African Growth and

Opportunity Act (AGOA)

 Purpose
• The purpose of this legislation was to
assist the economies of
sub-Saharan Africa and to improve
economic relations between the
United States and the region
 Eligibility
• The President of the United States to determine
which sub-Saharan African countries would be
eligible for AGOA on an annual basis
• Currently (August 2009), there are 41 AGOA-
eligible countries.
• A 'Visa System' for exporting apparel and certain
textile to the US under the AGOA duty-free
• The majority (45 of 48) of Sub-Saharan African
countries are currently GSP eligible. 41 of these
are also AGOA-eligible.
• The Generalized System of Preferences (GSP) program
• AGOA expanded market access for textile and apparel goods into
the United States for eligible countries.
• However, the dismantling of the Multi Fibre Agreement's world quota
regime for textile and apparel trade in January 2005 reversed some
of the gains made in the African textile industry due to increased
competition from developing nations outside of Africa, particularly
China.
• Already, many factories have been shut down in Lesotho, where
most of the growth occurred. However, following the imposition of
certain safeguard measures by US authorities, orders from African
manufacturers stabilized somewhat. Still, Africa is the only region
that has in fact a reduced share of the US apparel import market
following the phasing out of quotas.
• AGOA was set to expire in 2008. In 2004,
the United States Congress passed the
Act, which extended the legislation to
2015. The Act's apparel special provision,
which permits lesser-developed countries
to use foreign fabric for their garment
exports, was to expire in September 2007.
However, legislation passed by Congress
in December 2006 extended it through
2012.
 Forum
• The Forum is held in Washington every
other year, and in an AGOA eligible
African country in the other years. So far,
the Forum has been held three times in
Washington, and once in Mauritius,
Senegal, Ghana and Kenya in 2009.
• Others claim AGOA encourages fraud by
making Chinese and Indian clothing
manufacturers label their goods "Made in
Kenya" and transshipping them to the United
States through Kenya.
• The balance of trade statistics show that the
AGOA act is benefiting countries in Africa. In
FY2008, the US Exported $17,125,389 in goods
to the 41 AGOA countries, and the US imported
$81,426,951 for a balance of $64,301,562 in
favor of the AGOA countries.
 Wearing Apparel provisions
• Visa System
• As of May 2006, 25 of the 37 AGOA-
eligible countries had complied with this
condition and had obtained the necessary
visa system, allowing them to export
apparel to the US duty-free under AGOA
AGOA's 'Wearing Apparel' Rules of
Origin
• Apparel and textiles are not included
under the General System of Preferences
(GSP) program, on which AGOA is based
 The main features of AGOA's
'wearing apparel' provisions
• AGOA-eligible Sub-Saharan African
countries first be certified as having
complied for the 'Wearing Apparel'
provisions-Visa licensing
• Apparel made in qualifying Sub-Saharan
African countries from U.S. fabric, yarn,
and thread is provided with duty-free and
quota-free access to the U.S. market
without limitations
• This market access into the U.S. is subject
to a cap of 1.5% of overall U.S. apparel
imports, growing in equal yearly
increments to 3.5% of overall imports by
2008 and now its 6.43675 percent
• Amendments to AGOA ("AGOA II")
doubled the applicable percentages of this
cap
• lesser-developed countries – 3.5%
• Preferential treatment-embroidered or subjected
to stone-washing, enzyme washing, acid
washing, perma-pressing, oven-baking,
bleaching, garment-dyeing, screen printing, or
other similar processes also eligible for duty-free
benefits
• simply because the article contains certain
interlinings of foreign origin, as long as the value
of such interlinings (and any findings and trim-
mings) does not exceed 25 percent of the cost of
the components of the assembled apparel
article.
• De Minimis Rule -the article contains fibers
or yarns not wholly formed in the U.S. or in
one or more AGOA-beneficiary SSA
countries if the total weight of all such
fibers and yarns is not more than 10
percent of the total weight of the article.
• For Lesser Developed Countries – their
GNP per capita being less than $ 1,500 in
1998 as measured by the World Bank.
 AGOA IV
• Apparel made of U.S. yarns and fabrics;
• Apparel made of sub-Saharan African (regional) yarns
and fabrics, subject to a cap until 2015;
• Apparel made in a designated lesser developed country
of third-country yarns and fabrics, subject to a cap until
2012;
• Apparel made of yarns and fabrics not produced in
commercial quantities in the United States;
• Certain cashmere and merino wool sweaters;
• Eligible handloomed, handmade, or folklore articles and
ethnic printed fabrics; and
• Textiles and textile articles produced entirely in a lesser-
developed beneficiary country.