AGOA Frequent Asked
Questions
Q: How does AGOA benefit African countries?
A: AGOA
passed as part of The Trade and Development Act
of 2000 provides
beneficiary countries in Sub-Saharan Africa with the most
liberal access to the U.S.
market available to any country or region with
which we do not have a Free
Trade Agreement. It reinforces African reform
efforts, provides improved access to U.S. credit
and technical expertise, and establishes a high-level
dialogue on trade and investment in
the form of a U.S.-Sub-Saharan
Africa Trade and Economic Forum.
Q: How does
it benefit U.S. firms?
A: By creating
tangible incentives for African countries to implement
economic
and commercial reform policies, AGOA contributes
to better market opportunities
and stronger commercial partners in Africa for
U.S. companies.
The Act should help forge stronger commercial
ties between Africa and
the United States, while it helps to integrate
Africa into the global economy. U.S. firms may find new opportunities in privatizations
of African
state-owned enterprises, or in partnership with
African companies in infrastructure
projects.
Q: Why the
need for an AGOA II bill?
A: The need
for AGOA II legislation was developed in part
to improve upon
and clarify
some of the specific provisions that were not
addressed in the
original
AGOA legislation (or AGOA I). AGOA II is part
of the Trade Act of
2002 which
President Bush signed into law on August 6, 2002.
Q: What
specific changes did the AGOA II legislation make
to the original AGOA law?
A: Click
below to view a table comparing AGOA I and AGOA
II.
Q: What
benefits are provided for Botswana and Namibia?
A: AGOA
II permits Botswana and Namibia to qualify for
the "Special Provision,"
which permits lesser developed AGOA beneficiary
countries to
utilize
fabric manufactured anywhere in the world (until
September 30, 2004). However,
AGOA II does not extend the 2004 end date of the
Special
Provision,
nor does it extend AGOA beyond its legislated
end date of September
30, 2008. Since Botswana's and Namibia's per capita
GNP exceeded $1,500 (the
1998 World Bank level), they were not designated
as a lesser developed
beneficiary country and were not eligible for
the Special Provision
under the original AGOA legislation. Botswana's
and Namibia's economies
are heavily dependent upon minerals and other
precious stones which increased
GNP per capita as well as inequalities in their
income distribution.
Q: What
conditions are placed on participation by African
countries?
A: The President
may designate Sub-Saharan African countries as
eligible to receive
the benefits of the Act if they are making progress
in such areas as:
establishment of market-based conomies; development
of political
pluralism and the rule of law; elimination of
barriers to U.S.
trade and
investment; protection of intellectual property;
efforts to combat corruption;
policies to reduce poverty, increase availability
of health care
and educational
opportunities; protection of human rights and
worker rights,
and elimination of certain practices of child
labor. Progress
in each area is not a requirement for AGOA eligibility.
Q: Which
countries have been designated as AGOA eligible?
A: 38 countries
have been designated as AGOA eligible (click here
for the country
eligibility page).
Q: Does
the United States have the right to set eligibility
criteria for
African countries?
A: The criteria
are standards which the Africans themselves have
espoused and most
are striving to uphold. But Congress never intended
AGOA to be a blank check
for all African countries, without regard to performance.
It was meant to offer tangible incentives for African
governments to improve
their political
and economic governance, not to underwrite poor
policies.
Q: What
are the provisions governing apparel imports?
A: Eligible
Sub-Saharan African countries will enjoy unlimited
duty-free and quota-free
access to the U.S. market for apparel made in
Africa from U.S. fabric,
U.S. yarn, and U.S. thread. AGOA I also provides
for growth of apparel
imports made from fabric and yarn produced in
beneficiary Sub-Saharan
African countries from 1.5% of overall U.S. apparel
imports to
3.5% over
an 8-year period. AGOA II doubles the applicable
percentages of the cap.
Under a Special Rule for Lesser Developed Beneficiary
Countries, those with
a per capita GNP under $1,500 in 1998 will enjoy
an additional preference
in the form of duty-free/quota-free access for
apparel made
from fabric
originating anywhere in the world. The Special
Rule is in effect until
September 30, 2004. 33 countries have been designated
as eligible
for the Special Rule, once they meet the apparel
benefits criteria.
