TRALAC - Trade Law Centre

Key Features of AGOA III

The reauthorization of the African Growth and Opportunity Act (AGOA), which was signed into law by President Bush July 13, gives a new lease on life to the landmark trade legislation by extending most of the original benefits and access to U.S. markets through 2015.

The AGOA Acceleration Act of 2004, known as AGOA III, is seen by many as the latest and most influential step in promoting investment with and within the African continent. Although most benefits have been extended for the 37 eligible sub-Saharan African countries, a provision covering the production and export of apparel, set to expire September 30 this year, was extended only through 2007.

Another element of the legislation calls on the U.S. Department of Agriculture to send representatives to Africa to help various industries meet the standards needed to export to America.

The enactment of AGOA III was cause for celebration on July 21 as the AGOA Action Committee, a group made up of ambassadors, congressmen and businessmen, gathered in Washington to honor 12 congressmen who had been influential in passing the new legislation.

Congressman Jim McDermott (Democrat from Washington), considered by many the father of the AGOA legislation, was among the honorees. He declared that the latest bill would help Africa to join the international economic community.

In an interview with the Washington File, McDermott said, "I think what we're seeing is a gradual evolution of Africa beginning to take its place in the world as an equal partner. It has tremendous wealth in the form of natural resources and it's a question of how do they begin to benefit from those sources ... not just in being a mine for us to come and pull everything out of but rather for them to develop the capacity to ... ship to us a finished product."

McDermott explained that African industries were in the midst of an expansion, including eco-tourism, which he thought would play a larger role within Africa as infrastructure continues to develop.

McDermott also said he felt investment could go far in preventing the fighting and strife that has plagued some African countries. He stated: "Most of what people fight over is life ... food for your family and a house and education for your kids. If we begin to develop the economy, those other issues will be less likely to be fought over."

The influx of investment would help put Africans to work, which would in turn provide them with the money for the basic necessities for life and consequently correct the conditions that lead to fighting between groups, he said.

Congressman Phil Crane (Republican from Illinois) was also honored for his work in passing AGOA III. Crane told the Washington File the United States needs to help promote investment rather than aid as a means of helping African countries create sustainable economies, because "free trade has done more to advance civilized values than anything else in the span of recorded history."

Crane said the promotion of trade and business does more than aid to help a country escape poverty. "[Investment in Africa] is critically important to the region because trade creates the kind of economic growth and opportunity that is unprecedented historically and that helps improve the welfare of all the people," he said.

Senator Chuck Grassley (Republican from Iowa), another honoree, agreed with McDermott's sentiment, saying: "People that trade together generally don't wage war on each other. So I look at this as an effort to promote peace and understanding as well."

The senator used examples from the Cold War to show how trade can turn a war-tattered country into an economic powerhouse. Fifty years ago, he said, Japan, South Korea and Taiwan were developing economies but now they have become major players on the world market. Grassley said he felt AGOA would ultimately allow for African nations to attain the same success and enter the international market as equal partners.