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Tuesday, June 19, 2012

The African Growth and Opportunity Act

Congress is unlikely to renew the trade agreement with African countries known as the African Growth and Opportunity Act:

Rule to Encourage Africa Trade Set to Expire, by Neanda Salvaterra, WSJ: A clause in a U.S. trade law designed to stimulate trade with Africa is set to expire Sept. 30 and, so far, there appears little prospect that it will be renewed by Congress.
At issue is a provision in the African Growth and Opportunity Act, which was passed with bipartisan support by Congress in 2000 and gives 40 African countries tariff-free access to the U.S. market. Some 90% of exports to the U.S. from Africa since then have been oil.
But a clause called the “third-country fabric rule” has been successful in encouraging the growth of African textile and apparel manufacturing, which is part of the development goal of AGOA, as the law is known. ... But the provision had a built-in expiration date of Sept. 30, 2012. And, so far, there appears to be little prospect Congress will renew it.
The reason: partisan bickering, says Witney Schneidman, a former deputy assistant secretary of state for African affairs under President Bill Clinton who recently authored a report on AGOA for the Brookings Institution.
Few bills have made it to a vote in Congress this year. Any bill, including an extension of the third-country rule, that comes up for a vote therefore runs the risk of having a range of legislation appended to it that otherwise is unlikely to reach the House floor. ...
Renewing the provision isn’t a pressing issue for U.S. manufacturers as the African third-party garment provision represents a small part of overall U.S. textile imports. But the rule has generated $800 million in exports and a lot of jobs in Africa where oil extraction generates few employment opportunities for medium and low skilled labor. ...
AGOA , which is set to expire in 2015, was crafted at a time when the U.S. focus was aid and not trade. According to Mr. Schneidman, this needs to change, if U.S. firms are to compete with countries like China which has engaged Africa with an estimated $ 73.4 billion in export trade. ...

Here's more from Brookings:

Summary In May 2000, President Bill Clinton, as a part of his leadership in enhancing ties between the U.S. and Africa, signed into law the African Growth and Opportunity Act (AGOA), a historic piece of legislation that provides preferential duty-free access to U.S. markets for nearly 6,400 product lines from sub-Saharan Africa. With the goal of both supporting business in the United States and critical political and economic reforms in African countries, AGOA has created an estimated 300,000 jobs on the continent and contributed to the region’s emergence as one of the world’s fastest growing markets, with total U.S. exports to sub-Saharan Africa tripling between 2001 and 2011. Today, AGOA stands as the cornerstone of the U.S.-African commercial relationship. AGOA is set to expire in 2015 and U.S. Secretary of State Hillary Clinton and the U.S. Trade Representative Ronald Kirk have called for a "seamless renewal" of the act. This commitment to extending AGOA has led to a new policy debate over the length of the extension, how to strengthen the act, and how the U.S. can increase its commercial presence on the continent given the expanding influence of China, India, Brazil and other large emerging economies. ...

    Posted by on Tuesday, June 19, 2012 at 03:24 AM in Economics, Kenya | Permalink  Comments (0)


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