African agricultural, light manufacturing product exports face shrinking market after end of Agoa
African exporters of agricultural and light manufacturing products could face shrinking market access to the US, while the expiry of the US preferential trade framework the African Growth and Opportunity Act (Agoa) is also set to undermine their prospects for diversification, warns international organisation UN Trade and Development (Unctad).
Since its launch in May 2000, Agoa has supported sub-Saharan African exports to the US through preferential access, but the recent expiry of the scheme threatens export diversification and industrialisation across the continent, Unctad states.
In a country such as Lesotho, about one-third of exports are tied to Agoa, and predominantly from the apparel sector, which employs between 30 000 and 40 000 workers, primarily women, it says.
African and non-African exporters are already facing increased trade barriers in the US market. Country- and sector-specific tariffs that have been introduced by the US since April have increased tariffs for the average Agoa country from below 0.5% to 10%.
For key exports, such as agriculture and food products, metals, machinery and transportation, textiles and apparel, the tariffs have already triggered a double-digit increase in duties.
The expiry of Agoa will disproportionately affect Africa’s light manufacturing product exports to the US, namely apparel and agrofood products, such as fish and dried fruits.
Without Agoa’s preferential treatment, the 32 countries that received preferences until September 30 will face a second wave of tariff increases as country-specific and sectoral tariffs will be added on top of most-favoured nation (MFN) rates, instead of the current preferential treatment under Agoa, Unctad says.
Owing to varying tariff rates and exceptions for sensitive raw materials, African exports of agricultural goods and manufactured products will be subject to tariffs that are two to three times higher than those applied on fuels and minerals, it highlights.
Exporters of mined commodities are the least affected by the US tariff changes on African goods. Countries such as the Democratic Republic of Congo, Nigeria or Angola, whose exports are primarily fuels and minerals, face minimal tariff increases, as their main exports already benefit from low MFN tariffs, or exemptions from additional duties.
More diversified economies, such as South Africa, are less exposed to Agoa’s expiry, but have already experienced significant tariff increases this year due to country-specific and sectoral tariffs, Unctad adds.
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