US-Africa Deal Boost Trade But Untapped Opportunities Remain

By Jean Pierre Afadhali

Vehicles, machinery, chemicals, fruits, nuts, and wine have dominated products that were imported by the U.S. private sector from Africa in recent years, while the U.S. private sector has exported mainly machinery, aircraft, vehicles, cereals, and plastics to Africa, Don Graves, U.S. Deputy Secretary of Commerce revealed in online media briefing during the just concluded African Growth and Opportunity Act, (AGOA) forum in South Africa.

However, Graves said US priority markets going forward will focus on things that President Joe Biden outlined at the U.S.-Africa Leaders’ Summit, including sustainability, clean tech, digital economy, cyber security, and creative industries.

Responding to a question submitted by Pan African Visions about markets priority in Africa, Graves added: “We know that U.S. companies small and large know that Sub-Saharan Africa is a vital export market, and it’s really a key sourcing destination going forward.”

AGOA is a United States Trade Act, enacted on 18 May 2000 as Public Law 106 of the 200th Congress. The AGOA legislation has been renewed on different occasions, most recently in 2015, when its period of validity was extended to September 2025. The act seeks to enhance two-way trade between Sub-Saharan Africa and USA and will likely be extended in 2025.

The US Deputy Secretary of Commerce further revealed” We’ve launched a personal care and cosmetics trade promotion program that’s going, to create strong business-to-business relationships and people-to-people ties.”

According to Graves, the strength of the American economy is built off of small and medium enterprises, and connecting those same small- and medium-sized enterprises to small- and medium-sized enterprises on the continent will “help us grow both of our economies.”

Meanwhile, US government has terminated membership of Uganda, Central African Republic, Niger and Gabon for “failing to meet eligibility requirement of section 104 of AGOA.”

Ugandan President Yoweri Museveni has said that the United States was "overestimating" its importance.

Commenting on the trade ties between Africa and USA Graves said that a U.S. company, Equinix, which is a major data center infrastructure company, is building a major data hub in South Africa and investing $160 million in South Africa.

“It’s going to create jobs here as well as jobs back home in the United States, and importantly it’s helping to create the digital ecosystem that not only will Africans here will folks here in South Africa need, but across the continent and, frankly, across the globe will be able to tap into to help build a stronger digital ecosystem.”

Two-way trade, untapped opportunities

Despite business opportunities that member-countries benefit such as facilitated access to US markets for certain products, challenges remain as some businesses have not seized the opportunities.  Graves noted “We believe that AGOA is a fantastic opportunity that African businesses and American businesses have tapped into but they haven’t fully realized the potential of AGOA.”

So we expect that we can tell a great story of the – what the full potential of AGOA could mean if we are able to fully capitalize on it, he added in an online media briefing that was organized from South Africa.

The US also hopes, according to Deputy Secretary of Commerce, the African Continental Free Trade Area that was recently been put into place will boost and facilitates its businesses on the continent.

China-US competition

According to some observers US could use AGOA to increase its influence on the continent amid growing competition with China for influence in Africa. Responding to a question about global powers competition, Graves said “We as a country are focused on our partnerships and what we can do together.”

We know that American businesses are the partners of choice because our friends and partners all across the continent tell us that continuously, Graves added.

Since 2000, AGOA's inception year, US imports from AGOA countries peaked in 2008, reaching similar heights in 2011.

“We want to be true partners, help the development of the continent, to be here as strong partners, and to make sure that our private sectors are working hand in hand, “stressed Graves during the online presser.

In 2022, combined two-way trade between AGOA beneficiaries and the US exceeded $46 billion, with US imports exceeding exports by $13.5 billion. AGOA beneficiaries exported $30 billion worth of goods to the US in that year, with $10.2 billion traded under duty-free AGOA preference. While the remaining exports were traded under normal tariff relations, the majority of this was in general duty-free categories.