African Growth and Opportunity Act (AGOA) Page: 1 of 2
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Congressional Research Service
SOA Informing the legislative debate since 1914July 25, 2014
African Growth and Opportunity Act (AGOA)
Overview
What is AGOA? AGOA, the cornerstone of U.S. trade
policy toward sub-Saharan Africa since 2000, is a non-
reciprocal U.S. trade preference program that provides
duty-free access to the U.S. market for most exports from
eligible sub-Saharan African countries. In addition to this
preferential market access, the Act also requires an annual
forum, known as the AGOA Forum, held between U.S. and
AGOA country officials to discuss trade-related issues.
Additionally, AGOA provides direction to select U.S.
government agencies regarding their trade and investment
support activities in the region.
What countries are eligible? AGOA lists 49 sub-Saharan
African countries that are potential candidates for AGOA
benefits. AGOA eligibility criteria address issues such as
trade and investment policy, governance, and worker rights,
among other issues, which countries must satisfy to be
beneficiaries of the AGOA preferences. The President
annually reviews and determines each country's AGOA
eligibility. There are currently 41 AGOA-eligible countries.
This includes Madagascar, whose eligibility was reinstated
in June, as well as Swaziland, whose eligibility will be
removed effective January 1, 2015.
What is the authorization status? The AGOA preference
program was initially enacted in 2000. It has been amended
five times, including one overall extension in 2004, as well
as technical modifications and extensions of time-limited
provisions (e.g., third-country fabric provision). AGOA
authorization is currently set to expire on September 30,
2015.
What's the goal? Through AGOA, the U.S. Congress
seeks to increase U.S. trade and investment with the region,
promote sustainable economic growth through trade, and
encourage the rule of law and market-oriented reforms.
"[T]o keep our trade growing, we need to renew
AGOA. But we've also got to make some decisions
about how we can make it more effective."
President Obama, July I, 2013
Supporting Views-Supporters of AGOA argue that the
program affords African producers a vital competitive
advantage in the U.S. market, thereby enabling exports,
encouraging investment in the region, boosting private
sector activity and economic growth, and ultimately
generating demand for U.S. goods and services as the
region's economies develop.Opposing Views-Opposition to AGOA comes primarily
from U.S. producers that may face increased import
competition from AGOA countries. Due to the relatively
small level of U.S. imports under the program, such
concerns may be relatively limited. Many observers are
generally supportive of AGOA, but would like reforms.
Key Aspects of AGOA
Trade Preferences-The primary component of AGOA is
the duty-free treatment of U.S. imports of certain products
from beneficiary countries. This tariff savings can
potentially help AGOA exporters compete with lower-cost
producers in other countries.
Relation to the Generalized System of Preferences-The
Generalized System of Preferences (GSP) is another U.S.
preference program, but unlike AGOA, GSP is not
regionally based. The AGOA preferences include all
products covered by GSP, as well as some products
excluded from GSP, such as autos and certain types of
textiles and apparel. In both GSP and AGOA, additional
benefits are granted to least-developed countries.
Apparel and Third-Country Fabric Provision-AGOA's
duty-free treatment on certain apparel products is
significant because (1) apparel articles face relatively high
U.S. import tariffs; (2) they are excluded from GSP; (3)
they can be manufactured in developing countries as their
production utilizes lower-skilled labor and requires little
capital investment; and (4) production in this sector can be
a first-step toward higher value-added manufacturing. The
third-country fabric provision in AGOA, which some argue
is critical for AGOA countries' competitiveness in the
sector, allows some U.S. apparel imports from
least-developed sub-Saharan African countries to qualify
for duty-free treatment even if the yarns and fabrics used in
their production are imported from non-AGOA countries.
Trade Capacity Building-Unlike other U.S. preference
programs, AGOA directs the President to provide U.S.
government technical assistance and trade capacity building
(TCB) in AGOA beneficiary countries. This assistance is
intended to encourage governments to (1) liberalize trade
policy; (2) harmonize laws and regulations with WTO
membership commitments; (3) engage in financial and
fiscal restructuring; and (4) promote greater agribusiness
linkages. The United States Agency for International
Development (USAID) administers certain TCB-related
projects in support of AGOA, including funding for the
three African Trade Hubs, which work to increase AGOA
utilization by beneficiary countries.www.crs.gov 1 7-5700
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Williams, Brock R. African Growth and Opportunity Act (AGOA), report, July 25, 2014; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc807819/m1/1/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.