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The three countries will lose their duty-free access to the US market under the African Growth and Opportunity Act (AGOA) starting Jan. 1 “absent urgent action” to get back into compliance with the law, US Trade Representative Katherine Tai said in a statement.
Ethiopia is under fire for its “gross violations of internationally recognized human rights” in its conflict with Tigrayan forces, President Biden said in a message to Congress announcing his “intent to terminate.”
Meanwhile Mali is accused of failing to protect human rights and worker rights, rule of law and political pluralism following two military coups in less than a year.
As for Guinea, Conakry has been found to be in violation of the law’s requirements regarding rule of law and political pluralism after the military toppled President Alpha Conde in September.
“Our administration is deeply concerned by the unconstitutional change in governments in both Guinea and Mali, and by the gross violations of internationally recognized human rights being perpetrated by the Government of Ethiopia and other parties amid the widening conflict in northern Ethiopia,” Tai said in her statement. “The United States urges these governments to take necessary actions to meet the statutory criteria so we can resume our valued trading partnerships.”
Tai went on to say that she would be providing each country with “clear benchmarks for a pathway toward reinstatement.” She said the Biden administration would ”work with them to achieve that objective.”
Bitter blow for Addis Ababa
Then-President Bill Clinton signed AGOA into law in May 2000, ushering in a new post-Cold War Africa economic policy of ‘trade not aid’.
The program grants duty-free access to the US market for 1,800 products, in addition to the more than 5,000 products eligible under the Generalised System of Preferences (GSP) program. Last year, African duty-free exports to the US under the program amounted to just over $3.2bn, out of a total of about $46bn in two-way trade in goods and services, according to the US International Trade Commission (ITC).
Tuesday’s announcement is a particularly bitter blow for Ethiopia, putting tens of thousands of jobs in the textile and apparel sector in jeopardy. It comes as the country has already been deemed ineligible for assistance from the Millennium Challenge Corporation, a US foreign aid agency that provides grants to promote economic growth, reduce poverty and strengthen institutions.
“Ethiopia is ineligible to receive foreign assistance due to its human rights record,” the agency said in a little-noticed Sept. 8 report on candidate countries for the fiscal year that started Oct. 1.
Ethiopia was the fifth largest beneficiary of the AGOA program last year, with $237 million worth of exports to the US. Mali and Guinea by contrast are tiny players in the program, registering just $24,000 and $17,000 in exports respectively in 2020, according to the ITC.
The Office of the US Trade Representative (USTR) singled out Ethiopia’s success under the program in its biennial report to Congress last year. “As one example of what an individual country can do to leverage its AGOA benefits over a five-year time horizon,” then-US trade representative Robert Lighthizer wrote,
“Ethiopia’s annual apparel exports under AGOA increased dramatically from $20.3 million in 2015 to $209.6 million in 2019.”
With the Biden administration sending warning signs in recent weeks, the Ethiopians launched a lobbying and public relations campaign to protect the trade preferences.
Investors in the Chinese-built Hawasa industrial park in southern Ethiopia hired international trade law firm Sandler, Travis & Rosenberg in September to lobby for “preserving AGOA eligibility for apparel from Ethiopia.”
In an interesting choice of timing, US Ambassador to Ethiopia Geeta Pasi visited the Hawasa park last week and touted the AGOA program. She highlighted the Biden administration’s “shared goal” of ensuring that the Ethiopian people continue to benefit from the program, putting the onus on Prime Minister Abiy Ahmed’s government to come to the negotiating table with the Tigray People’s Liberation Front (TPLF).
Meanwhile the country’s chief trade negotiator Mamo Mihretu took to the pages of Foreign Policy magazine last month to sound the alarm over AGOA.
“The effect of Ethiopia’s removal from the AGOA would do lasting damage,” Mihretu wrote. “Ethiopia’s decades-long and relatively successful efforts to extricate itself from poverty, build a viable manufacturing industry, create jobs for its youth, and progressively wean itself off aid through trade would all be imperiled.
Moreover, by injecting uncertainty into the Ethiopian investment environment, such a measure would undo the promising gains registered over the past two decades while escalating the investment risk premium for a long time to come.”
And the bad news for Ethiopia might not be over.
In a speech to the US Institute of Peace today, US special envoy for the Horn of Africa Jeffrey Feltman said the Biden administration was prepared to announce additional punitive measures following the imposition of visa bans on several Ethiopian officials and recent sanctions on Eritrean Gen. Filipos Woldeyohannes, the Chief of Staff of the Eritrean Defense Forces.
READ MORE The Abiy effect
“The United States is prepared to pursue the first sanctions under the executive order that President Biden signed in September against those fueling this crisis and obstructing humanitarian operations,” Feltman said.
“And we will be targeting all parties implicated.”
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