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US Congress looks to extend AGOA apparel provisions

Published date:
Monday, 25 June 2012

Bipartisan bills have been introduced in both the Senate and the House of Representatives to continue the expansion of United States trade with sub-Saharan Africa and Central America, by means of extending and changing key provisions of the African Growth and Opportunity Act (AGOA) and the Dominican Republic-Central America-US free trade agreement (CAFTA-DR).

AGOA is described as the cornerstone of America’s trade and investment policy with sub-Saharan Africa. At the centre of AGOA are substantial trade preferences that, along with those under the US Generalized System of Preferences (GSP) tariff treatment, allow almost all goods produced in the AGOA-eligible countries to enter the US market duty free.

While general GSP covers approximately 4,600 items, AGOA GSP applies to more than 6,400 items. AGOA GSP provisions are in effect until September 30, 2015.

However, AGOA’s performance and effectiveness are said to be closely tied to its third country-fabric (TCF) provision, which is currently set to expire in September 2012, as that provision is said to be crucial to the continued survival of Africa’s textile and apparel industry. Under the TCF provision, lesser-developed beneficiary countries enjoy an additional preference in the form of duty-free/quota-free access for apparel made from fabric originating anywhere in the world.

The bills introduced in Congress would extend the TCF provision until September 2015, concurrently with the present expiry of AGOA itself. The legislation would also add South Sudan to the list of 48 sub-Saharan nations eligible to qualify for duty-free access to the US market for certain products, including apparel, footwear and textiles.

The bills would also make technical corrections and modifications to the rules of origin for certain textile and apparel products under CAFTA-DR which will expand trade and create jobs in the United States and the CAFTA-DR countries. These changes were agreed to by trade ministers during the February 2011 CAFTA-DR Free Trade Commission meetings, and all CAFTA-DR countries except the US have already approved the changes the bills codify.

Senate Finance Committee Chairman Max Baucus (D - Montana) said that “we can strengthen our economy and create jobs in the US by developing trade relationships with countries around the world. This program helps us advance our trade agenda, support jobs and boost our economy here at home.”

“This is win-win legislation that builds upon our nation’s goal of strengthening economic relations with Africa, while ensuring that our regional trade agreement with Central America and the Dominican Republic continues to succeed,” added the Committee’s Ranking Member Orrin Hatch (R - Utah). “Swift passage of this legislation will help provide opportunities for job creation and economic growth both in the United States and abroad.”

The Chairman of the House’s Ways and Means Committee Dave Camp (R – Michigan) commented that “this must-do legislation has strong bipartisan and broad industry support. It will benefit US global competitiveness, aid US employment and global development, and strengthen our ties with fifty-five US trading partners in Africa and the Western Hemisphere.”

“Extension of AGOA third-country fabric provisions and the designation of South Sudan as an eligible beneficiary demonstrate our strong commitment to sub-Saharan Africa and to the AGOA programme. The technical corrections to the CAFTA-DR textile rules of origin encourage deeper integration within the region, promote US exports, and support US jobs," Camp added.

The Trade Subcommittee Ranking Member Jim McDermott (D – Washington) concluded that “it’s good we are finally getting this done – our inaction on AGOA for over a year now is inexcusable. This senseless congressional delay has resulted in lost orders, lost jobs, and destroyed lives. The AGOA textile provision is important, non-controversial, and we should work to get it signed into law as soon as possible.”

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