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Ethiopia’s Loss of AGOA could sink the harvests of AGOA itself: The faux pas

By Ermias Wodejao
Did preferential access durably boost African export performance? Based on product-level data for 208 countries exporting to the US, over the period 1992-2017, show that complementary domestic reforms have the highest impact on durability of the benefits accrued during the preference period. The establishment of effective special economic zones, which combined liberal trade regimes with ease of doing business and improved infrastructure, is believed to have been the reason for the success of Kenya and Ethiopia. In addition, growth of Ethiopia in their exports of apparel to the US were driven largely by new exporters that entered the market after 2010, rather than by incumbent exporters that had benefitted from large preference margins during the early AGOA period. In conclusion, industry-level or country-level improvements or reforms coupled with AGOA have the long lasting export boosting effect than the preference itself. Hence, lifting (removing) AGOA, during industry level or country level improvement or reform operating in Ethiopia, is going bust on the booming apparel exporting economy of the country and mislay 20 years of preference harvest.
A couple days ago, U.S. global trade representative, Katherine Tai said Washington would “soon” decide on Ethiopia’s status under AGOA. Tai was quoted as saying: “Reports coming back to us through official channels and civil society are not encouraging. What is happening in Ethiopia is a humanitarian crisis.” This stand makes it imminent by the fact that the Act authorized the United States Trade Representative (USTR) to exercise the authority provided to the President. The US President has the mandate and power to evaluate eligible AGOA beneficiaries annually in the first month of the year. Hence, USA president decision on Ethiopia’s continuity of eligibility, or enlisting otherwise, is expected to be pronounced by January 2022.
The main purpose this article is to set a clear data driven, evidence based and persuasive economic and legal arguments as to the obscure stand of USA on Ethiopia’s “progress” and the stand for existence of “humanitarian crisis” is unacquainted with the “progressive” objectives of AGOA. On the issue of “making continual progress” requirement, for the purpose of analyzing the US Trade representative warning, the two requirements are very crucial for detail analysis. These are: (A) a country shall not engage in activities that undermine United States national security or foreign policy interests; and (B) a country shall not engage in gross violations of internationally recognized human rights or provide support for acts of international terrorism and cooperates in international efforts to eliminate human rights violations and terrorist activities.
The African Growth and Opportunity Act (title I of Public Law 106-200) (AGOA), is a unilateral textile preference for ‘lesser developed beneficiary sub-Saharan African country’ under the favorable third country fabric rules of origin and only Sub-Saharan African countries are considered for eligibility. It is a unilateral agreement offered by the US government, beneficiaries have no power to negotiate. Beneficiary countries have no recourse to dispute settlement in this regard, and this unpredictability is one aspect that differentiates AGOA’s non-reciprocal preferences to those contained in reciprocal and bilateral trade agreements.
The Unprecedented Solitary enlisting warning against Ethiopia
The following are those sub-Saharan African countries that were initially or in progress eligible of AGOA but removed (suspended) from the eligibility list. Those countries, with the alleged eligibility violations, mainly include: Burundi (political violence, arbitrary arrest, mass killing of opposition during and after election of Nkurunziza), Cameroon (failure to address concerns regarding persistent human rights violations being committed by security forces), Equatorial Guinea (income graduation), Eritrea (human rights), Mauritania (response to a military coup in August 2009 that toppled a democratically elected president), DRC (alleged human rights violations under former president Joseph Kabila but reinstated in 2020), Seychelles(income graduation), Swaziland (U.S. government’s growing concerns over insufficient progress toward certain democratic standards), Mali and Guinea-Bissau (both were hit by a coup in 2011), South Sudan (upon political violence but not clearly mentioned in President Barrack Obama’s decision), Rwanda (upon Rwanda ban on imports of used clothing and leather products from USA). Niger, CAR and Gambia was also suspended for failure to progress on establishing effective visa systems and related customs procedures requirement of the relevant AGOA legislation.
As you may have noted very well, there is no any Africa country suspended of AGOA on the basis of gross human right violation upon a military operation by a legitimate democratically elected central government against a base of a group designated by the central legislative body as a“terrorist”. In addition, based on the following justifications, the assessment and conclusion reached by the US government on current Ethiopia situation as “gross humanitarian crisis” and “inability to make any progress” will be unjustified.
