Uganda Turns to China, Europe as US Terminates AGOA Trade Deal

by Christopher Kiiza
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In a letter dated October 30, 2023, the U.S President Joe Biden notified the Speaker of the U.S. House of Representatives that he was intending to terminate the designation of Uganda, Gabon, Niger and Central African Republic as beneficiary Sub Saharan African countries under the African Growth and Opportunity Act (AGOA).

“I am taking this step because I have determined that Central African Republic, Gabon, Niger and Uganda do not meet the eligibility requirements of section 104 of the AGOA,” Biden’s letter reads in part.

It adds: “Accordingly, I intend to terminate the designation of those countries (Uganda, Central African Republic, Gabon and Niger) as beneficiary Sub Saharan African countries under the AGOA, effective January 1, 2024.”

Specifically, for Uganda, Biden said, “the Government of Uganda has engaged in gross violations of internationally recognized human rights.”

Enacted in May 2000, AGOA is the cornerstone of U.S. economic engagement with the countries of sub-Saharan Africa.

AGOA grants exports from qualifying countries duty-free access to the U.S. market.

Recent official data indicates that Uganda’s exports to the US had reached $200m annually.

On June 25, 2015, the U.S. Congress overwhelmingly approved legislation to re-authorize AGOA for an additional ten years. This is a strong signal from the American government that American investors can and should invest with confidence in Africa.

The AGOA deal is set to expire in September 2025, but discussions are already under way over whether to extend it and for how long.

African governments and industry groups are pushing for an early 10-year extension without changes in order to reassure business and new investors who might have concerns over AGOA’s future.

For over two days, the Government of Uganda has been tight-lipped about Biden’s move to terminate Uganda from the AGOA deal.

However, today, Wednesday, the Minister of ICT and National Guidance, Dr Chris Baryomunsi said that Uganda will seek other markets specifically China, Europe and the Arab world if the U.S withdraws Uganda from AGOA beneficiary countries.

“Even before the AGOA opportunity, Uganda was there, and I am sure that even when that opportunity is withdrawn, Uganda will be there. We shall seek for other markets. We are operating in an international world. The other day, I was in China signing a memorandum of understanding with the Chinese government to cooperate on issues of ICT and digital transformation. There are many other markets which are opening in Asia, the Arab world, Europe. So, we are not going to be intimidated by anybody on earth simply because we have stood our ground in defending what we believe is good for Uganda,” said Baryomunsi this Wednesday afternoon.

Although Biden accuses Uganda of human rights violations as the reason to withdraw the country from the AGOA trade deal, Baryomunsi disagrees. He says the reason is Uganda’s passage of the anti-homosexuality law which the U.S government described as one of the harshest in the world.

“We know that all this is because of the firm stand we have taken on homosexuality…. We have no apologies at all. We are responsible for Ugandans and we are the ones who make laws through the Parliament of Uganda, and we do not make laws to please anybody especially those outside Uganda. So, whether the law displeases Americans, that is their business. There are values which we protect, and no amount of blackmail is going to shake our strength in far as protecting the values of Ugandans is concerned. For you to do arm twisting so that we say yes to homosexuality, that one, we shall not do it,” he said.

Biden’s letter says that the U.S government has had intensive engagements with the affected countries, including Uganda about the non-compliance with the AGOA eligibility criteria.

Asked how Uganda will respond to the U.S government, Baryomunsi said Uganda has not yet formally received the letter.

“As Government, we have not received a formal communication from the U.S Government. We are also reading it on social media like all of you. We shall wait for the formal communication from the U.S Government and we shall give a formal response; government to government. We shall wait for a formal communication. We cannot just act on social media communications. There is a diplomatic mechanism how governments communicate to governments,” he said.

Impact of Withdrawing Uganda From AGOA

The termination of Uganda from the AGOA would have a significant negative impact on the Ugandan economy. AGOA is a preferential trade program that allows eligible sub-Saharan African countries, including Uganda to export certain goods to the United States duty-free and quota-free. In 2022, Uganda exported $174 million worth of goods to the US under AGOA, accounting for 18% of its total exports to the US.

The termination of AGOA would make Ugandan exports to the US lose their duty-free access to the U.S market. This would make them more expensive, less competitive, and therefore less attractive to American buyers. This would lead to a decrease in Ugandan exports to the US, which would have a negative impact on the Ugandan economy.

Export earnings are a major source of government revenue in Uganda. A decrease in exports would lead to a decrease in government revenue.

In addition to the economic impacts, the termination of AGOA would also have a negative impact on Uganda’s relationship with the United States. AGOA is a symbol of the US’s commitment to supporting economic development in Africa. The termination of AGOA would send the message that the US is no longer committed to supporting Uganda’s economic development.

The termination of Uganda from AGOA would have far-reaching economic, diplomatic, and geopolitical implications. It would impact Uganda’s economy, strain U.S – Uganda relations.

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