An improvement in the export of merchandise from Nigeria to the United States in the first half of this year has reduced the trade deficit between both countries by 61.4 percent.
Analysis of trade statistics obtained by BizWatch Nigeria showed that the trade deficit in the first half of this year was $260.63 million against $675.51 million in the same period last year.
The data from the US Department of Commerce showed that the export of merchandise from Nigeria to the US from January to June this year was $1.64 billion while the United States imported goods worth $1.91 billion in the same period.
Meanwhile, in the first half of 2020, Nigeria exported goods valued at $723.74 million to the US while the US in turn imported goods valued at $1.4 billion.
In the first half of this year, the trade statistics indicated that crude oil valued at $1.52 billion was exported by Nigeria to the United States while the US in turn imported refined petroleum products valued at $238.52 million to Nigeria.
Trade in petroleum products formed a huge bulk of the bilateral trade between both countries as such, the volatility in global crude oil prices often impacts the volume and value of bilateral trade between both countries.
For instance, following the coronavirus-induced crash in oil prices in 2020 and declined demand for the product, Nigeria struggled to sell its crude oil cargoes.
Prior to the lockdowns and collapse in crude oil demand caused by the coronavirus crisis, the production of US shale oil had led to a significant reduction in the exportation of Nigerian crude oil.
The United States import of Nigeria crude oil plunged by 63.03 percent in the first quarter of 2020, compared to the last quarter of 2019.
Data from the US Energy Information Administration (EIA) showed that the country imported 5.53 million barrels of crude oil from Nigeria in Q1 2020, down from 15.07 million barrels in Q4 2019.
Duty-Free Export To US Grew By Over 100%
Nigeria’s export to the United States under a duty-free policy, African Growth and Opportunity Act (AGOA) has improved this year compared with the last year when the coronavirus pandemic affected international trade.
In the first six months of 2021, AGOA export to US grew by 111 percent as Nigerian Duty-free export was valued at $522.03 million as against $246.62 million in the first half of 2020.
According to the latest AGOA policy trade statistics, exports to the US under the policy fell by 86.97 percent from $2,699.13m in the first nine months of 2019 to $351.73m in the corresponding period in 2020.
The AGOA, a United States trade policy, enacted in 2000, is a legislation that facilitates a duty-free trade between exporters from sub-Saharan Africa and the United States.
The AGOA was designed to promote increased trade and investment between the United States and SSA countries, promote increase access and opportunities for US investors and businesses in SSA countries, and promote economic development and reforms in SSA countries.
Annual trade data showed the largest contribution towards AGOA-eligible trade commodities is usually oil exports mainly from Angola and Nigeria, and to a lesser extent, Chad and the Republic of Congo.
For instance, oil export under the policy accounted for 99.7 percent of Nigeria’s AGOA exports to the United States in 2019.
According to the statistics, oil and gas products valued at $3.12bn were exported to the US under the policy in 2019.
However, South Africa, Kenya, Ethiopia, Lesotho, Ghana and Madagascar are among the leading non-oil AGOA exporters.
The data showed that Kenya, Ethiopia and Madagascar dominate the apparels sector.
The majority of Nigeria’s US-bound exports are mostly crude oil. The US tariff on this amounts to 10.5c/bbl; approximately one-third of US imports within this tariff line claimed AGOA preferences in 2020 but in previous years the AGOA ratio often exceeded 80 to 90 percent.
Exports of motor vehicles (passenger and goods) accounted for a third of US exports to Nigeria in 2020.
The bilateral trade was valued at $4.2 billion and the leading US exports to Nigeria between 2019 and 2020 are motor vehicles, wheat, parts and accessories for vehicles, petroleum gases, motor vehicles for goods transport, petroleum oils, filters, centrifuges, taps and valves, among others.
Exports of agricultural products account for a significant share of Nigeria’s non-oil exports to the US. Nigeria exports a diverse number of agricultural products to the US, led by cocoa beans worth $12 million in 2020, cereal bran valued at $9 million, plants used in perfumery worth $8 million and nuts valued at $6 million.
While most enter the US duty-free on a non-preferential basis, $11million worth of agricultural exports (representing 17 percent of the total) benefited from AGOA preferences in 2020.
The data showed that herbal teas are currently Nigeria’s largest agricultural export product under AGOA preference.
The US-bound exports have grown rapidly over the past three years, off a low base, and increased more than three-fold in value between 2018 and 2020.
Demand for herbal, medicinal and aromatic plants (HMAP) is generally considered to be increasing due to its use in alternative medicine, and other health care products.