The final report of the established joint UN and Ethiopian Human Rights Commission investigation finding on the type, nature and character of human right violation on Tigray is expected to be published on 1 November 2021. UN Human Rights Chief, Michelle Bachelet, on 13 September 2021, cases documented comprises multiple allegations of human rights violations committed by all parties to the conflict in Tigray. The word “multiple allegations of human rights” could not be equated with “gross violation” of human rights.
The final conclusion (report) as to the type, nature, violating party, and character of the human right violation is expected in the coming November. Hence, earlier conclusive remark made by the US Global trade representative on “human right violation” were too early to call and unfortunately grudged to spell “progresses” made. In addition, the debate about the operational meaning of “gross violation” of human rights is far from being concluded under international law. In addition, the AGOA act abstained from clearly defining this concept, but also the necessity of establishing clear criteria to assess the extent of violation as amounting to “gross violation” of human rights. The terms “gross,” “flagrant,” “massive,” “systematic,” or “serious” violations of human rights are often interchangeably or cumulatively used by both international legal instruments and quasi-judicial bodies. Several elements need to be taken into account while assessing the seriousness of a violation, including: the type of the violated rights and the character of the violation, the quantity of victims, the repeated occurrence of the violation and its planning, and the failure of the government to take appropriate measures relating to the violation in question. According to the International Law Commission; Van Boven and Chernichenko, there are two criteria: the first concerns “the character of the obligation breached,” which derives from a peremptory norm of general international law; the second involves “the intensity of the breach”: the nature of rights violated (peremptory rights), and the character of the violation (cruelty of the breach). The Human rights Chief comment on multiple allegations of human rights by both parties could not be considered as indicator of failure on the part of the government to make “progress” on avoiding, minimizing or halting the conflict. Based on the information gathered from Ethiopian Disaster Prevention and Preparedness Commission, 80% of essential humanitarian assistance is still provided by the federal government and private sector.
The suspension of Ethiopia from eligibility in a form of sanction not only undermines the relationship between Addis Ababa and Washington, halts the continuous, progressive and promising reform support immediately needed to improve the current human right and economic reform efforts of Ethiopia and deteriorates overall situation of East Africa.
Most of East African countries, except Ethiopia and Kenya, are ineligible at all (Sudan, Somalia, Eritrea) or ineligible (South Sudan gained in 2012 and lost in 2015). Ethiopia and Kenya are the only East African country eligible throughout the 20 years of AGOA having an official AGOA utilization Strategy, scoring 81.9% in taking advantage of AGOA to increase exports, on the basis of ‘key markets’ research conducted by USITD. Increase in apparel exports by Ethiopia is directly the result of US imports of apparel under AGOA increasing by 9.9 per cent annually to $1.2 billion from 2016 to 2018. Ethiopia spent USD 1.5 billion to build 13 industrial parks with total exports valued at USD 730 million in which 70 % of the total exports made through the AGOA privilege. The 24 parks directly employ 85,000 work forces. Hawassa Industrial Park, where the engagement of local investors with 20 foreign companies is on the increase and over 96 percent of the products go to the US market, secured USD 114 million from export of masks to Europe and USA.
In the past three years, Ethiopian government have made a significant progress on creating market economy and free liberal market that mainly include: launching home grown economic reform with a more liberal investment legislative amendments, public enterprises privatization, fully opening telecom sector for foreign investors, more stable and efficient macro-economic and banking directives. Ethiopia held free, fair and democratic election on June 2021 and formed a new government and cabinet on late September 2021. The elected government set a nationwide dialogue, said to bring together the various political interests in the country, to be held in early November 2021. Hence, the decision of Ethiopia’s eligibility suspension will be indicator of USA government withdrawal of attention from overall objective of AGOA and the eligibility requirement of “progress”.
The Expected way forward
It must also be noted well that the US President also may withdraw, suspend, or limit the application of duty-free treatment with respect to specific articles from a country if he determines that it would be more effective in promoting compliance with AGOA eligibility requirements than terminating the designation of the country as a beneficiary sub-Saharan African country. Hence, based on the above facts, it is expected that the global trade representative and president will qualify Ethiopia for 2022 eligibility without any conditions.
Since its enactment in 2000, the African Growth and Opportunity Act (AGOA) has been at the core of U.S. economic policy and commercial engagement with Africa. Imports from sub-Saharan Africa to the US under AGOA amounted to $12 billion in 2018 and accounted for nearly half of total US imports from the region, with Nigeria, South Africa, Angola, Chad and Kenya as the top exporters under the AGOA provisions.

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