TRALAC - Trade Law Centre

Zambia: US to Extend Eligible Exports Products

African economies could face serious repercussions if passage of a proposed enhancement of the African Growth and Opportunity Act known as AGOA III is delayed beyond September, Assistant U.S. Trade Representative for Africa Florizelle Liser told the House Africa Subcommittee May 11.

Chairman Ed Royce (Republican of California) asked what would happen if the provision in the last AGOA bill that allows least-developed countries duty-free export into the U.S. market of apparel made with fabrics from another country were allowed to expire.

Liser responded: "I think the failure to extend that provision could have a serious impact" on economies in Africa that AGOA helped to expand over the past four years. If the "third-country fabric provision" were allowed to lapse on September 30, she said, the momentum gained by several African countries in their textile sectors might stall, leading to a loss of jobs and investment. "There are some [textile] businesses [in Africa] that have already been transferred to Asia" in anticipation of the end of the AGOA provision, she added.

As it is, she noted, the increased market access provided by AGOA II and the third-country fabric provision "helped to boost U.S. imports from Africa by 43 percent to $25.6 billion."

Chairman Royce also questioned the impact on the many jobs he said AGOA's duty- and quota-free access into the U.S. market helped create in Africa since the bill was first passed by Congress in 2000.

Citing the potential loss of the hundreds of thousands of jobs in Africa created by AGOA, Royce said AGOA III "is in jeopardy. Congress must pass H.R. 4103 [the bill] before September [30th]. ... Without this extension, we'll be undoing much of the good that AGOA has done. Intensified competition from China and other countries is coming soon as apparel-trading rules are set to change. Unless we act, this will wipe out much of Africa's emerging apparel industry, the many African jobs it has created -- and much hope."

Echoing Liser's concerns, Royce said: "I'm told that apparel orders for Africa already are being cancelled due to the uncertainty over Congress's action. Our credibility as a nation that takes an interest in the plight of the world's poorest continent is on the line."

Representative Donald Payne (Democrat of New Jersey) seconded Royce's call for immediate action on the AGOA III bill, because it "takes the step towards helping African cloth and apparel 'get up and running' before the WTO [World Trade Organization] textile quotas end in 2005."

"We need to continue to build on the success that AGOA has had and the progress that it has made for economic development on the continent by passing AGOA III in the House and Senate and swiftly move to conference [committee], as we likely will need to do," the lawmaker added.

David Beckmann, president of the NGO Bread for the World Institute and executive committee member of the Partnership to Cut Hunger and Poverty in Africa, told the panel, "Trade has the potential to help lift African people out of the cycle of hunger and poverty."

Extending the life and trade benefits of the legislation [through AGOA II] was important, Beckmann said, because "AGOA has had a positive impact in Africa in a relatively short time, stimulating economic growth and job creation at a time of economic recession ... and encouraged many countries to adopt policies aimed at ending hunger and poverty.

"Five countries -- Lesotho, Kenya, Namibia, Swaziland and Uganda -- have credited AGOA with creating nearly 200,000 jobs," he said. "Examples abound, in Uganda, of young women who have become employed for the first time and left endless cycles of hunger and poverty. In Southern Africa, families have been reunited as men find jobs near their spouses and do not have to migrate far looking for jobs, only to come home infected with HIV/AIDS."

AGOA "has become a household name in many African countries, touching the lives of many poor people," and goes beyond those receiving wages, Beckmann told lawmakers. "Many Africans -- especially the 200,000 employed in AGOA-related industries -- see it as a lifeline and opportunity for gainful employment and sustainable incomes. Families that are currently benefiting from AGOA, such as farmers growing cotton for these industries or workers spinning yarn, can now send their children to school and afford basic health services."

Extending AGOA is critical, the NGO head said, because "the approaching deadlines are dampening new investments and placement of new orders. The longer Congress waits to make this important decision on third-country fabrics, the greater the losses in jobs and investments."