African Growth and Opportunity Act (AGOA)

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African Growth and Opportunity Act (AGOA)




Purpose

The purpose of this legislation was to assist the economies of sub-

Saharan Afr ica and to improve economic relations between the

United States and the region




Eligibility

The President of the United States have to determine which sub-Saharan Afr ican countr ies would be eligible for AGOA on an annualbasis

Currently (August 2009), there are 41 AGOA-eligible countr ies.

A 'Visa System' for exporting apparel and certain textile to the US

under th

e AGOA duty-free The major ity (45 of 48) of Sub-Saharan Afr ican countr ies are

currently GSP eligible. 41 of these are also AGOA-eligible.




The Generalized System of Preferences (GSP) program AGOA expanded market access for textile and apparel goods into

the United States for eligible countr ies.

However, the dismantling of the Multi Fibre Agreement's world quotaregime for textile and apparel trade in January 2005 reversed some

of th

e gai

ns madei

n th

e Afr i

can texti

lei

ndustry due toi

ncreasedcompetition from developing nations outside of Afr ica, particularlyChina.




AGOA was set to expire in 2008. In 2004, the United StatesCongress passed the Act, which extended the legislation to 2015.The Act's apparel special provision, which permits lesser-developedcountr ies to use foreign fabr ic for their garment exports, was toexpire in September 2007. However, legislation passed byCongress in December 2006 extended it through 2012.




AGOA Eligible countr ies




AGOA apparel Certif ied countr ies




Forum

The Forum is held in Washington every other year, and in an AGOA

eligible Afr ican country in the other years. So far, the Forum has

been held three times in Washington, and once in Maur itius,

Senegal, Ghana and Kenya in 2009.




Others claim AGOA encourages fraud by making Chinese and Indian clothing manufacturers label their goods"Made in Kenya" and transshipping them to the United States through Kenya.

The balance of trade statistics show that the AGOA act is benef iting countr ies in Afr ica. In FY2008, the USExported $17,125,389 in goods to the 41 AGOA countr ies, and the US imported $81,426,951 for a balance of $64,301,562 in favor of the AGOA countr ies.




Wearing Apparel provisions

Visa System

As of May 2006, 25 of the 37 AGOA-eligible countr ies had complied

with this condition and had obtained the necessary visa system,

allowing them to export apparel to the US duty-free under AGOA




AGOA's 'Wear ing Apparel' Rules of Or igin

Apparel and textiles are not included under the General System of

Preferences (GSP) program, on which AGOA is based




The main f eatur es of AGOA's 'wearing appar el'

provisions

AGOA-eligible Sub-Saharan Afr ican countr ies f irst be certif ied ashaving complied for the 'Wear ing Apparel' provisions-Visa licensing

Apparel made in qualifying Sub-Saharan Afr ican countr ies fromU.S. fabr ic, yarn, and thread is provided with duty-free and quota-free access to the U.S. market without limitations




This market access into the U.S. is subject to a cap of 1.5% of overall U.S.

apparel imports, growing in equal yearly increments to 3.5% of overall

imports by 2008 and now its 6.43675 percent

lesser-developed countr ies ± 3.5%




Preferential treatment-embroidered or subjected to stone-washing, enzyme washing, acid washing, perma-pressing, oven-baking, bleaching, garment-dyeing, screen pr inting, or other similar processes also eligible for duty-free benef its

simply because the article contains certain interlinings of foreign or igin, as long as the value of such interlinings(and any f indings and tr im-mings) does not exceed 25 percent of the cost of the components of the assembledapparel article.




De Minimis Rule -the article contains f ibers or yarns not wholly formed in the U.S. or in one or

more AGOA-benef iciary SSA countr ies if the total weight of all such f ibers and yarns is not more

than 10 percent of the total w eight of the article.




For Lesser Developed Countr ies ± their GNP per capita being less than $ 1,500 in 1998 as

measured by the World Bank.




AGOA IV

Apparel made of U.S. yarns and fabr ics;

Apparel made of sub-Saharan Afr ican (regional) yarns and fabr ics, subject to a cap until 2015; Apparel made in a designated lesser developed country of third-country yarns and fabr ics, subject to a cap unt il 2012; Apparel made of yarns and fabr ics not produced in commercial quantities in the United States; Certain cashmere and mer ino wool sweaters; Eligible handloomed, handmade, or folklore articles and ethnic pr inted fabr ics; and Textiles and textile articles produced entirely in a lesser-developed benef iciary country.

Documents

African Growth and Opportunity Act (AGOA)