World | Africa

August 15, 2013

View From Washington : Mauritius And Other African Countries Push For 15 More Years of AGOA Trade Benefits

Supporters of the African Growth and Opportunity Act (AGOA), a U.S. trade law that has been a big boost to Mauritian exports, are asking the U.S. Congress to extend the law for another 15-20 years when it expires in 2015.

They argue that prolonged, tax-free access to the U.S. market will give textile and other industries that are just developing in many part of Africa the chance to mature and become more firmly established in international trade.

And they are pushing lawmakers to renew the law well before the 2015 expiration date, in order to avoid uncertainties in trade that in the past have led to serious disruptions in the production of goods destined for the U.S. market. Last year's last minute extension of the Third Country Fabric provision of AGOA, for example, led to major problems for apparel exporters in Lesotho and Mauritius.

On Tuesday, a working group of African Ambassadors presented its AGOA wish list to Congress.
Lawmakers are seeking such input from African countries as part of the AGOA reauthorization process.
Among the top priorities are extending both AGOA and Third Country Fabric for at least 15 years, giving prominence to Africa-US trade by organizing a U.S.-Africa Summit during next year's AGOA Forum, to be held in Washington, providing more technical and capacity building assistance to help African countries take full advantage of AGOA, and encouraging more U.S. investment in Africa that includes getting the African Diaspora living in the U.S. involved.

"We are making progress," the Honorable Somduth Soborun, Mauritius ambassador to the U.S., said in presenting the ambassadors' report at a press conference in Washington. "AGOA has brought the United States and sub-Saharan Africa closer together in trade and in various other issues. It had a very marked influence on textiles and apparel, and has shown to be a real success story. It has also created an auto parts industry, mostly in South Africa."
The goal to get Africa fully engaged in trade, not dependent on U.S. aid programs
An early extension of AGOA, he said, is essential because it will "inspire investor confidence and allow opportunities to take root and grow."
Members of Congress attending the press briefing agreed. "With an early start, I believe we will get AGOA reauthorized, extended and enhanced well before the (expiration) deadline," said Rep. Karen Bass, a Democrat from California.

But an extension, said Rep. Chris Smith, Republican from New Jersey, doesn't mean AGOA will become a permanent trade program. That was never the intent, he said, as it was the goal to get Africa fully engaged in trade, not dependent on U.S. aid programs, and this is becoming a reality. "A 15-year timeframe is long enough, and will give enough time for predictability and to make enhancements in the program. Doing it forever just won't pass Congress."

In preparation for the 12th annual AGOA Forum (the first was held in Mauritius in 2001), officials in Washington presented evidence how the trade law has made a big difference in the economies of many African countries. The Forum begins Aug. 12 in Ethiopia.

The State Department said that eligible countries exported nearly $35 billion in products to the United  States under AGOA in 2012, and that total exports have risen 300 percent since the program's start. While about 84 percent of products were petroleum (oil from places like Nigeria), the program has also helped promote other, value-added exports such as apparel, footwear, agricultural products and cars.
In Lesotho, AGOA spurred a vibrant textile and apparel industry that is the country's largest private sector employer with 36,000 workers. In Mauritius, exports to the U.S. have grown more than 400 percent. The textile and apparel sector has grown annually at a rate of five percent and leading non-apparel exports have grown at an overall rate of 12 percent since 2001. "AGOA has contributed to an expansion of the apparel industry in Mauritius on a scale that the country likely would not have achieved otherwise," the State Department said.

Despite such successes, AGOA can do much more, Florizelle Liser, Assistant U.S. Trade Representative for Africa, told reporters at a press briefing about the AGOA Forum on Tuesday. "We have to look at how we can make it better, how we can fulfill its promise and potential, and we need to get that right. As AGOA is extended, we want to make sure that the Africans are in a position to compete in the global economy."

And, she added, it's also important to make sure that American companies "face a level playing field while doing business in Africa."
Liser also said that:
-    Relaxing the so-called "rules of origin" for canned tuna from Mauritius, a top priority for the Mauritius government in the AGOA renewal discussions, "is a sensitive issue" in U.S. trade and will require extensive lobbying in Congress. "Mauritius has been very savvy in how it engaged the U.S. Congress in the early days of AGOA, doing an excellent campaign on Capitol Hill, and then again on winning extension of the Third Country Fabric designation," Liser said in an interview. "If Mauritius wants to the rules of origin changed, it will take an effort similar to what they did with Third Country Fabric." The issue is sensitive, she explained, because the United States has an active tuna canning industry, mostly in California, that would oppose changes in the rules.
-    There's no reason to be concerned about the growing trade relationship between China and Africa. The Chinese, like other countries, are attracted to the region because Africa has a rising middle class and has seven of the 10 fastest growing economies in the world. But the Chinese aren't the only ones moving in on Africa. "Last year, the largest investor in Africa was not China, it was actually Malaysia. A lot of people don't know that," she said. There are also different trade patterns between the U.S. and Africa and China and Africa. "Africa has been rapidly increasing its exports of footwear and apparel to the United States. You will not see that same pattern in their trade with China or other countries."

Madagascar still an outcast to AGOA program
With presidential elections again delayed in Madagascar, there's renewed international concern over the future of the island nation's fragile economy and governance. Elections scheduled for July 24 have been pushed back to Aug. 23 due to a dispute between candidates and the international community.
And with the delays come worries that Madagascar will not soon regain its eligibility to export textile and other products to the United States under the African Growth and Opportunity Act (AGOA). The United States dropped Madagascar from the program after a military coup in 2009.
Prior to that, Madagascar had become one of the largest exporters in Africa of textile and apparel goods to the United States under AGOA's benefits, which allow products from eligible African countries to enter the US market tax-free. Many firms in Mauritius expanded or developed textile operations on the island to take advantage of these benefits.1

"They have said they would have elections three times, but we are waiting to see if the rule of law will be re-established," Florizelle Liser, assistant U.S. Trade Representative for Africa, said in an interview after a press conference in Washington last week.

"They can be put back into AGOA any day of the year," she said, once they have held democratic elections and can demonstrate that they meet the eligibility criteria of the AGOA program.
Political instability in Madagascar has forced many Mauritian companies to reevaluate their operations there. Some companies have shifted their sales to Europe and South Africa, and have transferred their U.S.-bound business back to Mauritius. Liser said that other African countries that have been suspended under AGOA, notably Cote d'Ivoire and Guinea have reentered the program after political reforms were made. Besides Madagascar, Guinea Bissau and Mali remain excluded from AGOA after unconstitutional transfers of power.

She said the United States "wants to put countries in AGOA" rather than exclude them because the program has a track record in promoting trade and expanding jobs and industries in participating countries. But governments must first demonstrate that they can govern democratically, protect rights of their citizens and respect the rule of law, she said.

Text by Le Mauricien

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