AGOA Renewal Likely to Face Uphill Climb, but Urgency Grows, Say Lawmakers, Witnesses

The current legislative climate and congressional dysfunction doom nearly all legislation to fail, Rangel added. “How fast we move on this will be determined the day after the national elections,” said Rangel. “This Congress has historically challenged any way to give any estimates as it relates to legislation.” Rangel said he thought AGOA could potentially move independently if Congress is able to make a breakthrough in its current obstructionist atmosphere. Lawmakers and witnesses said the hearing represented a critical opportunity to address AGOA renewal and modifications prior to the U.S.-Africa Leaders Summit from Aug. 4-6 (see 14072921). The law expires on Sept. 30, 2015, and many industry representatives are calling for early renewal in order to preserve existing supply chains.

Subcommittee Chairman Devin Nunes, R-Calif., told reporters that AGOA legislation will have to move forward as part of an omnibus trade bill, featuring Trade Promotion Authority (TPA) as its flagship item. TPA legislation has hit significant resistance in Congress since one version of the bill was introduced in January (see 14040919). “It’s all depending on the larger trade picture and that is: Where are we at on TPA? Where are we on [the Miscellaneous Tariff Bill]? Where are we on [the Generalized System of Preferences]?” said Nunes. “And, you know, can we get anything that comes together between the House and the Senate before the lame duck?”

Skyrocketing African growth is presenting a monumental incentive for U.S. firms to continue to invest in African production and enter African markets through the AGOA framework, said witness William McRaith, chief supply chain officer at PVH, a clothing company. Lawmakers should renew AGOA “as soon as possible,” in order to send an “unequivocal signal” to African partners that the U.S. is committed to bilateral trade. African economies are now able to add significant value to commodities, through sewing, weaving and other logistics, and produce finished goods, said McRaith, rather than solely producing textiles as they have in the past. Poor infrastructure and a lack of regional integration still pose significant challenges to the optimization of AGOA, said lawmakers and witnesses.

In terms of U.S. exports to Africa, U.S. companies also continue to face high tariffs, forced localization barriers, customs slogs and other non-tariff barriers, said Ben Leo, senior fellow at the Center for Global Development, along with other witnesses and lawmakers. “Implementing the recently concluded Trade Facilitation Agreement would also help Africa address supply-side constraints and encourage greater investment from the private sector and development banks,” said Nunes. “I am frustrated that India is blocking adoption of the deal it agreed to last December, harming developed and developing countries alike and threatening the WTO’s viability.” The ratification and entry into force of the World Trade Organization Trade Facilitation Agreement is currently being blocked primarily by India as a critical July 31 deadline looms (see 14072521).

Moreover, the U.S. should push back against European Union (EU) Economic Partnership Agreements (EPAs) with African partners that inhibited U.S. access to African trade, said lawmakers and witnesses. The Transatlantic Trade and Investment Partnership provides an ideal forum to address those preferential agreements, said Leo. “The tariff preference in the EU-South Africa EPA are now largely entered into force,” he said. “U.S. exporters are at a significant disadvantage in losing market share. The EU is pushing EPAs to bring together AGOA members to further disadvantage U.S. exporters. While Congress has never required that AGOA countries provide reciprocal market access for U.S. exports, the fact that some are now offering this preferential access to the EU, and not the United States, has raised serious concerns.” -- Brian Dabbs