TRALAC - Trade Law Centre

Made in Africa, duty-free in the US, AGOA up for renewal

Thursday, 12 June 2014 Published: | Dana Sanchez

Source: AFK Insider

Apparel and footwear – but especially footwear – are among the US industries that have benefited most from the African Growth and Opportunity Act.

Now that AGOA is about to expire, stakeholders want the law renewed in a hurry. They’re meeting today in Washington, D.C. to talk about it ahead of Barack Obama’s U.S.-Africa Leaders Summit in August.

AGOA, which is up for renewal in 2015, allows products made in Africa with African textiles to come into the U.S. duty-free. Signed into law in 2000, it was enacted to expand U.S. trade and investment in sub-Saharan Africa, home to some of the fastest-growing economies in the world.

Some U.S. companies interested in doing business in Africa are reluctant to do so over uncertainty about whether AGOA will be renewed. It could be hurting business between the U.S. and Africa, industry stakeholders say.

AGOA will be the topic of discussion today in Washington, D.C. at the Africa-America Institute’s Conversations on Africa Series. The inaugural discussion will focus on the potential of AGOA reauthorization in strengthening human capital in Africa.

Panel discussions will offer a preview into trade and investment issues to be addressed at the White House’s upcoming U.S.-Africa Leaders Summit.

Steve Lamar will be on the panel. He is executive vice president of American Apparel & Footwear Association, a 530-member U.S. trade association. Members do business in Lesotho, Swaziland, Bostwana, South Africa, Ethiopia, Kenya and Madagascar, among others.

Lamar served for two years as a Peace Corps volunteer in Botswana and now he comes up with lobbying strategies on international trade, labor policy, customs procedures, environment, judicial policy, product safety, and procurement.

“We represent an industry that does a lot of work in Africa, that employs a lot of people in Africa. Part of the story of AGOA is the story of our work in Africa,” Lamar said in an interview with AFKInsider.

AGOA and trade with Africa are synonymous for the vast majority of the U.S. apparel and footwear industries doing business on the continent, Lamar said. “It’s critical that the renewal happens. For a lot of our members, without that duty preference (that AGOA allows) it doesn’t make Africa competitive.”

The Apparel & Footwear Association conducted a survey of member in 2013. Half the respondents said they were already doing business in Africa. The other half said they weren’t.

One of the things holding them back from doing business in Africa is worrying that AGOA won’t renew, said Marie D’Avignon, manager of government relations for the association.

Sure, there are other benefits to doing business in Africa besides AGOA, D’Avignon said in an interview with AFKInsider. “A lot of companies produce in Lesotho because they want to access the growing South African market. Gap is there because they like the idea of doing business in Africa. They want to be socially responsible. Beyonce wanted all her 2012 tour T-shirts made in Africa.

“But for the companies looking for a price cut, the threat of AGOA not being renewed – not being a permanent program — is scary.”

AGOA expires Sept. 30, 2015.

“Congress tends to wait to the last minute to do things,” D’Avignon said. “In today’s supply chain, U.S. apparel and footwear companies need to know ahead of time to plan. Most companies plan 18 months out – 2015 isn’t a long way away.”

AGOA is not available for all African countries. They have to be democracies to qualify. When Madagascar lost its AGOA preferences a few years ago due to a coup, the amount of trade with the U.S. plummeted.

“We’d like to see trade expand,” Lamar said. “It’s not a hard argument to make. It’s a question of if Congress can get it passed on time.”

The Africa-America Institute is a U.S.-based international education and policy organization. Today’s panel discussion is entitled “AGOA 2015: Positioning Renewal to Ensure Better Human Capacity Training.”

Empowering piece of legislation

The good news is that AGOA has been around 14 years and both parties like the law because it is an empowering piece of legislation for all involved, said Amini Kajunju, president and CEO of the Africa-America Institute, in an email to AFKInsider. “I believe that there is a low chance that it will not get passed again,” he said.

There are those who say that AGOA has been under-utilized by many African countries.

If African companies use AGOA more and all of its benefits, then it gives U.S. companies viable trading partners and supplies for raw materials and value-added products needed to build the U.S. economy, jsaid. And, it gives U.S. consumers a wider array of choices of interesting and unique products.

“This piece of legislation continues to be an important component of the relationship between Africa and America,” Kajunju said. “I believe African governments and businesses want to get better at using AGOA to import their goods into the U.S. If AGOA does not get passed, it (will) seriously weaken the relationship and communicate a vote of no confidence to Africans.”

Panelists include Lamar; Witney Schneidman, non-resident fellow of the Africa Growth Initiative with The Brookings Institute; Steve Hayes, president and CEO, The Corporate Council on Africa; Florizelle Liser, assistant U.S. Trade representative for Africa, Office of the U.S. Trade; and Gregory Simpkins, majority staff director of the House Subcommittee on Africa, Global Human Rights and International Organizations.

After the panel discussion in D.C., the Apparel & Footwear Association heads to Cape Town next week for the Source Africa trade show. The goal: to connect U.S. and other foreign buyers with African manufacturers,  both to produce in Africa for U.S. consumption and to establish intra-Africa trade.