The Seychelles Graduate

USTR has announced that the Seychelles will cease to be an AGOA beneficiary as of January 2017. Reason: the Indian Ocean nation and its 92,000 inhabitants have, with a per capita GNI of $13,990 in 2014,  joined the ranks of high income countries as defined by the World Bank and so have become too wealthy to qualify for GSP. “Eligibility for GSP is a precondition for benefits under AGOA,” USTR explained in a September 30 press release. Graduation from GSP is mandatory once a country achieves high income status with a per capita GNI or $12,736 or higher. The Seychelles, with exports to the US valued at $3.8 million last year, mostly in the form of surgical catheters,  have made negligible use of GSP and none of AGOA, so is unlikely to feel the loss of benefits.

Some argue that the prospect of graduation may deter investment in export industries AGOA is meant to encourage. Our perspective is different. AGOA, like GSP on which it is based,  is intended to give a leg up to developing countries through preferential access to the US market for which they do not have to reciprocate.  To ask Congress to extend unilateral preferences to countries that have outgrown the need for them risks undermining support for programs like AGOA. Members not unreasonably ask whether we may not be encouraging long-term dependency. In any event, the whole point of such programs is to help countries grow their economies so that they can compete on their own — and, where appropriate, enter into reciprocal arrangements with the US. That is the direction USTR wants to go with AGOA countries, singly or as blocs, in the course of the coming decade.

The AGOA countries presently  closest to the cutoff point are Mauritius (GNI per capita $9,710 in 2014), Botswana ($7,240) and South Africa ($6,800).