The extension of the African Growth and Opportunity Act (Agoa) hangs in the balance as the US heads to the polls next Tuesday.
Kenya, a major beneficiary of Agoa, is concerned that the programme that provides eligible countries in the region with tariff-free access to US markets expires at the end of 2025 with the US presidential race likely to complicate Biden’s renewal plans.
The Agoa Renewal and Improvement Act of 2024 which was introduced by bipartisan Senators Chris Coons (Democratic) and James Risch (Republican) would extend the bill for 16 years until 2041 and continue to boost Africa’s duty-free status as a means of attracting private sector investment to help underwrite economic development.
However, in the event that the Democratic Party’s candidate Vice President Kamala Harris does not make it, it is unlikely that Republicans with their candidate former President Donald Trump, would be enthusiastic about its renewal.
The Republican Party candidate and former US president Trump, a fierce proponent of America-first trade conservatism, has on several occasions stated that Agoa should not be renewed on account of foreign policy disagreements that the US has with Agoa trade partners.
An expert in international trade and investment Law, Associate Olabisi D. Akinkugbe of the Schulich School of Law at Dalhousie University, Canada, observes that the future of Agoa will depend on who wins the 2024 polls.
“Assuming its Vice President Kamala Harris one would say it would be a continuation of ‘Biden-economics”, the approach to international trade negotiations of the bilateral agreements as well as the Agoa, in particular, will not change significantly from what we have seen of her,” said Prof Olabisi.
“If it's Trump’s administration then you know it’s a re-emergence of ‘America first’. Trump has not been unclear about the fact that what he wants to do is to globalise American interests.”
Despite the current political situation in the US, the Kenya Private Sector Alliance (Kepsa) is optimistic that whichever the outcome of the US November polls, Agoa is likely to be renewed.
“Agoa has always been a bipartisan bill supported by both the Democrats and the Republicans, hence no major policy shift envisaged,” said Jas Bedi, Kepsa chairperson.
Kenya’s garment manufacturing sector benefits significantly from Agoa. In more than the two decades since 2000, Kenya has exported $6.5 billion(Sh716.8 trillion) worth of garments to the US duty-free under Agoa.
Kenya is also the largest garment exporter under Agoa, well ahead of Lesotho, and with higher exports than Mauritius and Madagascar combined.
Kenya’s exports of nuts to the US have been an important Agoa success story. Between 2000 and 2022, Kenya exported nuts worth $ 577 million(Sh7.3billion) duty-free.
Most exports comprise macadamia nuts, which would be subject to an import duty of (US) 5c/kg under normal trade relations. In 2022-23, Kenya supplied 34 percent of the US’ global imports of macadamia nuts.
President Joe Biden’s administration expressed support for renewing Agoa before it terminates, and bipartisan legislation has been under consideration in Congress.
Nonetheless, a packed US political agenda in a presidential election year, along with ongoing discussions over potential changes to the Act and how long to extend it for, have created a situation in which renewal in 2025 appears more probable than this year.
“It may be unlikely to happen in 2024, but certainly in early 2025 I expect to see it completed,” Constance Hamilton, the United States Assistant Trade Representative for Africa, said in a recent briefing.
