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BACKGROUND
The
African Growth and Opportunity Act (AGOA) was signed into
law on May 18, 2000 as Title 1 of The Trade and Development
Act of 2000. The Act offers tangible incentives for African
countries to continue their efforts to open their economies
and build free markets. President Bush signed amendments to
AGOA, also known as AGOA II, into law on August 6, 2002 as
Sec. 3108 of the Trade Act of 2002. AGOA II substantially
expands preferential access for imports from beneficiary Sub-Saharan
African countries.
By
modifying certain provisions of the African Growth and Opportunity
Act (AGOA), the AGOA Acceleration Act of 2004 (AGOA III, signed
by President Bush on July 12, 2004) extends preferential access
for imports from beneficiary Sub Saharan African countries
until September 30, 2015; extends third country fabric provision
for three years, from September 2004 until September 2007;
and provides additional Congressional guidance to the Administration
on how to administer the textile provisions of the bill.
The
Africa Investment Incentive Act of 2006 (signed by President
Bush on December 20, 2006) further amends portions of the
African Growth and Opportunity Act (AGOA) and is referred
to as "AGOA IV". The legislation extends the third
country fabric provision for an additional five years, from
September 2007 until September 2012; adds an abundant supply
provision; designates certain denim articles as being in abundant
supply; and allows lesser developed beneficiary sub-Saharan
African countries export certain textile articles under AGOA.
AGOA provides reforming African countries with the most liberal
access to the U.S. market available to any country or region
with which the United States does not have a Free Trade
Agreement. It supports U.S. business by encouraging reform
of Africa’s economic and commercial regimes, which will build
stronger markets and more effective partners for U.S. firms.
AGOA
expands the list of products which eligible Sub-Saharan African
countries may export to the United States subject to zero
import duty under the Generalized System of Preferences (GSP).
While general GSP covers approximately 4,600 items, AGOA GSP
applies to more than 6,400 items. AGOA GSP provisions are
in effect until September 30, 2015.
AGOA can change the course of trade relations between Africa
and the United States for the long term, while helping millions
of African families find opportunities to build prosperity:
- By
reinforcing African reform efforts;
- By
providing improved access to U.S. technical expertise, credit,
and markets; and
- By
establishing a high-level dialogue on trade and investment.
Since
its implementation, AGOA has encouraged substantial
new investments, trade, and job creation in Africa. It has
helped to promote Sub-Saharan Africa's integration into the
multilateral trading system and a more active role in global
trade negotiations. It has also contributed to economic and
commercial reforms which make African countries more attractive
commercial partners for U.S. companies.
IMPLEMENTATION
An
AGOA Implementation Subcommittee of the Trade Policy Staff
Committee (TPSC) was established to implement AGOA.
Among the most important implementation issues are the following:
- Determination
of country eligibility;
- Determination
of the products eligible for zero tariff under expansion
of the Generalized System of Preferences (GSP);
- Determinations
of compliance with the conditions for apparel benefits;
- Establishment
of the U.S.-Sub-Saharan Africa Trade and Economic Forum;
and
- Provisions
for technical assistance to help countries qualify for benefits.
COUNTRY
ELIGIBILITY
The U.S. Government intends that the largest possible number
of Sub-Saharan African countries are able to take advantage
of AGOA. President Clinton issued a proclamation on
October 2, 2000 designating 34 countries in Sub-Saharan
Africa as eligible for the trade benefits of AGOA. The
proclamation was the result of a public comment period and
extensive interagency deliberations of each country’s performance
against the eligibility criteria established in the Act.
On January 18, 2001, Swaziland was designated as the 35th
AGOA eligible country and on May 16, 2002 Côte d'Ivoire
was designated as the 36th AGOA eligible country. On January
1, 2003 The Gambia and the Democratic Republic of Congo were
designated as the 37th and 38th AGOA eligible countries. On
January 1, 2004, Angola was designated as AGOA eligibile.
Effective January 1, 2004, however, the President removed
the Central African Republic and Eritrea from the list of
eligible countries. On
December 10, 2004, the President designated Burkina Faso as
AGOA eligible. Effective
January 1, 2005, the President removed Côte
d'Ivoire from the list
of eligible countries. Effective
January 1, 2006, the President designated Burundi as AGOA
eligible and removed Mauritania from the list of eligible
countries. Effective
December 29, 2006, the President designated Liberia as AGOA
eligible. Effective
June 28, 2007, the President again designated Mauritania as
AGOA eligible. Effective April 17, 2008, the President designated Togo as AGOA eligible. Effective June 30, 2008, the President designated Comoros as AGOA eligible. The U.S. Government
will work with eligible countries to sustain their efforts
to institute policy reforms, and with the remaining nine Sub-Saharan
African countries to help them achieve eligibility.
