No New Countries Added to List of AGOA Beneficiaries

U.S. Trade Representative Ron Kirk announced last week that no African countries would be removed from the list of countries eligible for benefits under the African Growth and Opportunity Act (AGOA) in 2012, but no new ones would be added either. Currently, 40 sub-Saharan African nations are designated as AGOA beneficiaries, and that list will remain the same for the foreseeable future.

“President Obama’s determination today is good news for the people of these African nations, as well as for the American businesses and workers trading with these countries,” said Ambassador Kirk. “We are proud to announce, after a thorough review by the Obama Administration, that all 40 of these important U.S. trading partners will continue to receive benefits under the African Growth and Opportunity Act—a vital and growing pillar of U.S.-Africa trade policy.”

The president made the decision not to make any new countries eligible for benefits under the legislation following an annual review of whether current AGOA designees are complying with the Act’s eligibility criteria. Countries benefitting from the legislation’s array of trade preferences must establish, or make continual progress toward establishing, a market-based economy, a rule of law, economic policies to reduce poverty, the protection of internationally recognized worker rights and efforts to combat corruption.

AGOA was signed into law under President Bill Clinton in May 2000, with the intention of providing sub-Saharan African nations with trade preferences and better integrating the region into the global economy. Although the Act was primarily designed to allow African companies to export to the U.S. duty-free, it has also benefitted U.S. exporters by creating tangible incentives for African countries to implement economic and social reforms and forging stronger commercial ties with the region.

Previously, only 37 countries were eligible for AGOA benefits, but President Obama signed a proclamation last October adding Côte d’Ivoire, Guinea and Niger to the list. U.S. exports to the region have recently experienced an uptick, increasing by 13% from 2009 to 2010.

Jacob Barron, CICP, NACM staff writer

1 comment:

  1. Dr. Richard Mutule Kilonzo, Chief Executive, ExporMay 2, 2012 at 12:14 PM

    The potential impact of a delayed renewal of the third country fabric provision of AGOA is grave. Third country fabric is the most successful components of the AGOA legislation and can be credited with over 100,000 direct jobs in Sub-Saharan Africa. Apparel orders are drying up due to the uncertainty surrounding the provision. In Kenya alone, over 40,000 factory workers could very likely lose their jobs if third country fabric is not renewed in a timely manner. The apparel industry in SSA rely on the third country fabric provision; without it there is a very real possibility that the investors in the apparel factories will pack up and move production to some other part of the world as happened in Madagascar following its loss of AGOA eligibility in 2009. This would cause enormous economic strife in countries that are strong partners of the United States. On September 30, 2012, the third country fabric AGOA provision will expire. With barely six months to go, further delay threatens the lives of 1 Million people, mostly women who work in the apparel sector. We estimate that each factory worker supports ten additional people. If third country fabric is not renewed soon, these jobs will disappear and Africa's poverty rate will sour by over 55%.