AGOA provides liberal access to US market.

Daily Graphic Special Supplement on Bush's visit Pg 58, Feb 18/2008

Story: Charles Benoni Okine

BEFORE the year 2000, it had been the dream of many African countries to export most of their products to the United States, perhaps the biggest market they can have in the world. At every meeting of the World Trade Organisation (WTO), African countries fought relentlessly to have free access to the US and the European market but with very little success.
Luckily, the US gave a positive response and the African Growth and Opportunity Act (AGOA) was born to provide 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.
AGOA supports US business by encouraging a reform of Africa's economic and commercial regimes, which will build stronger markets and more effective partners for US firms.
The beauty of the Act is that it expands the list of products which eligible sub-Saharan African countries may export to the United States, subject to zero import duty under what is termed the Generalised System of Preferences (GSP). While GSP covers approximately 4,600 items, AGOA GSP applies to more than 6,400 items. AGOA GSP provisions will be in effect until September 30, 2015.
To firm the idea, AGOA was signed into law on May 18, 2000 by the immediate past President of the United States of America (USA), Bill Clinton, 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.
When the current President George W. Bush assumed the reins of government, he 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 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 to export certain textile articles under AGOA.
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 US 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 Generalised System of Preferences (GSP);
. Determination of compliance with the conditions for apparel benefits;
. Establishment of the US-sub-Saharan Africa Trade and Economic Forum; and
. Provision 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 should be 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 for which Ghana rightly qualified.
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 eligible. 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. The US 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.

GSP product eligibility

AGOA authorises the President to provide duty-free treatment under GSP for any article, after the US Trade Representative (USTR) and the US 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 duty-free 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.


Ghana and AGOA

The African Growth and Opportunity Act (AGOA) provides a unique opportunity for Ghana's non-traditional export to penetrate the US market, which remains one of the most strategic global markets of the world. Under this, Ghana is to benefit from increased trade and investment through duty-free and quota-free access to the US market for essentially over 6,000 products, including textile and garments as well as such other products as cassava starch which comes under the President's Special Initiative Project to take advantage of the AGOA package.
Bi-lateral trade between Ghana and the United States was relatively well-balanced in recent years, although 2002 saw a sharp drop in exports to the US. In 2002, exports from Ghana to the US amounted to $ 76 million, while imports were almost $ 200 million. This resulted in the country recording significant trade deficit with the US of $ 76 million.
Ghana's main export categories to the U.S. consist of 'forest products', 'agricultural products', 'energy-related products' and 'minerals and metals'. Exports eligible under AGOA amounted to $34.8 million in 2002 (43 million in 2001), and consisted mostly of 'energy-related' products (see link to Country Trade Profile below). On March 20, 2002, Ghana qualified for the 'Wearing Apparel' provisions. It is also classified as a 'Lesser Developed Country' in terms of AGOA, thus reaping the associated 'Rules of Origin' benefits (which allow third-country textile inputs until September 30, 2004). Although exports of 'textiles and garments' are insignificant vis-à-vis the country's other exports to the US, there are indications that AGOA-eligibility will stimulate this sector in future.
So then it was the turn of Ghana to host the Sixth AGOA US-Sub-Saharan Africa Trade and Economic Co-operation Forum which was addressed by Ghana’s President John Agyekum Kufuor who said ; “Because of the great opportunities that AGOA promises to its stakeholders, this conference has been slated as one of the key events marking the 50th anniversary of Ghana’s independence, which we are celebrating throughout this year.”
“It is in this light that I welcome all ministers from AGOA-eligible Sub-Saharan countries who have met here to advance the continent’s trade and development agenda”.
He said an important feature of the AGOA meetings is the active interaction it promotes among all stakeholders of trade and development, namely government agencies, private sector operators, NGOs and civil society organisations. Their representatives here are welcome.
Many African countries now boast of democratically elected leaders as well as policies and programmes for reforms which aim firstly at growth and poverty reduction, and secondly, at making these countries a part of the multilateral arrangements which govern global trade.
As many as 39 countries are now eligible for AGOA benefits, having subjected themselves to rigorous requirements for qualification, including adherence to good governance, the rule of law, political pluralism, market-based economies, elimination of barriers to US Trade and Investment, Protection of Intellectual Property and the establishment of structures to fight corruption.
“But ladies and gentlemen, the AGOA Initiative expires in the year 2015. This means there are only eight years left to take advantage of the opportunity to export about 6,400 items, estimated at more than $10.0 trillion, to the US market without reciprocity. Given the time constraint and the very serious capacity challenges, Africa, we must admit, can hardly exploit the full benefits of this huge initiative.
I will, therefore, appeal first to the US government to extend the time span of AGOA to 20 years and then to the countries in Africa as well as our development partners in the US to design and implement specific, efficacious vehicles targeted at building the capacity of African nations. This is the surest way to make Africa competitive with other countries on the US market and grow our economies.
Ladies and gentlemen, there is a tendency to see the benefits of AGOA from only the perspective of the African. But while signing the AGOA Acceleration Act in 2004, President Bush reminded his countrymen that, when America sells to Africa, it means employment for somebody in America.
The President said AGOA should, therefore, work both ways to everyone’s advantage, adding “ I will therefore encourage operators in the American private sector to increase their investments in Africa to cover more areas than just the extractive industries of oil and precious minerals. Venturing into agriculture, processing, manufacturing and tourism are some of the ways in which technology transfer and Africa’s capacity building must be given a boost. Relocation of factories and outsourcing ICT contracts to Africa could also add to capacity building to make Sub-Saharan Africa effective partners in trade.”
Happily, he told the distinguished ladies and gentlemen, “you have worked hard to produce the Strategic Framework for Accelerating the Implementation of the African Growth and Opportunity Act (AGOA), which is indeed geared to capacity-building, diversification of the product range that can be exported from the region, improved market access and supply capacity, all of which should enhance our chances of attracting investments. These are laudable objectives, supported by detailed programmes which are to inform the preparation of country-specific AGOA Response Strategies and Implementation Plans.”