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USTR Issues Fifth Annual Report on AGOA

The Office of the U.S. Trade Representative (USTR) has submitted to Congress the Administration's fifth of eight annual reports, entitled "2005 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act (AGOA)."

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Highlights of the 2005 report include:

"AGOA III" extended AGOA's authorization until 2015, etc. In July 2004, President Bush signed into law the AGOA Acceleration Act of 2004 (AGOA III), which extends AGOA's authorization until 2015, extends its special third-country fabric provision until 2007; mandates increased AGOA-related technical assistance; and amends some technical provisions of the AGOA. (See ITT's Online Archives or 07/14/04 news, 04071405, for BP summary of the President's signing of AGOA III into law.)

Elimination of WTO textile & apparel quotas may be source of instability for African exporters. According to the USTR, the elimination of textile and apparel quotas at the end of 2004 represents a potential source of instability for textile and apparel exporters which have benefited greatly from AGOA. To continue to realize the potential benefits of AGOA in the apparel sector, the USTR states that eligible sub-Saharan African countries need to develop vertically integrated - cotton to textiles to apparel - sectors that are more competitive.

However, the USTR states that AGOA-eligible countries must also move beyond apparel and diversify their exports to maximize AGOA benefits by producing any of the over 6,000 products eligible for duty-free treatment under AGOA.

AGOA continues to increase U.S.-sub-Saharan Africa trade. The USTR reports that AGOA has been a measurable success by increasing the U.S.' two-way trade with sub-Saharan Africa and diversifying the range of products being traded.

In 2004, over 98% of U.S. imports from AGOA-eligible countries entered duty-free. The U.S. imported more than $26 billion in merchandise duty-free under AGOA in 2004, an 88% increase from 2003, largely due to an increase in oil imports. Non-oil AGOA imports totaled $3.5 billion in 2004, up 22% from 2003. The USTR notes that apparel and agricultural products accounted for more than half of non-oil AGOA imports. Also in 2004, U.S. exports to sub-Saharan Africa increased 25% from 2003, to $8.6 billion.

U.S.-SACU FTA negotiations expected to resume in 2005. The U.S. and the five members of the Southern African Customs Union (SACU) - Botswana, Lesotho, Namibia, South Africa, and Swaziland - continued negotiations toward a free trade agreement (FTA).

The USTR states that although six rounds of negotiations were held in 2003 and 2004, progress toward an FTA is moving more slowly than initially expected, due largely to capacity constraints on the SACU side and divergent views between the parties on some key issues. In early 2005, the U.S. continued to work with SACU to reaffirm a common vision and approach for a comprehensive FTA with the expectation that negotiations would resume later in 2005.

(See ITT's Online Archives or 06/15/04 news, 04061530, for BP summary of the fourth annual AGOA report.)

USTR report (dated May 2005) available at http://www.ustr.gov/assets/Trade_Development/Preference_Programs/AGOA/asset_upload_file424_7746.pdf