Namibia welcomes new AGOA trade agreement

02 Jul 2015 08:20am
WINDHOEK, 02 JUL (NAMPA) - The Namibian Government has welcomed the re-authorisation of the African Growth and Opportunity Act (AGOA) for another decade.
The current version of AGOA is due to expire on 30 September 2015.
AGOA, also known as the Trade and Development Act of 2000, was approved by the United States Congress in May 2000. It promotes duty-free market access to the US, with the purpose to assist the economies of sub-Saharan Africa and to improve economic relations between the United States and the region.
It is aimed at moving Africans from poverty to prosperity by increasing their economic opportunities.
President Barack Obama on Monday signed into law the Trade Preference Extension Act of 2015, to enact a 10-year renewal of the AGOA.
In an interview with Nampa on Wednesday, Director of International Trade in the Ministry of Industrialisation, Trade and Small and Medium Enterprise Development, Benjamin Katjipuka said Namibia is currently not trading with the USA under AGOA, but he commended the USA's strong commitment to enhancing the Africa-US economic partnership.
“Although we do not benefit much from AGOA, Namibia welcomes the new version of AGOA. We have been calling for a re-authorisation of 15 years, but still, 10 years’ re-authorisation is a welcome development,” said Katjipuka.
In Namibia, he said, AGOA’s benefits have not been fully utilised due to a number of challenges, in particular the closure of the Ramatex garment and textile factory in 2005, which left 600 people unemployed.
Ramatex turned cotton into textile to export it to the US under AGOA.
“Since the closure of the Ramatex garment and textile factory there has not been any other significant industry that took up the US market under AGOA,” he stated.
He said currently, Namibia is trading with the US, but under the Most Favoured Nations (MFN) agreement.
The MFN agreement is a method of establishing equal trading opportunities amongst states.
It is a status or level of treatment accorded by one state to another in international trade. The country that is the recipient of this treatment, must, nominally, receive equal trade advantages as the 'most favoured nation' by the country granting such treatment.
Namibia's exports to the US in 2010 were valued at N.dollars 1.9 billion and N.dollars 2.9 billion in 2011; while in 2012 it decreased to N.dollars 1,6 billion. The year 2013 recorded export volumes of N.dollars 2 billion.
Imports from the US to Namibia were valued at N.dollars 495 million in 2010; N.dollars 457 million in 2011; and N.dollars 378 million in 2012. In 2013, imports went up to N.dollars 1,3 billion.
Namibian exports to the US mainly comprise uranium ore and concentrate; non-industrial diamond; as well as refined copper and fish products.
“None of these products are eligible under AGOA. We trade in those products with the US, but under MFN,” Katjipuka said.
Namibia’s imports from the US include machinery, transportation equipment, chemicals and chemical products.
“We are now developing an engagement strategy on how best we can benefit from AGOA as well as ready ourselves for after 2025 for the new World Trade Agreement compatible arrangement,” he said.
The new AGOA ends in 2025.
Under AGOA, Namibia will be able to export beef to the US market, Katjipuka said, adding that the country’s grapes have also been granted access to the American market.
Before the re-authorisation of AGOA, Namibia availed a list of investment opportunities to encourage investment in the country through AGOA, while at the same time, it explored other products as the country is in the process of implementing the 'Growth at Home' strategy.
The list includes opportunities in sectors such as tourism, manufacturing, agriculture, value-addition to minerals, and construction, among others.
Under the new text, beneficiary countries will be expected to develop biennial AGOA utilisation strategies in order to “more effectively and strategically utilise benefits available under AGOA,” the Act says, which additionally cites the possibility for regional economic communities to be involved in this exercise.
Such strategies would mainly review opportunities and challenges around exports under AGOA, obstacles to regional integration, and establish a plan to increase the utilisation of benefits under the Act.
The general rule of origin under the new AGOA retains a value-added requirement of 35 per cent.
This provision entails that products may integrate materials sourced from outside countries – in other words, non-AGOA-beneficiaries – provided that the 'direct costs of processing' undertaken in one or more designated AGOA-beneficiary countries equal at least 35 per cent of the product's appraised value.
Since AGOA was put in place, 13 countries have lost their eligibility, although seven eventually had it restored, according to a report by the US Government Accountability Office, an independent agency providing audit and evaluation to Congress.
Six countries – the Central African Republic, Democratic Republic of Congo, Eritrea, The Gambia, South Sudan, and Swaziland – lost their eligibility primarily due to political reasons and have not regained it to date, said the report.
The new AGOA will also allow the US President to conduct out-of-cycle reviews of any beneficiary country to determine whether it is making continued progress towards meeting the scheme’s eligibility criteria.
Since its inception, over 1.5 million jobs have been directly and indirectly created on the African continent.