Nairobi (AFP) – African manufacturers warned on Wednesday that a one-year extension to the long-standing duty-free deal with the United States was only a temporary “breather” and could jeopardize long-term investment. The African Growth and Opportunity Act (AGOA) was renewed by President Donald Trump on Tuesday until the end of 2026. A cornerstone of US-Africa trade relations for 25 years, AGOA has allowed the United States to buy billions of dollars of duty-free cars, clothes, and other items from select African countries each year.
But with the Trump administration broadly hostile to free-trade deals, it was allowed to expire on September 30. The new extension came with fresh demands and fell far short of the multi-year renewal that many African businesses wanted. “AGOA for the 21st century must demand more from our trading partners and yield more market access for US businesses, farmers, and ranchers,” said US Trade Representative Jamieson Greer in a statement.
In Kenya, the owner of a factory that exports Wrangler and Levi’s jeans under the deal said the extension was “good news”. “But it’s only as good as one season, so the negotiations are not a done job,” said Pankaj Bedi, CEO of United Aryan in Nairobi. His factory had been forced to pay the extra duties when AGOA lapsed last year, in order to keep their US buyers on-side, pushing the company and its 10,000 workers to the brink of collapse. “The extension gives us a breather, which is critical. But it won’t help with the long-term orders and investments to sustain us,” said Bedi.
AGOA operates in 32 African nations and is responsible for tens of thousands of jobs. In 2024, $8.23 billion worth of goods were exported under the accord, half of which came from South Africa, mainly cars, precious metals, and farm produce. One fifth came from Nigeria, mainly oil and other energy products, according to the US International Trade Commission. Tiny Lesotho, which sells a large amount of textiles to the United States, was especially hard-hit, and hundreds of workers demonstrated in the capital Maseru in October over cuts sparked by US tariffs.
Lesotho union boss Tsepang Makakole told AFP the initial talks had been focused on extending AGOA for 10 years. “It started with 10 years, then three, and it is now just one year. It means a very small win,” he said. “Investors could say, by this time next year, we should be out of Lesotho because we can see that it is no longer a good country to manufacture from and export clothes to America,” he added.
The South African government also said it was “concerned by the short nature of the extension” and called for a deal “that will provide certainty around investment and purchasing decisions”.
© 2024 AFP
