United States Ambassador to Malawi, Virginia Palmer, has said she does not expect any suspension to the African Growth and Opportunity Act (Agoa) following the coming in of the Donald Trump administration.
Trump took over the US Presidency from Barak Obama on January 20 this year and promised to make a number of radical changes regarding how the US government does business with the rest of the world in his attempt to make America great again.
Agoa is a United States Trade Act, enacted on 18 May 2000 as Public Law 106 of the 200th Congress. The legislation significantly enhances market access to the US for qualifying Sub- Saharan African (SSA) countries, including Malawi.
Qualification for Agoa preferences is based on a set of conditions contained in the Agoa legislation. In order to qualify and remain eligible for Agoa, each country must be working to improve its rule of law, human rights, and respect for core labor standards.
“I don’t think the coming in of President Trump would affect Agoa and I would like to encourage Malawian firms to take advantage of the duty free opportunities that Agoa presents,” Palmer said.
Malawi enjoys a vibrant bilateral trade relationship with the United States, although trade has waned in recent years. Two-way Malawi-US goods trade totalled $92 million in 2015 – a 13 percent decrease from 2013, mainly due to a decline in tobacco exports to the United States.
Malawi exports a wide variety of products to the United States under the provisions of Agoa and Generalized System of Preferences (GSP), including tobacco, rice, tea, sugar, and cotton.
Speaking during Malawi’s Trade Policy Review last year, US Permanent Representative to the World Trade Organisation, Michael Punke, encouraged Malawi to develop strategies to take better advantage of Agoa.
“We are committed to working with Malawi not only to help it make greater use of the benefits of Agoa to increase bilateral trade, but also to help it improve its capacity to boost regional trade and make the most of the opportunities afforded by its membership in the World Trade Organisation,” Punke said.
Minister of Industry, Trade and Tourism, Joseph Mwanamvekha, recently admitted that Malawi’s exports to the US under Agoa have been unsatisfactory.
He said the country does not produce enough due to capacity problems.
“One of the major reasons is our production coupled with higher costs of transport logistics. Even if you look at markets around us in the region, we do not supply enough of our products though they are on higher demand.
“The fact that we export raw products straight from the farm to the export market without adding any value means we can’t even industrialise and create jobs,” Mwanamvekha said.