Agoa’s not much of a perk

The overwhelming consensus from academic studies is that Agoa does nothing whatsoever for almost all African countries.

During last year’s “out of cycle review” of South Africa’s Agoa status in Washington, DC, the department of trade and industry made the argument that South Africa more or less is Agoa.

The scheme waives US tariffs on about 1 500 items, about a third of which are clothing-related, on top of more than 4 000 tariff lines covered by the Generalised System of Preferences tariffs for poor countries anywhere.

The problem is that Agoa covers things Africans do not make and, even if they did, the often small tariffs being waived can’t be the basis for new investment.

In money terms, Agoa is essentially a trade deal with South Africa, along with a special clothing deal with Kenya, Lesotho and Mauritius.

The clothing component relies on an additional concession that allows some African countries to export clothing to the US tariff-free by using fabric imported from outside Africa.

It is called the Third Country Fabric Provision.

A major study of Agoa’s usefulness (to Africans) was commissioned by the UK government in 2011.

It found the benefits outside of clothing “modest”, with “little or no impact on exports”, and added that even the clothing exports were not as economically beneficial as they might have appeared.

“Most of the rent from apparel preferences goes to the Asian investors and importers in the US,” said the report.

The largest beneficiary is Kenya, but Kenya’s growing clothing exports to the US have been matched dollar for dollar by imports of the textiles being used.

The US Government Accountability Office studied Agoa’s effects in the run-up to the US Congress’ renewal of the programme last year.

It concluded that the economic impact was “difficult to isolate”.

The most recent study of Agoa came from the University of Nebraska’s Addisalem Zenebe et al, published in the Journal of International Agricultural Trade and Development last year.

Zenebe and co-authors found Agoa’s effect on agricultural trade “statistically insignificant”.

“In general, Agoa preferences are only applied to agricultural products that do not compete with goods produced in the US.”