Agoa.info - African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/Op-Ed: AGOA renewal not so seamless

Op-Ed: AGOA renewal not so seamless

Op-Ed: AGOA renewal not so seamless
Published date:
Thursday, 29 January 2015
Author:
Steve Lamar

For the apparel and footwear industry, timing is everything. Our executives plan production and place orders months, and sometimes years, in advance so goods will make it to stores in time for the next season. Understanding and managing long lead times are critical.

For our supply chains, “seamless” processes require that decisions be set months in advance. Unfortunately, when it comes to legislation, Washington’s definition of “seamless” does not line up.

Case in point – the African Growth and Opportunity Act (AGOA). Policy makers and legislators in both chambers of Congress and at both ends of Pennsylvania Ave. have been working on renewal of AGOA for more than a year.

AGOA is the trade preference program that allows countries in Sub-Saharan Africa to export textiles, apparel, footwear, and about 6,500 other products to the United States duty free. Such access, given the high duty rates still charged in the apparel and footwear industries, is key for African competitiveness.

The program enjoys unprecedented support in Washington and beyond. A coalition of U.S. and African apparel, footwear and retail associations has been urging its swift and long-term renewal. Policymakers have said it would be renewed in a “seamless” manner.

But in Washington terms, “seamless” means before the expiration date – in this case, Sept. 30, 2015. For apparel and footwear companies, that’s too late.

Apparel and footwear executives are already planning production and placing orders that will be entered after the expiration date. Because they don’t know if those goods – when they finally do arrive in the U.S. – will be duty free or not, they can’t properly cost their merchandise.

While they could bet that policymakers will renew AGOA in time, recent evidence shows that Congressional intentions do not always translate into Congressional action.

Dysfunction in Washington has delayed action on even the most popular programs. The Generalized System of Preferences (GSP), another trade preference program that also enjoys widespread support in Washington, expired 18 months ago. Numerous efforts to renew this program failed. GSP users have so far paid more than $1 billion in duties on goods that were supposed to be duty free on the promise that the program will be retroactively renewed.

The Nicaragua Tariff Preference Level (TPL), another successful program that anchors U.S. textile jobs and has generated double digit growth of U.S. fabric exports to Nicaragua, expired last month. The Miscellaneous Tariff Bill (MTB), through which U.S. companies secure short term duty reductions on goods and manufacturing inputs not found in the United States, has been expired for three years.

So what happens next? The political environment seems auspicious for activity on trade this year. And some policymakers are now pledging AGOA’s renewal well before its expiration date. While that’s helpful, it is not enough to create the certainty the industry needs. Sourcing executives are looking for speedy renewal of AGOA and other expired programs to prevent further disruption to their supply chains. Their African partners need that same action to avoid the job cuts that such loss of business will cause. Both will be pressing for swift action, and Congress needs to respond.

Madagascar, which just regained duty free status under AGOA for apparel and footwear, provides a cautionary tale of what happens when a country loses duty free status. Five years ago, it lost duty free access to the U.S. market because of a coup. Apparel exports to the United States dropped 71 percent the following year (and then another 35 the year after that).

Washington’s calendar still shows lots of time, but the industry’s calendar shows that time’s up. It’s long past time to renew AGOA.

We are already beyond “seamless.”

 

Read related news articles

US and African civil society stakeholders seek AGOA extension

A Civil Society Organisation, Network and other stakeholders from across the United States and African Growth and Opportunity Act-eligible countries have petitioned the President of the United States of America, Joe Biden, to consider an extension of the initiative. The CSO made the plea in a letter dated February 16, 2024, titled ‘Petition for Timely Re-Authorisation and Enhancement of the African Growth and Opportunity Act Beyond...

