Trade agreements: EPA OR AGOA

Trade agreement: EPA OR AGOA, which offers more opportunities for Cameroonians?

Trade agreements can be seen as an opportunity when negotiations are conducted fairly, and countries must ensure that each party wins. It is therefore the responsibility of the governments of the countries that ratify these agreements to ensure that they have the mechanisms in place to enable their SMEs to meet the challenges they will face, so that they can compete in the various markets that will open up to their companies. By way of illustration, two agreements are being weighed up.

Passed and enacted in May 2000 by the U.S. Congress and renewed on June 29, 2015 for a period of 15 years, the African Growth and Opportunity Act(AGOA) is an American law on Growth and Development Opportunities in Africa. This law allows Sub-Saharan African countries to export products of African origin to the American market duty-free. Like many other countries involved in Agoa, Cameroon benefits from a preferential trade system without reciprocity, enabling it to export a wide range of basic and manufactured products to the United States. Almost all products are eligible, provided they meet the rules of origin and are imported directly from a beneficiary country in sub-Saharan Africa.

En revanche, le sucre, les mangues, les haricots verts, certaines qualités de coton-fibre, certains produits à base de cacao (poudre sucrée, chocolat) ne bénéficient pas d’avantages particuliers. Des exceptions sont également observées sur certains produits que le gouvernement américain considère comme sensibles à l’effet des importations.  Par ailleurs, les prix pratiqués sur le marché américain concernant les produits Africains sont des prix  justes (au dessus du prix du marché). Toutefois, pour pénétrer le marché africain, ces produits doivent se conformer aux normes américaines dans le but de protéger les consommateurs américains. Malgré cette barrière des normes, il existe tout de même une volonté à travers l’Agoa de booster le développement économique de plusieurs pays de l’Afrique y compris le Cameroun au travers des échanges commerciaux. Cette volonté se manifeste même au niveau politique, où des clauses de bonne gouvernance et de respect des droits de l’homme sont des obligations que devraient respecter tous les pays bénéficiaires.

As a result, this agreement calls into question the Economic Partnership Agreements (EPAs) that Cameroon has signed with the European Union. The European Union’s advanced pursuit of profit is the first perceptible motivation with regard to the Cameroonian market. From a commercial point of view, this is legitimate, but in this case, the balance of power between the two parties remains unequal. Within the framework of the EPAs, European governments negotiate with high-level government institutions for the granting of markets for the sale of manufactured products from their SMEs and SMIs with added value (development of a value chain and job creation). In Cameroon, on the other hand, raw materials are sold at international market prices, to the detriment of national SMEs and SMIs, whose level of government support remains low. In addition, taxation, customs harassment and corruption do not encourage entrepreneurship and investment. Although MINEPAT and MINCOMMERCE have made some efforts to provide financial and technical support for SMEs and SMIs, a number of difficulties remain: to date, very few companies have benefited from the upgrading program, and its impact on businesses is still awaited; moreover, Cameroon’s SMEs still have problems with production capacity and technological development, not to mention standards.

As a result, they are finding it hard to find a place on the increasingly competitive international markets, and soon on the domestic market too, with strong competition from foreign companies. As a result, Cameroon’s government needs to sign free trade agreements that are in the interests of economic development (job creation, creation of fair value chains, etc.). Seen from this angle, AGOA presents an opportunity for the development of the Cameroonian economy. Efforts must be made to enable SMEs and SMIs to benefit from the advantages of the American market, which has a population of several million. If companies have the capacity to produce in quality and quantity to satisfy this market, this will have the advantage of creating jobs which will have positive consequences on the fight against poverty in Cameroon. However, in view of the current context of American economic policy under Donald Trump, fears about the future of AGOA in Africa and specifically about the review of the clauses of this agreement raise questions for a country like Cameroon, which has not really been able to take advantage of the opportunities offered by AGOA.

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