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African Growth and Opportunity Act sees mixed results

23 years after its ratification, the African Growth and Opportunity Act (AGOA) remains on the hot seat after a US International Trade Commission report found partial success in the legislation’s intentions. AGOA, ratified under “the mutual interest of the United States and the countries of sub-Saharan Africa to promote stable and sustainable economic growth and development to sub-Saharan Africa,” is most notable for granting trade preferences and eliminating tariffs on the importation of textiles and clothing into the United States from the dozens of African countries participating in the agreement. In accordance with free market principles, such an increase in free trade between the respective countries would be Pareto-optimal, or beneficial to all parties, through the creation of more employment opportunities in African countries and the reduction of prices in the aforementioned goods in the United States. While these classical economic predictions have largely been upheld by the report’s findings, the benefits of increased textile and apparel trade in African countries have largely been unevenly distributed to certain countries and sectors.

On the one hand, for the countries and sectors particularly involved after the AGOA’s ratification, the report found major reductions in poverty, an improvement in wages, and an increase in labor participation for women particularly. The eight largest beneficiaries of AGOA added an estimated 240,000 to 290,000 combined apparel industry-related jobs in 2021, leaving an “impact on economic development and poverty reduction vis-à-vis job growth” in an industry whose workforce is about 70 to 90 percent women. As the report summarizes, “AGOA benefits appear to be essential for SSA (sub-Saharan African) countries to maintain their apparel exports to the United States.” On the other side of the Atlantic the effects of the AGOA also appear beneficial, with the average Consumer Price Index for Apparel in the United States remaining slightly lower in 2022 than its level in 200 when AGOA was first passed, in spite of a nearly 67 percent increase in the general price level over that same time frame.

Although providing promising benefits to both continents, the AGOA’s benefit to the African continent has largely been secluded to five countries who have comprised over three quarters of sub-Saharan non-petroleum exports to the US since 2014: South Africa, Kenya, Lesotho, Madagascar, and Ethiopia. Even within such countries, workers in apparel-related sectors such as cotton farming and chemicals found marginal benefits as a result of the act in spite of legislator’s predictions for even spoils with respect to workers directly employed by the apparel industry. In the words of the U.S. House of Representatives’ Ways and Means Committee top Democrat Richard Neal, “While certain sectors and countries have benefitted from the program, AGOA has not achieved all that we had hoped, and more work must be done to improve our economic relationships.”

Although uneven in distribution, what’s important to note is that no party, country, or sector have necessarily been made worse off as a result of the agreement. Rather, different groups have benefitted to much different extents. As the AGOA once more confronts the scrutiny of Congress, however, it remains to be seen whether such a distribution proves to be politically popular.


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