16 February 2024

House Ways and Means Committee leadership statement on meeting with ambassadors from select AGOA countries

Ways and Means Committee Chairman Jason Smith (MO-08) and Ranking Member Richard E. Neal (MA-01) released the following statement after hosting a bipartisan roundtable with Committee members and ambassadors from several African Growth and Opportunity Act (AGOA) countries. AGOA is a U.S. trade program focused on strengthening economic ties between the United States and nations in Sub-Saharan Africa. “We appreciate the ambassadors from...

18 January 2024

WEF - How has AGOA benefited African countries?

The African Growth and Opportunity Act (AGOA) is a trade agreement between the United States and sub-Saharan African countries. Agoa has helped to increase trade and investment between Africa and the US. It has also helped to create jobs and boost economic growth in Africa. African countries are calling for it to be extended. To what extent has the AGOA goal been achieved? The duty- and quota-free access to the US market granted by Agoa...

16 November 2023

South Africa’s AGOA forum: Crafting future pathways for US-Africa trade partnership

Ultimately the African Growth and Opportunity Act (AGOA) could be extended by 16 years, that means until 2041, indicating its importance for strengthening Africa’s trade and economic cooperation with United States. That was, in fact, the main focus during Johannesburg’s early November forum that brought together more than 30 trade ministers, astute investors plus representatives from the regional economic blocs and the African Union. At...

14 November 2023

Africa-US trade: AGOA expires in 2025 - what has it achieved in 23 years?

African governments are seeking an extension of the African Growth and Opportunity Act (Agoa) beyond 2025. The law was enacted in 2000 to “encourage increased trade and investment between the United States and sub-Saharan Africa”. We asked David Luke, who specialises in African trade policy and trade negotiations, what benefits Agoa has brought for qualifying African countries and how it can...

12 November 2023

US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility

Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...

07 November 2023

AGOA extension crucial for Ghana’s industrialisation

The Deputy Minister of Trade and Industry Nana Ama Dokua Asiamah-Adjei is supporting the push for the extension of the African Growth and Opportunity Act (AGOA) to enhance trade between Ghana and the US. A United States Trade Act enacted on 18 May 2000 as Public Law 106 of the 200th Congress, the AGOA legislation has been renewed on different occasions, most recently in 2015, when its period of validity was extended to September 2025. The...

06 November 2023

US-Africa program (AGOA) should be extended through 2041, Senate Democrat says, proposes legislation [Download]

A trade program that grants exports from qualifying African countries duty-free access to the U.S. market should be extended by 16 years, said Democratic Senator Chris Coons, a leading voice on U.S.-Africa policy. Talks are underway for the renewal of the two-decade-old African Growth and Opportunity Act (AGOA), which is due to expire in 2025. African countries want a 10-year renewal of the pact ahead of the 2024 U.S. election. President Joe...

06 November 2023

AGOA: US vows to support regional integration

The United States says it is committed to supporting regional integration in Africa, seeing it as essential for the continent's economic development and prosperity. At a conference on the African Growth and Opportunity Act (Agoa) in Johannesburg, US officials said they were backing the African Continental Free Trade Area (AfCFTA), even though there will be variations on country specific trading arrangements. Agoa is a trade agreement...

04 November 2023

US committed to ‘seamless’ AGOA renewal, USTR Tai says

The US aims to ensure that its preferential trade pact with Africa is replaced without interruption when it expires in two-year’s time, while bringing it up to date. “We want to make sure that as of Sept. 30, 2025, that there will be another Agoa that will pick up from this one,” said US Trade Representative Katherine Tai, referring to the African Growth and Opportunity Act. “It is a seamless renewal that we’re...

03 November 2023

US president Biden wants to improve US-Africa trade programme, not just renew it - Blinken

President Joe Biden's administration wants to work with Congress to improve the United States' flagship trade programme with Africa, not just renew it without changes, U.S. Secretary of State Antony Blinken said on Friday. First launched in 2000, the African Growth and Opportunity Act (AGOA) grants exports from qualifying African countries duty-free access to the United States - the world's largest consumer market. It is due to...

03 November 2023

You are here: Home/News/Article/Op-Ed: AGOA renewal not so seamless