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Zambia's AGOA Exports to Rise - US Envoy

Published date:
Friday, 26 March 2004

Passage of an expanded African Growth and Opportunity Act is extremely timely and should be concluded by Congress before September 30, says Senator Dick Lugar (Republican of Indiana), chairman of the Senate Foreign Relations Committee.

AGPA III BillFailure to pass the bill, known as AGOA III, could jeopardize economic gains made by Africans under the legislation first passed in May 2000, the senator said.

Lugar voiced concern over legislative stalling on his bill, S. 1900, "The United States-Africa Partnership Act of 2003," during a March 25 hearing of the Senate Foreign Relations Committee. A bill similar to Lugar's is making its way through the House of Representatives.

The lawmaker said: "I believe it is critical to expand on the partnership between the United States and Africa by moving forward with S. 1900 [AGOA III]. This bill recognizes the enormous potential for economic growth and development in sub-Saharan Africa. A stable and economically prosperous Africa can provide new partnerships that will contribute greatly to our commercial and security interests."

However, "people are saying, 'Go slow in the trade area this year,'" he added. And this affects AGOA because it deals with textile imports, always a sensitive economic issue, especially during an election year.

The AGOA extension is "a time-sensitive matter," he stressed, because "the AGOA provision that allows least-developed countries (LDCs) to export capped [limited] quantities of apparel made from third-country fabric to the U.S. duty-free expires in September of this year [2004]." The bill would extend this provision until September 30, 2008.

The lawmaker said he feared that "if this 'special rule' for LDCs is not extended before its expiration, much of the economic progress that has been made under AGOA could be threatened."

Florizelle Liser, assistant U.S. trade representative (USTR) for Africa, echoed Lugar's concern for the LDC provision, noting: "In the eyes of many AGOA stakeholders, the extension of the third-party fabric provision ... is the most urgent item for congressional action on AGOA. In FY [fiscal year] 2003, 84 percent of the $1.2 billion in AGOA apparel imports fell under this provision. Although sub-Saharan Africa's share of the U.S. apparel market is just 2.1 percent, this rule has contributed to AGOA's early success by allowing sub-Saharan African countries to develop their apparel industries."

Sounding a more disturbing note, Liser said: "The uncertainty about the future of the provision is already having a negative impact on AGOA. We understand that several major U.S. buyers have already shifted orders to Asia in anticipation of the September 30 expiration date."

Alan Larson, under secretary of state for economic, business and agricultural affairs, highlighted the overall importance of AGOA as he told Lugar: "AGOA remains a centerpiece of our policy toward Africa. In the past three years, AGOA has had the very positive effect of increasing our two-way trade with Africa and in diversifying the range of products that are being traded."

Although AGOA has allowed African goods to enter the U.S. market on a non-quota, duty-free basis, thus helping to spur African exports and expanded manufacturing and employment sectors, the trade act "isn't just altruism on the part of the United States," Larson asserted.

He pointed out, "There are benefits available for American businesses and consumers as well." For example: "At year-end 2002, the U.S. investment position in sub-Saharan Africa stood at $12.1 billion, an 18 percent increase over the previous year."

Larson sympathized with Lugar's anxiety over the September 30 deadline for LDC textile exports under AGOA, concurring: "It is a short legislative year. It is an election year and that always makes things complicated. But it's very important to remember that for the United States and our economy the impact of AGOA, frankly, while positive, is overall minimal." Yet for African economies that have counted on AGOA and its generous fabric provisions, he said, its impact is "huge."

The Africans, Larson stressed, "would not understand that somehow we were not able to address this legislative challenge this year. For them it really is imperative that this get done." Therefore, he said, the message the State Department wanted to send was that "we need to work for a resolution that is practical and passable. We can't let perfect be the enemy of good."

Lugar said he was encouraged to see that he and the administration were "on the same track" about the need for urgency in passing AGOA III.

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