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Saturday, 15 June 2002

Africa Growth And Opportunity Act:: Hot Air or Hot Stuff?

  • Year: 2002
  • Organisation: National Treasury
  • Author(s): Matthew Stern; Nnzeni Netshitomboni
  • Countries and Regions: East African Community (EAC), Southern African Development Community (SADC)

The US Africa Growth and Opportunity Act (AGOA), which was promulgated in October 2000, claims to “move Africans from poverty to prosperity by increasing their economic opportunities.” The Act extends Generalised System of Preferences (GSP) status for qualifying African countries to September 2008 and expands the existing list of 4 650 GSP products by 1 837. Thirty-four sub-Saharan African countries, including South Africa, qualify for AGOA.

Much has been said about the large number of new export opportunities and jobs that will be created out of AGOA. However, a closer examination of the expanded product list suggests that some scepticism is warranted. For example, media attention has focused on the improved access for South African wine resulting from the implementation of AGOA. While it is true that bottled wine is included in the expanded GSP product list, the existing tariff on South African bottled wine exports to the US is a mere 1.7%, or 6 cents (US) on a R30 bottle of wine.

This paper attempts to uncover some of the truths and untruths about AGOA. The paper highlights possible export opportunities arising out of AGOA, and identifies some of the missed opportunities that could be corrected for in a follow-up agreement, AGOA-2. It also provides an indication of the benefits that might accrue to South Africa and the US from a reciprocal free trade agreement. Finally, the performance of AGOA up to June 2001 is evaluated using the latest trade data provided by the US authorities.