TRALAC - Trade Law Centre

Uganda: US an important Niche Market for Organics

Wednesday, 02 June 2004

Source: Schneidman & Associates International (Washington,

"AGOA is in shambles" commented an African diplomat following a recent rally in the Senate that featured the rock star Bono and bevy of influential legislators. What should have been have been a shot in the arm for the passage of pending AGOA legislation instead revealed the degree to which this effort is in peril.

The key aspect of the legislation is the extension of the provision that enables the less developed AGOA-eligible African countries to export to the U.S., duty and quota free, apparel containing fabric from non-AGOA countries. This provision is responsible for more than $500 million in new investments and the creation of about 250,000 jobs in Africa. It is set to expire on September 30. According to the clock of the U.S. Congress, as well as the buying schedule of American retailers who source from AGOA countries, this is the equivalent of fifteen minutes.

If the provision expires, AGOA will cease to be commercially viable. The historic legislation would then become one of the many well-intentioned but unsustained efforts to help reduce Africa's reliance on foreign aid. American credibility in Africa would suffer as well. Already American companies are already placing orders in other regions of the world in anticipation of the provision lapsing.

AGOA is in trouble for several reasons. The legislation has become mired in partisan sniping over job outsourcing and is no longer seen as an innovative and cost effective means for stimulating economic development in Africa. For the Bush Administration and many Senate Democrats, AGOA appears to be just another trade bill they want to avoid.

AGOA could also become a victim of parliamentary procedure. Senator Frist (R-TN) has indicated that AGOA legislation can only pass under Unanimous Consent, to avoid using valuable floor time to fight off extraneous amendments. Getting all 100 Senators to agree on anything is difficult, not to mention a trade-based strategy to spur economic development in Africa.

As for the third country fabric provision, the Ranking Member of the Senate Finance Committee, Senator Max Baucus (D-MT), is advocating a six-month extension, until March 2005, with a promise to revisit AGOA early in the new session of Congress. Senator Frist and Senate Finance Committee Chairman, Charles Grassley (R-IA), favor a twelve-month extension in order to get past the presidential elections with the goal of passing a more comprehensive bill and longer extension next year.

These proposals inspire little confidence. American buyers who work for U.S. retailers need security of apparel supply at a set price. A six to twelve month extension creates uncertainty for American retailers and it would undermine Africa's ability to compete in the American market with apparel from China and elsewhere. AGOA already faces a major challenge when the Multi-Fiber Agreement expires on January 1 2005 and all apparel can enter the U.S. quota free.

Congressman Rangel (D-NY) was right when he told the rally that a three-year extension is necessary to ensure AGOA's continued relevance to Africa's development. In fact, the AGOA bill that Senator Lugar (R-IN) introduced earlier this year and the bill that is making its way to a floor vote in the House both advocate extending the third country fabric provision for three years.

So how can AGOA be saved?

First, the House needs to act quickly on the AGOA Acceleration Act of 2004. A strong bipartisan vote, as has occurred on previous AGOA legislation, is essential

Second, Senate Democrats need to voice support for what President Museveni of Uganda has accurately described as the most important initiative in the developed world's relationship with Africa since independence. It is troubling that two years ago, seven Democrats co-sponsored revisions to AGOA but only Senator Lieberman (D-CN) has put his name on the Lugar bill.

Third, President Bush needs to deliver on his promise to support an extension of AGOA, made in January 2003 in a message to the U.S.-Africa AGOA Forum in Mauritius. Apart from an endorsement of AGOA by U.S. Trade Representative Robert Zoellick in the Senate on March 10, 2004, the Administration has been virtually silent on AGOA's fate.

AGOA will become irrelevant unless President Bush lets the leadership in Congress know that the legislation is a priority for his Administration. Indeed, when AGOA passed for the first time in 2000, it would not have happened without the active engagement of President Clinton, the Secretary of State, the Secretary of Commerce, the Secretary of the Treasury and the offices of legislative affairs at each of these agencies, especially the White House.

If on September 30th, the key provision of AGOA lapses or is only extended for a limited time, all U.S. development initiatives in Africa, including the new Millennium Challenge Account and the Bush Administration's efforts to negotiate a free trade agreement with the Southern African Customs Union, will be weakened substantially.

Witney W. Schneidman was deputy assistant secretary of State in the Clinton Administration. He is president of Schneidman & Associates International, an Africa-focused trade and investment consulting firm in Washington, DC.