IThe African Growth & Opportunity Act (AGOA) was enacted in May 2000 to expand U.S. trade with Sub-Saharan Africa and stimulate the economies of the participating countries. Each year, the President of the United States is eligible to determine the countries eligible for AGOA benefits, which include trade preferences that essentially allow goods produced in the eligible countries to enter the United States duty-free. There are currently 40 countries eligible for AGOA benefits. The three most recently eligible countries are Cote d’Ivoire, Guinea, and Niger, all of which held democratic elections.
The AGOA program has brought significant benefits to the participating countries, but it is scheduled to expire very soon in September 2015. The program includes a “third-country fabric benefit,” which allows apparel producers in AGOA-eligible countries to use third-country fabric and still get duty-free treatment in the United States. The benefit was initially scheduled to expire on September 30, 2012, two years before the expiration of the program. On August 2, 2012, Congress passed legislation renewing the benefit until September 2015, when the program expires. The legislation also adds South Sudan as a beneficiary country under AGOA. More information on the legislation is available from the House Ways & Means Committee here.
President Obama signed the legislation on Friday, August 10, 2012. The AGOA extension and the Burma sanctions extension are effective immediately. The CAFTA-DR fixes will go into effect 60 days after the publication of the Presidential Proclamation and the notification of the Organization of American States (OAS), on or around October 15, 2012.
The United States Association of Importers of Textiles & Apparel (USA-ITA), now USFIA, was an active voice in the effort to renew the AGOA third-country fabric benefit.
On March 9, 2012, USA-ITA (now USFIA) joined a group of apparel and retail associations in sending a letter to the leadership of the U.S. Senate Finance Committee and the U.S. House Ways & Means Committee calling for the renewal of the Third-Country Fabric Provision of the African Growth & Opportunity Act (AGOA). The letter explains that the provision “helps U.S retailers achieve lower costs and diversify their supply chains,” as well as “solidifies a broader strategic partnership with the United States based on development through trade.”
On June 13, 2012, USA-ITA (now USFIA) joined a multi-industry group of trade associations and other business organizations in sending a letter to the leadership of the U.S. Senate Finance Committee and U.S. House Ways & Means Committee again calling for quick renewal of the Third-Country Fabric Provision of AGOA, along with passing the CAFTA "fixes." The letter identifies consequences of not renewing AGOA:
Moreover, the impact is by no means limited to sub-Saharan Africa. In fact, the delay in renewing this non-controversial measure, which is at the core of the AGOA apparel provisions, has already forced many U.S. companies to shift their 3rd and 4th quarter 2012 orders to other countries to avoid uncertainties.
The delay in renewing this provision is increasingly sending the wrong message to African countries on the eve of the largest annual U.S.-Africa summit — the AGOA Forum, which will be held in Washington on June 14-15. Inaction is difficult to justify given that the Third Country Fabric provision has proven beneficial to U.S. businesses and non-controversial in both Congress and in the U.S. business community.
Regardless, as uncertainty grows over renewal, African apparel producing countries have already experienced a 30% drop in apparel orders since January 2012. This decline in orders has already led to the loss of thousands of jobs in Africa, with hundreds of thousands more hanging in the balance.
On July 25, 2012, USA-ITA (now USFIA) also sent letters to U.S. Senators Tom Coburn (R-OK) and Robert Menendez (D-NJ), urging them to drop their holds on the AGOA extension.