TRALAC - Trade Law Centre

Extending AGOA Called Vital to Africa's Prosperity

Congressmen who have contended fiercely over economic and foreign policy issues this election year took turns praising a trade bill they say will help Africans grow their export sectors and lead to increased standards of living on the continent.

An uncommon degree of bipartisanship as well as urgency dominated the House Ways and Means Committee as it held a "markup" or amendment hearing May 5 on H.R. 4103, The African Growth and Opportunity Act (AGOA) Acceleration Act.

The committee members voted unanimously to forward the bill to the full House after approving several technical amendments introduced by Committee Chairman Bill Thomas (Republican of California), extending the reach of duty- and quota-free African products into the U.S. market. They all agreed with Thomas that passage of the trade measure, also called AGOA III, was of critical importance to sub-Saharan Africa's continued economic advancement.

Thomas said, "I expect this bill to move to the [House] floor and frankly become law without much opposition."

Representative Jim McDermott (Democrat of Washington), who earned the name "Mr. AGOA" because of his early sponsorship of the U.S.-Africa trade legislation, told his colleagues, "Today's markup is important because it's an effort by both sides to work together on a continent that has for a long time been ignored."

By helping African cloth and apparel "get up and running" before the World Trade Organization (WTO) ends all textile quotas after 2004, "this bill really is an extension of our efforts to help a continent of 650 million people to which I think we have some responsibility," McDermott said.

Representative Clay Shaw (Republican of Florida), also a firm promoter of AGOA legislation who plans to travel to the continent in July, characterized the mood of the meeting: "I feel like pinching myself" at the dream-like atmosphere of goodwill shared by colleagues who agreed with Shaw's assessment that "you cannot grow democracy without a [thriving] economy."

Long-time AGOA supporter Representative Charlie Rangel (Democrat of New York) agreed with his political opponent Shaw terming the hearing "a unique occasion" because of its bipartisanship and thanked his Democratic colleagues in general for their understanding and cooperation.

Representative Philip Crane (Republican of Illinois), who, with McDermott and Rangel, was an original supporter of the first AGOA bill passed by Congress in 2000, said, "Africa has benefited greatly from the Act's trade preferences with the United States. U.S. imports under AGOA (excluding the Generalized System of Preferences) have almost doubled from their 2001 level of $7.6 billion to their 2003 level of $13.2 billion. At the same time, 150,000 AGOA-related jobs have been created along with $340 million in foreign investment in the five leading AGOA countries.

"By building on early successes this bill will attempt to distribute more widely AGOA's benefits," the lawmaker told his colleagues.

Crane also framed the hearing's urgency pointing out, "Under current law, come October 1, lesser-developed countries will no longer have duty-free access to the United States for apparel made from third country fabric. If that provision is not extended, the African apparel industry could contract, causing a loss of many of the gains made by Africa since passage of my original AGOA legislation."

Subcommittee on Trade staff director Angela Ellard told the panel that Section 7b of the House bill "would extend the current deadline for use of third-country fabric benefits of September 30, 2004 until September 30, 2007. Benefits in 2005 and 2006 would remain capped [limited] at the existing rate and then decrease by fifty percent in the final year of 2007. The current rate is approximately 2.3 percent of total U.S. imports."

She added that section 7b also "corrects an interpretation by the Customs Service" that Representative William Jefferson (Democrat of Louisiana) said hindered rather that helped Africans textile exports to the U.S. market. Ellard explained that the new bill "would clarify an existing provision in AGOA to allow apparel articles that are eligible for benefits because they contain fabric formed in AGOA beneficiary countries to remain eligible for benefits even if they include U.S. components or fabric in any combination."

According to Ellard, "This provision reverses an interpretation of AGOA by the U.S. Customs Service requiring that an article contain either all U.S. fabric or components or all AGOA fabric or components, but not a combination of both."

Following what Committee Chairman Thomas predicted would be timely passage by the full House, the bill will go to the Senate, after which, if there are variations in the drafts, a joint House/Senate conference will hammer out a compromise bill that will then be sent to President Bush for signature into law.