TRALAC - Trade Law Centre

Assistant Trade Representative dispels myths about AGOA

There are many myths and misconceptions about the African Growth and Opportunity Act (AGOA), says Florizelle Liser, the assistant U.S. trade representative for Africa.

On April 15 Liser was among a panel of experts at the Brookings Institution in Washington looking ahead to the 10th annual U.S.-Sub-Saharan Africa Trade and Economic Forum (the AGOA Forum), scheduled for early June in Lusaka, Zambia. Other panelists included Stephen Hayes, president of the Corporate Council on Africa, and Felix Mutati, Zambia's minister of commerce, trade and industry.

Myth Number 1 is that AGOA is just focused on oil, Liser said, noting that petroleum products are covered by AGOA and are the leading products imported under AGOA.

"But that should not be surprising," she said, because "oil is sub-Saharan Africa's leading export to the entire world. It is dutiable, and AGOA covers almost all dutiable products, so it only follows that oil would be the leading import under the program."

But oil has never been the major focus of AGOA, she said. "The main focus of our efforts and our capacity-building assistance related to AGOA has always been to promote new nontraditional and value-added exports from Africa like apparel, footwear, processed agricultural products and manufactured goods."

Total imports of materials other than oil from sub-Saharan Africa totaled $4 billion in 2010, an increase over 2009, she noted.

Myth Number 2, according to Liser, is that AGOA's product coverage is insufficient.

"The fact of the matter," she said, "is that AGOA almost covers everything. The list of products that AGOA does not cover is pretty short and is mostly composed of non-apparel textile products like pillows and bedding."

On agricultural goods, she said, AGOA covers everything except the few products, such as tobacco and sugar, subject to tariff-rate quotas.

Even then, she said, both tobacco and sugar can be imported into the United States duty-free up to allowable limits. AGOA currently allows the import of some 6,000 tariff lines of products.

The four trade hubs -- in Nairobi, Gaborone, Dakar and Accra -- of the U.S. Agency for International Development (USAID) are working to help Africans identify trade opportunities under AGOA, Liser said. The hubs have helped Africans export specialty foods, cut flowers, cosmetics, seafood and apparel to the United States.

Myth Number 3, according to Liser, is that AGOA eligibility standards are wrong -- either too stringent or too relaxed.

In reality, she said, 37 of 48 AGOA-eligible countries in sub-Saharan Africa now benefit from AGOA. She acknowledged that some AGOA-eligible countries have lost their eligibility as a result of undemocratic changes in their governments, but cited others that regained eligibility when they restored democratic rule.

"In the end, there is certainly room for honest differences of opinion as to how individual countries fare," she said, adding that she believes the statutory criteria have been enforced fairly.

Myth Number 4 on Liser's list: U.S. nontariff barriers have stifled AGOA trade.

Individuals asserting this myth usually have confused barriers with standards, she said.

"U.S. imports from Africa certainly do have to meet U.S. standards, including sanitary and phytosanitary measures for many agricultural products," she said. "These are the same standards that imports from all U.S. trading partners and domestic stakeholders must meet to protect food safety, animal and plant life, and health."

USAID trade hubs are helping to train African exporters to meet these standards, she said.

Myth Number 5: Making AGOA permanent would help Africa's economic competitiveness. Although the idea may sound appealing, a permanent AGOA might not be in the long-term competitive interests of Africa, she warned.

AGOA's current authorization ends in 2015; the special third-country fabric provision for AGOA apparel ends in September 2012.

Trade-preference programs like AGOA are not meant to be permanent but are intended to provide a temporary competitive advantage for beneficiary nations, she said.

Making AGOA permanent would send the message that the United States doesn't "think Africa will ever be able to compete in the global market" without some kinds of preferences. That is the wrong message, she said.

The goal of AGOA, passed by Congress in 2000, is to help African countries become more competitive in the U.S. market, Liser said, adding that it is not a technical assistance program and is not designed to address infrastructure problems and other such trade constraints.

"While AGOA has not yet realized its full potential, there is no question that it has indeed made a difference. By any measure," she told her audience, "we have seen a significant expansion and diversification in the products that Africa exports to the United States under AGOA."

(This is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://iipdigital.usembassy.gov/iipdigital-en/index.html)