The small Southern African state of Lesotho recently asserted that the United States is looking to extend the African Growth and Opportunity Act (AGOA), allowing Africa to enjoy trade perks with the U.S in the face of sweeping tariffs.
- Lesotho has emphasized the potential extension of the African Growth and Opportunity Act (AGOA) by the United States.
- AGOA, which provides duty-free access to the U.S. for African exports, is set to expire by the end of September.
- The trade minister of Lesotho mentioned that U.S. Congressional committees have agreed on a one-year extension to be finalized by late November or December.
- Since the onset of the Trump administration, African-U.S. trade relations have faced challenges, including increased tariffs on imports from African nations like Lesotho.
The African Growth and Opportunity Act (AGOA) has provided African countries with duty-free access to the US market for more than two decades, benefiting industries ranging from textiles to agriculture.
However, the deal is nearing its expiration, which is set for the last day of this month.
In light of this, the trade minister of Lesotho, Mokhethi Shelile, on Wednesday, disclosed that the African Growth and Opportunity Act will be extended by the United States.
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Midway into September, between the 15th to 19th, a trade delegation from Lesotho visited the United States.
The group was led by the country’s trade minister, who subsequently revealed that they met with U.S. representatives on the Senate Finance Committee and the House of Representatives Ways and Means Committee, who are in charge of AGOA.
“They all agreed that AGOA has to be extended, and they promised us that by November or December at the latest, it will be extended by a year,” the trade minister stated.
“We will be … monitoring closely … that the extension comes into force as promised, because if it doesn’t, we are risking losing more jobs,” he added.
AGOA is practically the only source of income for Lesotho’s textile sector, which employs tens of thousands of people, mostly women, and contributes 16% of the country’s GDP.
The U.S. market now accounts for over 80% of the nation’s exports.
A ranking Democrat on the Senate Finance Committee told Reuters: “The Trump administration hasn’t informed Finance Committee Democrats its position on renewing AGOA.
Ranking Member Wyden continues to support renewing the program.”
AGOA
The African Growth and Opportunity Act (AGOA), enacted in 2000, grants eligible sub-Saharan African countries duty-free access to the United States for approximately 1,800 products, in addition to the 5,000 previously covered by a different trade policy known as the Generalized System of Preferences.
The goal was to increase trade from Africa, attract investment, and support economic progress within the continent, while also assisting the United States in maintaining soft power and influence in Africa.
Some industries thrived under AGOA, particularly clothes and automobiles.
Within five years of initiating the program, African apparel exports to the United States increased by 150%.
New factories were built in Kenya, Lesotho, and Mauritius, creating thousands of jobs.
Trade between the U.S and Africa in recent months
Trade between Africa and the United States has been in a very peculiar spot since Donald Trump assumed office.
In what he tagged an ‘America First’ approach, the U.S president has gone on to make decisions that have shifted the dynamics of the U.S relationship with numerous countries.
On January 20, President Donald Trump shocked the international community by announcing a sweeping freeze on USAID’s $43 billion annual budget.
He subsequently implemented trade tariffs on countries that his administration identified as engaging in unfair trade practices with the United States.
Countries such as South Africa and Lesotho were some of the worst hit on the continent, with as high as 30% tariffs being imposed on South Africa and 50% being imposed on Lesotho at one point.
On “Liberation Day,” initiated by the U.S. president, Lesotho was hit with the highest tariff in the world, which was 50%.
This was disastrous for the little mountain kingdom’s export-led growth strategy, which was mostly reliant on textile manufacturers selling jeans and T-shirts to the United States.
In August, Trump lowered it to 15%, putting an end to the scare that threatened the country’s overall Gross Domestic Product.
Contrary to South Africa and Lesotho’s complex bilateral relationship with the United States, some African countries, such as Kenya, have been met with more moderate U.S. schemes and policies.
Kenya’s AGOA push after a lenient tariff imposition
In August, it was reported that a high-level Kenyan delegation visited Washington in a last-ditch effort to secure a new trade pact with the United States as the African Growth and Opportunity Act (AGOA) comes to an end.
The initiative followed President Trump’s decision to spare Kenya from heavier tariff increases in the most recent round of trade measures, allowing Nairobi to maintain the lowest 10-percent rate while several other nations were subjected to considerably higher charges.
Kenya’s Trade Cabinet Secretary, Lee Kinyanjui, led the high-level delegation to Washington, D.C., to meet with United States Trade Representative (USTR) Ambassador Jamieson Greer as part of efforts to expand bilateral relations.
SEE ALSO: America First vs Africa: What’s at stake for AGOA trade deal
The discussions come at a vital time, with Nairobi seeking to protect its core exports and expand market access, while also capitalizing on President Trump’s recent decision to exempt Kenya from the high tariff hikes imposed on many other nations.
