African Growth and Opportunity Act
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In May 2000, the U.S. Congress approved legislation known as the African Growth and Opportunity Act, or AGOA (Title I, Trade and Development Act of 2000; P.L. 106-200). The purpose of this legislation was to assist the economies of sub-Saharan Africa and to improve economic relations between the United States and the region.
[edit] Eligibility
The legislation authorized the President of the United States to determine which sub-Saharan African countries would be eligible for AGOA on an annual basis. The eligibility criteria was to improve labor rights and movement toward a market-based economy. Each year, the President evaluates the sub-Saharan African countries and determines which countries should remain eligible. Currently, there are 38 AGOA-eligible countries.
[edit] Benefits, results and criticism
AGOA provides trade preferences for quota and duty-free entry into the United States for certain goods, expanding the benefits under the Generalized System of Preferences (GSP) program. Notably, AGOA expanded market access for textile and apparel goods into the United States for eligible countries. This resulted in the growth of an apparel industry in southern Africa, and created hundreds of thousands of jobs. However, the dismantling of the Multi Fibre Agreement's world quota regime for textile and apparel trade in January 2005 reversed some of the gains made in the African textile industry due to increased competition from developing nations outside of Africa, particularly China. Already, many factories have been shut down in Lesotho, where most of the growth occurred. However, following the imposition of certain safeguard measures by US authorities, orders from African manufacturers stabilised somewhat. Still, Africa is the only region that has in fact a reduced share of the US apparel import market following the phasing out of quotas.
AGOA has resulted in limited successes in some countries. In addition to growth in the textile and apparel industry, some AGOA countries have begun to export new products to the United States, such as cut flowers, horticultural products, automotives and steel. While Nigeria and Angola are the largest exporters under AGOA, South Africa's have been the most diverse and unlike the former are not mainly concentrated in the energy sector. To some countries, including Lesotho, Swaziland, Kenya and Madagascar, AGOA remains of critical importance. Agricultural products is a promising area for AGOA trade, however much work needs to be done to assist African countries in meeting U.S. sanitary and phytosanitary standards. The U.S. government is providing technical assistance to AGOA eligible countries to help them benefit from the legislation, through the U.S. Agency for International Development (USAID) and other agencies. The U.S. government has established three regional trade hubs in Africa for this purpose, in Accra, Ghana; Gaborone, Botswana; and Nairobi, Kenya.
Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015. The Act's apparel special provision, which permits lesser-developed countries to use foreign fabric for their garment exports, was to expire in September 2007. However, legislation passed by Congress in December 2006 extended it through 2012.
Every year an AGOA Forum is held, which brings together government leaders and private sector stakeholders from Africa and the United States. The Forum is held in Washington every other year, and in an AGOA eligible African country in the other years. So far, the Forum has been held three times in Washington, and once in Mauritius, Senegal and Ghana.
While AGOA is often synonymous with preferential garment exports, the fact remains that AGOA opens the US market to a large number of African-sourced goods that are able to enter the United States free of import duty.
Some allege that AGOA is in contradiction with WTO rules.[citation needed] Furthermore, it is seen as a onesided agreement as there was little African involvement in its preparation. [1]
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.[citation needed]
