AGOA Eligibility Should Focus on Business Climates, not just Military Coups
By Ben Leo (Center for Global Development)
Trade policy is one of America’s most potent development tools, particularly for the world’s poorest countries. The big question has always been how best to use it. Should the US give away duty-free access to its $17 trillion market, essentially opening the door to anyone in the hopes of benefitting as many people as possible? Or instead, should it be granted only to those countries whose governments actually care about fostering a good business environment? After all, access to the US market won’t make a lick of difference if companies are smothered by bad policies at home. And the size of the US market prize may just incentivize governments to do better.
With the Africa Growth and Opportunity Act (AGOA) set to expire next year, the US Congress and Obama Administration should be debating these questions right now. In our view, they should give a thoughtful look at using AGOA eligibility rules to encourage business climate improvements.