The Malawi Government says it will capitalise on continental integration while engaging with the United States (US) amid lingering uncertainty surrounding the future of the African Growth and Opportunity Act (Agoa).
The response from the Ministry of Trade and Industry spokesperson Patrick Botha on Sunday follows uncertainty on the 25-year trade agreement, which offers eligible sub-Saharan African countries with duty-free access to the US market for over 1 800 products.
With Agoa’s current authorisation expiring on September 3, he said Malawi will pursue avenues to negotiate more favourable trade terms that can preserve and expand bilateral trade relations to ensure that Malawi is less vulnerable to the policy shifts of any one market.
He said: “The ministry acknowledges the important role that Agoa has played in shaping trade relations with the US and generation of export proceeds through its duty-free access for a wide range of exports from Malawi.
“However, with the future of Agoa uncertain, our strategy is to leverage on regional and continental integration, particularly through the African Continental Free Trade Area, which offers an expanded and more predictable market.”
Botha said the focus now is to diversify both markets and products to build resilience beyond Agoa and the European Union’s (EU) Generalised Scheme of Preferences, which grants duty-free, quota-free market access to the EU for least developed countries.
Meanwhile, Malawi has entered into and is pursuing memoranda of understanding with China to secure access for key commodities such as macadamia, groundnuts and soybeans.
Similar arrangements were made with India to open up additional export opportunities.
Agoa was last renewed in 2015 and even with the introduction of the bipartisan measure, Agoa’s future is still uncertain due to major changes in US trade policy concerning Africa and other regions.
Following the trade policy shift, US announced a 15 percent tariff for Malawi, an indication that companies that bring foreign goods into the US will have to pay the taxes to the government regardless of the existing trade deal, which include Agoa.
Under the 17 percent proposed tariff, which analysts said would threaten growth, investment and development progress for Malawi and other most vulnerable economies, the United Nations data showed that Malawi could be remitting $7 million (about K12.3 billion) to the US in potential custom duties annually from the reciprocal tariff of 18 percent announced on April 5, but pending implementation.
One of the Agoa beneficiaries is Malawi Stock Exchange-listed Illovo Sugar (Malawi) plc and its board chairperson Jimmy Lipunga hopes that every effort should be made to salvage the Agoa initiative.
He said: “Illovo Sugar like those similarly situated would always welcome any measures that would facilitate flow of exports to the US and indeed other parts of the world, including the UK, the European Union bloc and indeed Africa itself.
He said: “We would hope that the Government of Malawi will continue to engage the US authorities concerning the desired elimination of any tariff and non-tariff barriers that impede the flow of goods.
“For those involved in export, it is also important to ensure that there is currency alignment as otherwise our exports become uncompetitive.”
Since Agoa’s inception in 2000, Malawi has exported goods worth over $1.55 billion (about K2.7 trillion) to the US market
