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Uganda calls for review of AGOA rules of origin

Uganda calls for review of AGOA rules of origin
Minister Amelia Kyambadde (L) and Ambassador Deborah Malac (Credit: Uganda Observer)
Published date:
Wednesday, 20 July 2016
Edward Ssekika

Amelia Kyambadde, Uganda’s minister of Trade, Industry and Cooperatives, wants the United States government to relax the rules of origin under the African Growth and Opportunity Act (Agoa), and also expand the list of eligible products allowed under the programme.

Kyambadde attributes Uganda’s poor performance under Agoa to the strict rules of origin.

“The current arrangement is that a value addition level of 35 per cent must be attained on products whose inputs are imported from non-Agoa countries in order to export them under the Agoa. The threshold of 35 per cent on value addition is very high for an LDC country like Uganda,” she said.

Kyambadde was recently speaking after meeting the US ambassador to Uganda, Deborah Malac, on the upcoming annual review for Agoa. The review for annual review of the performance of Agoa is scheduled for September this year. The meeting was meant to discuss the progress of Agoa in Uganda.

“These rules of origin need to be simplified,” she emphasized.

Uganda is one of the beneficiaries of Agoa that provides for duty-free treatment for about 6,500 goods from eligible sub-Saharan African countries imported into the US market. Uganda’s exports to the US under Agoa include agricultural products, forest products, textiles and apparel, foot-wear, and minerals and metals. Uganda’s main export has been textiles and apparel.

“I want to admit that Agoa has not been well-implemented... The US government has indicated that they need to review Agoa, but we are still discussing,” she said.

According to Kyambadde, Uganda’s export under Agoa dropped from $3.3m in 2010 to $1.15 million in 2014. She attributed this poor performance to the limited list of eligible products for export to the US market under Agoa.

In the meeting, Kyambadde stressed the need to expand the list of eligible products under Agoa to include products such as sugar, peanuts, dairy and tobacco, among others.

She said if Agoa is not extended after the review, the country will lose out. “Definitely we will lose a bit of revenue because some Ugandans have already started generating some income from this arrangement from selling crafts, spices and others, according to the list that they provided,” she said.

In the meeting, Kyambadde called upon US investors to shift from trading to value addition especially in the areas of leather, textiles and developing the storage infrastructure.

She said there are some under-tapped and virgin sectors in Uganda which had great potential for investment and could be beneficial to both countries. Malac reiterated her commitment to supporting trade and bringing more US investments to Uganda, within or outside Agoa, and thus encouraged continuous dialogue to expand on more avenues and opportunities for investment and support to Uganda.

Malac extended an invitation to the Ugandan business community to the second US-Africa Business Forum due to take place in September this year in New York, USA.

She said this forum could be beneficial for Uganda’s businesses to interface with other business partners from around the world. Malac said the US has specific criteria in place that serve to advise governments on ways and procedures to ensure continued involvement in Agoa and gainful benefits and profiting from the programs and projects under Agoa.

She added that the US embassy, in conjunction with the EA Trade and Investment Hub, was doing an assessment to find new businesses and new value addition sectors that could be supported under Agoa.

Kyambadde reiterated Uganda’s commitment to improving the doing business environment by enhancing product standardization, developing infrastructure and eliminating non-tariff barriers to support local trade and export to the global market.

The two agreed to continue the convening of the Uganda –American Chamber of Commerce platform, which they had initiated so as to address the challenges that are faced by members of the US business community in Uganda.

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