Introduction
The African Growth and Opportunity Act (AGOA), first enacted in May 2000, provides tariff-free treatment of U.S. imports of goods sourced from certain sub-Saharan African countries. AGOA is intended to bolster economic growth and deepen U.S. economic ties with participating nations. According to the U.S. Chamber of Commerce, AGOA’s benefits enabled the United States to become sub-Saharan Africa’s largest export destination from 2000–2018 and the U.S. Trade Representative highlighted that two-way trade with sub-Saharan Africa totaled $44.8 billion in 2021.
AGOA has twice been renewed, in 2008 and 2015, with significant bipartisan support in Congress. At present, AGOA is set to expire on Sept. 30, 2025. Given the approaching expiration date, lawmakers from both parties have ramped up efforts to renew the vital economic program. Stakeholders who conduct business in Africa or with African products should look to engage in the renewal process to ensure that their interests are protected from any changes in the bill.
Ongoing AGOA Renewal Efforts
Over the last year, lawmakers on both sides of the aisle have signaled their intent to pass AGOA renewal legislation. In March, House Ways and Means Trade Subcommittee Chair Adrian Smith (R-NE) indicated he would prioritize AGOA’s renewal. Later that month, Reps. Sydney Kamlager-Dove (D-CA) and Colin Allred (D-TX) led 33 of their Democratic colleagues in introducing a resolution (H.Res.261) reaffirming the U.S.-African Union relationship and calling for greater trade ties with the continent. Most recently, on Sept. 27, Sen. John Kennedy (R-LA) took the most active step yet to renewing AGOA by introducing a bill (S.2952) that would provide for a “clean,” 20-year reauthorization of AGOA.
However, we believe it is unlikely the Biden administration—or some congressional Democrats—would support a clean renewal. U.S. Trade Representative Katherine Tai has remarked on several occasions that there is a need to reform and update AGOA so that it is more appropriately aligned with present-day needs and positions of African nations. Moreover, in remarks made at last December’s AGOA Ministerial that accompanied the U.S.-Africa Leaders’ Summit, Tai stated that the current level of duty-free access provided by AGOA is no longer sufficient to boost the economic development of African nations. Tai has called for more compelling incentives for participation, stressing that not enough countries have taken advantage of the benefits that AGOA can provide.
For his part, Sen. Kennedy has not yet indicated whether he was open to amending the program as part of the renewal effort. Nevertheless, Sen. Kennedy’s connection between AGOA’s importance and its ability to counter growing Chinese influence across Africa is likely to resonate across both sides of the aisle.
A Global Look at AGOA
AGOA was initially introduced as a means to move toward free trade agreements (FTAs) with sub-Saharan African nations; however, none have been reached so far. With the need for reauthorization upcoming, there are now calls to expand the agreement to include more incentives to industries that were not as prevalent during the 2015 reauthorization process, particularly technology and digital trade. USTR Tai has also expressed interest in expanding the program to provide better support for small and women-owned businesses.
Other discussions regarding AGOA expansion recommend increasing African investments beyond low-value-added products and natural resources to allow for the region to be a larger player in value-added manufacturing. Some have even criticized the program for failing to properly utilize the investments, highlighting that only 18 of the participant countries have developed national strategies on how to properly benefit from AGOA. Critics of the bill have stressed that a clean reauthorization is not what is needed, but rather, a full expansion to renew current provisions while also providing the opportunity to diversify and modernize markets.
Next Steps
Since the 2000 passage of AGOA, the United States and AGOA member countries come together to discuss economic, trade and investment issues at the annual AGOA Forum. It allows for networking opportunities between U.S. policymakers, companies, industry leaders, nonprofit organizations as well as members of U.S. and African civil society. The event also provides a venue for regional entrepreneurial groups to discuss how AGOA has expanded their ability to establish and grow enterprises. This year, South Africa will host the U.S.-Africa trade summit from Nov. 2–4 to discuss AGOA and plans for its reauthorization before the 2025 expiration date.
The Biden administration has become increasingly focused on strengthening U.S.-African ties since the December 2022 African Leaders Summit and has committed to delivering concrete partnership programs. Historically, the administration has been slow to approve trade agreements with other nations and President Biden focused most of his efforts on the Indo-Pacific during the first half of his term. With the upcoming expiration date of AGOA and the establishment of economic corridor programs such as the U.S. Partnership for Global Infrastructure and Investment (PGII) and the expansive investments across the Lobito Corridor, the administration is signaling its efforts to better support trade and investment opportunities across the African continent, particularly as a foil to China. As a result of the increase of investments across the African continent to combat Chinese influence, there is likely to be tension and disagreements regarding where investments may be the most beneficial. However, AGOA can act as a key opportunity for the administration to prove that it is looking to expand American trade and develop new economic alliances.
Brownstein is uniquely positioned on issues relating to international trade. The AGOA forum presents a great chance for the participants to have their concerns brought up with the power players at the conference. Our international team—including former House Foreign Affairs Committee Chairman Ed Royce, a co-author of AGOA—will also continue to monitor Sen. Kennedy’s bill and any other legislation that concerns AGOA’s reauthorization. If you want to know more about the legislation’s renewal and how to make sure your interests are considered, please contact one of the authors of this alert.
THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING AGOA RENEWAL. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.