AGOA II designates Botswana and Namibia as Lesser
Developed Beneficiary
Countries.
Q: Which
countries fall under the per capita GNP ceiling
for the Special Rule?
A: All Sub-Saharan
African countries meet the per capita GNP requirements
of the Special
Rule with the exception of the following: Botswana,
Gabon, Mauritius,
Namibia, Seychelles, and South Africa. However,
countries must meet the general AGOA eligibility requirements and
the requirements for apparel
benefits in order to qualify for the Special Rule.
AGOA II grants Lesser Developed Beneficiary Country status to Botswana and Namibia,
qualifying
both countries for the Special Rule.
Q: When
do the apparel benefits take effect?
A: Although
the apparel benefits take effect October 1, 2000,
beneficiary
countries
must first have an effective visa system in place
to prevent
illegal
transshipment and use of counterfeit documentation.
They must also institute
enforcement and verification procedures.
Details were disseminated
to African governments following a cable instruction
to all U.S. embassies
in Sub-Saharan Africa on September 21, 2000. Countries
must also be
beneficiary
developing
countries under the U.S. Generalized System of
Preferences (GSP), which includes 45 Sub-Saharan
African countries.
Q: How will
the cap be administered? Are there provisions
to prevent one
country
from monopolizing the benefits?
A: AGOA
specifies only one cap, which is not further sub-divided.
It is conceivable
that a beneficiary country or countries with a
strong apparel
manufacturing
sector could monopolize the benefits available
to all African
countries before others are able to establish
the infrastructure and the
required visa system. However, that is unlikely
because the third
year cap
is more than twice as large as the previous year
when AGOA countries
filled only 60% of the available cap.
Q: What
is the estimated value of the increasing cap on
imports of apparel made from
regional and Special Rule fabric?
A: The cap
is measured in square meter equivalents (SME’s)
and has no dollar equivalent.
However, the first year cap which was in
effect October
1, 2000-September 30, 2001 allowed AGOA-eligible
countries to ship nearly twice
the volume of apparel to the United States which
they shipped in 1999.
For the period October 1, 2001 - September
30, 2002 the cap was 27.1% larger
than in the previous year, when AGOA countries
filled only 17% of the
available cap. For the period October 1, 2002
- September 30, 2003 the
cap is more than twice as large than in the previous
year, when AGOA countries
filled only 60% of the available cap.
Q: Which
countries stand to benefit most from the apparel
provisions?
A: Countries
which already have the infrastructure in place
to produce apparel
will likely see the greatest benefit first, provided
they meet all other eligibility
requirements and establish an effective visa system,
enforcement
mechanism, and verification procedures.
As other eligible countries
are successful in attracting new apparel manufacturing
investments
they should benefit as well as the cap increases
annually to permit escalating
levels of
U.S.
imports.
Q: What
does the term "knit-to-shape" mean?
A: Components
that take their shape in the knitting process,
rather than
being cut
from a bolt of cloth.
Q: What
are the Act’s GSP provisions?
A: AGOA
authorizes the President to provide duty free
treatment under GSP for any
article, after the U.S. Trade Representative (USTR)
and the U.S.
International
Trade Commission (USITC) have determined that
the article is
not import sensitive when imported from African
countries.
On
December 21, 2000,
the President extended duty-free treatment under
GSP to AGOA eligible
countries for more than 1,800 tariff line items
in addition to the standard
GSP list of approximately 4,600 items available
to non-AGOA
GSP beneficiary
countries.
The
additional GSP line items which include
such previously
excluded items as footwear, luggage, handbags,
watches, and flatware
were implemented
after an extensive process of public comment
and review.
Sub-Saharan African GSP beneficiary countries
are also exempted
from competitive need limitations.
In order for any Sub-Saharan
African
country to receive the liberalized GSP benefits
it must first be
GSP eligible
under the existing criteria of that law. GSP is extended
for Sub-Saharan African beneficiary countries
until September
30, 2008, seven years longer than in the rest
of the world.
Q: How can
African countries become more familiar with the
benefits of the
Act?
A: We have
conducted technical assistance seminars in Africa
and the United States
to explain the benefits of the Act, in order to
ensure that
African
countries are able to take maximum advantage of
its provisions
Source: U.S. Govt.
Last modified: 05/26/05
