House votes final passage of the reauthorisation of AGOA

1 July 2015

Photo credit: CC BY-SA 3.0; US Capitol east side; Martin Falbisoner

The House voted final passage of the reauthorisation of the African Growth and Opportunity Act (AGOA) for another ten years, until 2025. Over the past several weeks, the Senate voted 97 to 1 and the House voted 394 to 37 on the bill. The final step now remains for President Obama to sign AGOA into law, one step which he assured will be done as soon as the matter reaches his hands.

Included in the legislation was another bill to extend a program of assistance to American workers who are shown to be hurt by overseas competition.

AGOA, which had been due to expire at the end of September, expands upon the US Generalised System of Preferences (GSP), a set of formal exceptions from the WTO’s most-favoured nation (MFN) principle, to give sub-Saharan African (SSA) nations duty-free access to U.S. markets for certain good since 2000.

 “AGOA has been called ‘the cornerstone’ of the U.S.-Africa economic relationship, and on this stone we will build an even more lasting and stronger commitment between the United States and the nations of Africa,” stated Congresswoman Karen Bass (D-Calif.), Ranking Member of the Africa Subcommittee.

New AGOA, new modalities for US-SSA engagement?

The new AGOA legislation contains a provision on deepening and expanding trade and investment ties between SSA and the US, including the negotiation of trade and investment framework agreements with SSA countries that “have expressed an interest in entering into a free trade agreement with the United States,” as well as the evaluation of “the viability and progress” of such countries toward entering into a FTA with the US.

Some observers note this language might mark the transition from a unilateral, non-reciprocal regime to a regime based on reciprocal – albeit asymmetrical – trade agreements such as that between the EU and ACP countries. (See Bridges Africa, 27 May 2015)

No other major changes were made on the bill since the US Senate passed legislation on 14 May 2015. (see our report Bridges Africa, 15 May 2015)

As before, the new AGOA urges SSA countries to develop utilisation strategies on a biennial basis in order to more effectively and strategically utilise the benefits under the AGOA. In the spirit of furthering regional integration, it states that US Trade Representatives should consider requesting Regional Economic Communities to prepare such strategies.

In this regard, some experts note that preference–receiving LDCs in the context of AGOA have shown a relatively high utilisation rate only in a few sectors – particularly in textile and clothing – and have therefore pushed for a revision of the US rules of origin. (See Bridges Africa, 5 November 2014)

The new version also mandates an out-of-cycle review to determine whether SSA countries are making continuous progress in meeting the eligibility requirements. This starts with South Africa, the most developed of the beneficiary SSA countries, and other beneficiary countries deemed appropriate, no later than 30 days after enactment of the Extension Act.

The continued participation of South Africa in the preference scheme has been guaranteed following resolution in May of the longstanding poultry dispute between the two countries. South Africa’s decision to impose anti-dumping duties on certain imported US poultry products recently fuelled uncertainty that the country’s eligibility could be either withdrawn, suspended or limited if it did not meet certain requirements. (See Bridges Africa, 15 May 2015)

The bill requires the President to notify and explain to Congress his intention to terminate a country’s designation as a beneficiary at least 60 days before the decision takes effect.

It also retains language on the promotion of the role of women in social and economic development in SSA as part of the eligibility criteria of the scheme.

ICTSD reporting: “It’s A Go: U.S.-Africa Trade Gets Final Congressional Go-Ahead On AGOA”, AFKInsider, 25 June 2015; “House Clears Extension of African Trade and Governance Bill”, Nasdaq, 26 June 2015; “AGOA Extension Passes Congress”, AllAfrica, 25 June 2015; “US-Africa Trade Gets a Boost With Renewal of AGOA,” The Wall Street Journal, June 25, 2015.

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