The AGOA: Another Dictated Trade Regime?

By Geepu Nah Tiepoh

The Perspective
May 30, 2001

The Africa Growth and Opportunity Act (AGOA), initiated by the Clinton Administration and enacted into law last year by the U.S. Congress, will soon have its first major institutional establishment when foreign, trade, and finance ministers from 35 African countries convene in Washington D.C. in October to launch a US/Sub-Saharan African Trade and Economic Cooperation Forum (, May 16). While many African governments have given enthusiastic support to this Act, others (including former President Nelson Mandela) did offer only lukewarm support when it was first introduced about four years ago. In fact, a large number of African social movements and scholars have long expressed outright dissent with the policies promoted by this Act. And yet, African governments will soon be matching to Washington to launch its first major institution.

The stated intent of the Act, which is to shift US relationship with Africa from aid to trade and investment, is in itself constructive. Africa and the United States can no longer afford to have US aid bolster corrupt and undemocratic African regimes, whereas the serious-minded ones that do not want to toll the 'Washington Consensus' are starved of development aid and consequently forced into compliance. It is therefore appropriate that such an aid instrumentalism be completely replaced with an international relationship based on balanced trade and investment.

In a sense, the AGOA initiative is a formal enactment of the decline in foreign aid-giving that the US and other OECD countries have entertained over the last decade as part of global fiscal downsizing and economic restructuring. As a percentage of their combined GNP, aid allocations from countries of the Development Assistance Committee (DAC) of the OECD fell for five consecutive years, from 0.33 percent in 1992 to 0.22 percent in 1997, far below the United Nations target of 0.7 percent of GNP. Denmark, Norway, Sweden and the Netherlands, which are not G-7 nations, were the only donors to maintain their allocations above the 0.7 percent target in 1997. The United States is now in the lowest rank in aid-giving. By last year the US Agency for International Development (USAID) would have been operating in only 75 countries, compared with 120 in the early 1990s (The Tampa Tribune, 27 April, 1996). Indeed, just as the AGOA legislation was being debated in 1998, the US Senate was also proposing cuts in foreign aid to Africa in the tone of 20% to 30%. Thus the shift in US-Africa relationship from aid to trade and investment has long been underway.

However, while in theory this change may be ground-breaking, the trade and investment policies promoted by the Act are not new. They are basically the same external adjustment type of policies, predicated on rewards and conditionalities, that have been imposed on most debt-ridden developing countries in the last 20 years. African governments will be demanded, just as under the current global adjustment policies, to implement certain market-led economic reforms that mostly benefit American and other foreign corporations. A review of the text of the Act reveals that African governments will be required to implement and adhere to the following policies: (a) severe cuts in government spending, (b) fire sales of government assets, (c) new rights for foreign investors to buy African natural resources and public enterprises without restriction, (d) deep cuts in tariff, (e) imposition of US monopoly and patent rules, (f) binding membership in and adherence to all World Trade Organization regulations, (g) compliance with all IMF and other international financial institutions' rules, and (h) avoidance of any activities that may undermine US national security or foreign policy interests.

For adhering to such policies, African countries are promised such rewards as extended duty free access to American markets for certain products, and equity and infrastructure funds to support American investments. Opponents of the Act have argued that, apart from possible minor increases in textile exports from Africa, the legislation provides no clear indication of how producers of other manufactured goods, and especially of oil which accounts for 70% of US imports from the continent, will be benefited. The main beneficiaries of the Clinton African plan, according to critics, are the major American corporations. As Martin has aptly argued:

"Hundreds of millions of dollars in guarantees are allocated to insure US investment, subsiding firms who reap the rewards of the forced privatization of African telecommunications and infrastructure. While the bill's promoters speak of assisting Africans, African-Americans, and women, the primary group targeted for assistance is the multinationals who control Africa's trade and access to rich markets" (ROAPE, 1999).

The question then is whether there is a real need for the 'Africa Growth and Opportunity Act' and the multilateral institutions that will result from it. If African governments are to be required to implement the same trade and investment policy conditionalities, as those they have pursued in the last 20 years, then what is the justification for instituting the AGOA? And yet African governments will soon be coming to Washington D. C. to launch Africa's newly found source of "growth and opportunity". Could this be another layer of dictated trade and investment regimes that increase Africa's economic exploitation?

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