US Senator wants AGOA in place till 2045 to deter China’s influence

Journalists from Eswatini Media Houses pictured as they were about to board a US Ship named St Terresa at the Port of Maputo in August.

By Sifiso Sibandze

In a move to daunt China’s influence in the African Continent, Louisiana Senator John Kennedy presented a Bill to Congress that proposed the extension of AGOA, the legislation that allows Sub-Saharan African countries, including Eswatini, preferential access to US markets.

This effectively means AGOA could be extended by 20 years beyond 2025 if the US Congress approves the Bill introduced by Senator Kennedy. Kennedy wants the legislation extended to 2045 because it would help deter “China’s growing influence throughout the region. “The African Growth and Opportunity Act has been the cornerstone of economic ties between the United States and Africa.

Over the next two decades, the AGOA will play a pivotal role in helping Americans deter China’s growing influence throughout the region. This extension would allow the United States to keep working closely with African nations to grow our economies, reduce poverty and ensure that American values prevail in the region,” said Kennedy.

Not only is China the largest and most dominant member of the BRICS grouping (Brazil, Russia, India, China and SA), but it is also a critical export market for the country’s ‘gold’ – sugar thereby a key driver of the Lilangeni exchange rate. According to data released by the IMF last week, China is Sub-Saharan Africa’s largest lender and a significant source of foreign direct investment. Eswatini is arguably the last country that has not solicited a loan from China and that stems from its 55-year-old friendship with Taiwan.

China’s share of total Sub-Saharan African external public debt rose from less than 2.0 per cent before 2005 to about 17 per cent in 2021, providing a significant source of infrastructure financing across the continent away from traditional Western partners, which have been viewed as having strenuous conditions attached to financing.

The US’s African Growth and Opportunity Act (AGOA) provides preferential access for some critical products produced by Eswatini mainly textile and apparel, sugar and soft drinks concentrates. In August, Eswatini shipped about 26,535 tonnes of sugar to the US under AGOA. Kennedy introduced the Bill to Congress in September. It would provide for a “clean” 20-year reauthorisation of AGOA, which would provide much-needed relief for African countries that have benefited from the trade pact since its inception in the year 2000.

Congress last extended AGOA in 2015, authorising the programme to the end of 2025. The extension of AGOA by two decades contradicts calls by African countries that want an early extension and for the trade pact to be extended by only a decade. They plan to make that call during a meeting of the beneficiaries and US legislators scheduled for Johannesburg in November.

A bipartisan consensus is essential to secure the necessary backing that African countries seek for a renewal of Agoa as a key means to promote African industrialisation. Officials from the International Trade Department in the Ministry of Commerce Industry and Trade who spoke to Eswatini Financial Times on condition of anonymity, said they would closely watch the US Congress’s reaction to the Bill.

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The officials said the proposed extension will boost investor confidence in the country as one that has access to many preferential markets compared to its peers in SADC. The AGOA Act requires that US legislators conduct yearly eligibility reviews of the trade pact’s beneficiaries. Eligibility criteria include that beneficiaries should not engage in gross violations of internationally recognised human rights or provide support for acts of international terrorism and that countries do not engage in activities that undermine US national security or foreign policy interests.

Congress first enacted the African Growth and Opportunity Act in 2000. The program encourages African countries to adopt market-based economies, support democracy and protect due process and the rule of law. In turn, AGOA-eligible nations receive duty-free access to thousands of products in the U.S. market. Today, 36 countries are eligible for AGOA benefits. The AGOA has also supported nearly 120,000 jobs in the United States. The AGOA Extension Act of 2023 will extend the program for 20 years to 2045. Congress last extended the AGOA in 2015 by 10 years, authorizing the program through 2025.

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