AGOA Hampered by Poor Infrastructure, Lack of Beneficiary Strategy, Says State Dept. Official
Sub-Saharan African countries must develop independent, national strategies for the African Growth and Opportunity Act (AGOA) in order to fully embrace the trade preferences program, said Nicole Johnson, senior trade and investment officer at the State Department, at an Advancing Trade and Investment in Africa (ATIA) panel on May 1. Poor infrastructure continues to inhibit use of the program as well, said Johnson. “There’s broad agreement that AGOA has not lived up to its full potential. There are a number of eligible countries that have never taken advantage of the benefits and never exported a single product,” said Johnson. “Last year, two-thirds of [eligible countries] exported to the U.S. under AGOA and only 14 of them exported more than $10 million worth of products. So there are still a sizeable number of countries that are not exporting at all under AGOA.”
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AGOA has dramatically boosted textile and other exports from eligible countries to the U.S., said Johnson. In one example, “Ethiopia, which was the host of last year’s AGOA forum, has significantly increased its AGOA exports, said Johnson. “The value of footwear exports has increased ten-fold from just over $600,000 in 2011 to $7 million in 2012.”
But the goods exported through the program are largely low-value added and restricted to more traditional sectors, said panel member Carl LeVan, advisory board member at ATIA and a professor of African studies at American University. “We’d want to see spillover. We’d want to see creation of jobs that involve some skill and some value added to the product,” said LeVan. The Obama administration government should include in renewal legislation enhanced provisions to cultivate high-value added production and assist ineligible countries to reform governance functions, added LeVan.
AGOA will expire at the end of fiscal year 2015. The program should be renewed before the end of 2014 in order to maintain sourcing relationships, say industry officials, but concrete prescriptions for enhancement remain amorphous (see 14040402). The Office of the U.S. Trade Representative has launched a multi-faceted strategy through congressional and stakeholder consultation to review the program before expiration. Roughly 97 percent of African products exported to the U.S. already enter duty-free through AGOA, the Generalized System of Preferences or most favored nation status, said Johnson. Nonetheless, “there is a close review underway now, tariff line by line to look at the remaining products and make an assessment of whether any new products could be added under AGOA.” -- Brian Dabbs