The Act authorizes the President to designate countries as
eligible to receive the benefits of AGOA if they are determined
to have established, or are making continual progress toward
establishing the following: market-based economies;
the rule of law and political pluralism; elimination of barriers
to U.S. trade and investment; protection of intellectual property;
efforts to combat corruption; policies to reduce poverty,
increasing availability of health care and educational
opportunities; protection of human rights and worker rights;
and elimination of certain child labor practices. These
criteria have been embraced overwhelmingly by the vast majority
of African nations, which are striving to achieve the objectives
although none is expected to have fully implemented the entire
list.
The eligibility criteria for GSP and AGOA substantially overlap,
and countries must be GSP eligible in order to receive AGOA’s
trade benefits including both expanded GSP and the apparel
provisions. Although GSP eligibility does not imply
AGOA eligibility, 47 of the 48 Sub-Saharan African countries
are currently GSP eligible.
GSP PRODUCT ELIGIBILITY
AGOA authorizes the President to provide duty-free treatment
under GSP for any article, after the U.S. Trade Representative
(USTR) and the U.S. International Trade Commission (USITC)
have determined that the article is not import sensitive
when imported from African countries. On December 21,
2000, the President extended dutyfree treatment under GSP
to AGOA eligible countries for more than 1,800 tariff line
items in addition to the standard GSP list of approximately
4,600 items available to non-AGOA GSP beneficiary countries.
The additional GSP line items which include such previously
excluded items as footwear, luggage, handbags, watches, and
flatware were implemented after an extensive process of public
comment and review.
AGOA extends GSP for eligible Sub-Saharan African beneficiaries
until September 30, 2015. Sub-Saharan African beneficiary
countries are also exempted from competitive need limitations
which cap the GSP benefits available to beneficiaries in other
regions.
APPAREL PROVISIONS
AGOA
provides duty-free and quota-free treatment for eligible apparel
articles made in qualifying sub-Saharan African countries
through 2015. Qualifying articles include: apparel made of
U.S. yarns and fabrics; apparel made of sub-Saharan African
(regional) yarns and fabrics until 2015, subject to a cap;
apparel made in a designated lesser-developed country of third-country
yarns and fabrics until 2012, subject to a cap; apparel made
of yarns and fabrics not produced in commercial quantities
in the United States; textile or textile articles originating
entirely in one or more lesser-developed beneficiary sub-Saharan
African countries; certain cashmere and merino wool sweaters;
and eligible handloomed, handmade, or folklore articles, and
ethnic printed fabrics.
Under
a Special Rule for lesser-developed beneficiary countries,
those countries with a per capita GNP under $1,500 in 1998,
will enjoy an additional preference in the form of duty-free/quota-free
access for apparel made from fabric originating anywhere in
the world. The Special Rule is in effect until September 30,
2012 and is subject to a cap. AGOA IV continues the designation
of Botswana and Namibia as lesser-developed beneficiary countries,
qualifying both countries for the Special Rule.
AGOA
IV provides for special rules for fabrics or yarns produced
in commercial quantities (or "abundant supply")
in any designated sub-Saharan African country for use in qualifying
apparel articles. Upon receiving a petition from any interested
party, the International Trade Commission will determine the
quantity of such fabrics or yarns that must be sourced from
the region before applying the third country fabric provision.
It also provides for 30 million square meter equivalents (SMEs)
of denim to be determined to be in abundant supply beginning
October 1, 2006. The U.S. International Trade Commission will
provide further guidance on how it will implement this provision.
Preferential
treatment for apparel took effect on October 1, 2000, but
beneficiary countries must first establish effective visa
systems to prevent illegal transshipment and use of counterfeit
documentation, and that they have instituted required
enforcement and verification procedures. Specific requirements
of the visa systems and verification procedures were promulgated
to African governments via U.S. embassies on September 21,
2000. The Secretary of Commerce is directed to monitor apparel
imports on a monthly basis to guard against surges.
If increased imports are causing or threatening serious damage
to the U.S. apparel industry, the President is to suspend
duty-free treatment for the article(s) in question. The U.S.
Government is now reviewing applications for approval of the
required visa and enforcement mechanisms from AGOA eligible
countries.
(click
here for further details on apparel eligibility provisions)
OTHER PROVISIONS
The
Act directs the President to organize a U.S.-Sub-Saharan Africa
Trade and Economic Forum, to be hosted by the Secretaries
of State, Commerce, Treasury, and the U.S. Trade Representative.
The Forum is to serve as the vehicle for regular dialogue
between the United States and African countries on issues
of economics, trade, and investment. The Act also calls for
annual reports to Congress through 2008 on U.S. trade and
investment policy in Africa and implementation of the Act.
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