TRALAC - Trade Law Centre

Bill H.R. 4101 - New Partnership for Trade Development Act of 2009

Wednesday, 18 November 2009 Published: | Eckart Naumann

Source: AGOA.info

Note: This Bill was not passed by Congress in its current form.

On 18 November 2009, Senator Bill McDermott, one of the architects of the AGOA legislation and a leading sponsor of US Trade Bills, introduced Bill H.R. 4101. More formally known as the "New Partnership for Trade Development Act of 2009", the proposed legislation is geared towards harmonising US trade policy and development efforts. It follows on from comments McDermott made during the annual AGOA Forum held most recently in Nairobi, Kenya, seeking to extend the current AGOA legislation in the context of harmonising US preferential trade programmes more broadly.
The proposed legislation has three key objectives:

Firstly, it seeks to extend the trade benefits currently available to AGOA-beneficiary countries inter alia by extending the Act's scope and coverage; secondly, it seeks to harmonise and broaden US preferential trade policy more generally amongst least-developed countries, by extending certain benefits to other beneficiaries of the US Generalised System of Preferences, and thirdly to simplify the US GSP through implementing a single Rules of Origin, reviewing current statutory exclusions (for example of textiles and clothing) and extending the programmes timeframe.

Changes to AGOA

Various amendments to the AGOA legislation are contained in Bill H.R. 4101.

  • While the current AGOA term expires at the end of 2015, the Bill makes provision for an extension of AGOA to the end of 2019 (and beyond) provided that there is a successful conclusion of the WTO Doha Development Agenda Round of Negotiations before the end of 2015. After 2019, the benefits under the Act would be renewed in 5-year increments for countries considered to be LDCs (as at March 31 in the year preceding each new 5 year period). LDC status is based on a UN classification.
  • The Bill seeks to abolish any quotas on goods shipped from AGOA-eligible countries under the Act.
  • The apparel provisions, which currently permit LDCs (and some non-LDCs) to export garments made from third country fabrics would be extended by three years from 2012 (the current expiry) to the end of 2015. There will be a change in the applicable Rules of Origin with all goods subject to the standard 35% local content rule. As an interim measure, exporters may chose to comply with either the general, or the current (third country fabric) rule. From 2016 onwards the general 35% local content rule will apply for all goods, provided that AGOA has been extended beyond this period.

Other changes that may directly or indirectly impact on AGOA beneficiaries

The United States currently has six preferential trade programmes that offer duty-free or preferential entry into the US for a list of products from developing countries in Africa, Asia, the Caribbean and Central America.

  • Trade preferences have also been extended to other LDCs, notably Cambodia and Bangladesh. This is in line with various lawmaker's desire to harmonise the USA's preferential trade regime. Countries that as of 31 March 2009 are classified as LDC by the UN classification may qualify from the date that the legislation is enacted. For the period 2015-2019, the eligibility is based on a country's LDC status as of 31 March 2014.
  • An 'adjustment rule' is applicable to some LDC beneficiaries with respect to exports of certain garment categories. Where a LDC country that becomes eligible to export garments under the revised trade regime is considered a "significant apparel supplier" (to the USA), then its exports in certain garment categories are limited to 50% of the square meter equivalent of the country's total garment exports during the previous year. This limits the extent to which non-AGOA LDC countries - particularly some of the low-cost producers in Asia - are able to grow their annual garment exports in certain sensitive product categories. Affected product categories are listed in H.R. 4101. The adjustment rule applies to the end of 2015, or 2019 through a determination by the US President.
  • However, the Bill also provides an incentive for non-AGOA LDCs to utilise local yarns and fabrics: where more than 50% of their garment exports to the USA are made of local materials, then the quantitative restriction outlined earlier will be increased by 10% beyond the applicable quota determined for each period.
  • The proposed legislation also provides for a review of import-restricted products under the GSP. To this end a 'Trade and Development Review Panel' will be established comprising representatives from various US agencies (USAID, Department of State, USTR, ITC and other individuals pursuant to selection by the USA President). Decisions with regard to the lifting of restrictions should be taken no later than three years after enactment of the legislation, and should be based on a determination that duty-free treatment will not materially harm (or threaten to harm) a US producer while at the same time not applying such duty-free treatment would harm (or threaten to harm) producers in LDC beneficiary countries.
  • The GSP is also set to be extended for a period of 10 year to 2019 (the current GSP expires at the end of 2009). There would also be a stronger focus on trade capacity building efforts in LDCs and African countries (meaning LDC GSP beneficiaries and AGOA beneficiaries) through the establishment of an "Office of Trade and Competitiveness for Least Developed and African Countries".