President Bill Clinton signed into law the African Growth and Opportunity Act (AGOA) on May 18, 2000, as Title 1 of The Trade and Development Act of 2000. AGOA provides the United States with additional markets and partnerships and provides eligible countries in sub-Saharan Africa with more access to U.S. markets and technical expertise than other countries without free trade agreements with the United States. Countries can become eligible by making progress in economic and political reforms, such as removing barriers to trade, fighting corruption, protecting human rights and political pluralism, and implementing policies to reduce poverty. President George Bush signed into law AGOA II through IV, which clarified rules specific to the trade of apparel and extended time frames for countries to receive preferential market access. The U.S.–sub-Saharan Africa Trade and Economic Cooperation Forum (known as the AGOA Forum) is an annual event and, in 2014, took place at the same time as the U.S.-Africa Leaders Summit.
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.
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.
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. Effective January 1, 2009, the President again removed Mauritania from the list of AGOA eligible countries. 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.
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.
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.