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U.S. Congress gives 10 year renewal to AGOA

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06Jul

U.S. Congress gives 10 year renewal to AGOA

The U.S Congress approved a long-anticipated renewal of the African Growth and Opportunity Act (AGOA) on Thursday, which will assure Mauritian textile producers at least 10 more years of duty-free and quota-free access to the U.S. market.

The legislation also gives a 10-year extension of the so-called Third Country Fabric rule, which allows poor sub- Saharan African nations to export apparel to the United States that is made from yarn and fabric sourced outside of Africa. Although not considered a least developed country, Mauritius has benefi ted from this rule under a special exemption.

AGOA renewal was a top priority for Mauritian companies and the Mauritian government, which joined with other sub-Saharan African countries in a two-year effort to convince Congress that AGOA has been successful in improving the economies of many poor African nations and should be continued.

«With the passage today by the House of the 10-year renewal of AGOA, the stage is set for the continued growth and success of the Mauritius apparel industry,» said Paul Ryberg, legal representative and lobbyist for the Mauritian government in Washington and president of the Mauritius- U.S. Business Association. A final vote on Thursday ended a roller-coaster week of confusing and controversial trade votes that saw AGOA tangled in a wider debate of U.S. trade laws.

«The 10-year extension of both AGOA and its thirdcountry fabric rule of origin will allow the Mauritian apparel industry to continue to export to the US and, at the same time, to become more competitive so it can survive in the evolving new world trading environment,» Ryberg added.

AGOA enjoys wide support from U.S. clothing retailers, which benefit from lowercost African-made garments, from civil society groups that advocate economic and social development in Africa, and from both Republicans and Democrats in Congress. Lawmakers from both parties like the idea of encouraging business growth in Africa and view AGOA as cornerstone of U.S. policy there. It was set to expire at the end of September.

AGOA also has had longstanding support within the Obama administration, and the president on Thursday promised to sign the bill when it reaches his desk.

With such widespread agreement about the law’s successes, it puzzles African leaders why it takes so long for Congress to act on this important trade measure. Congress has amended AGOA five times since it was passed in 2000, and in 2012 approved a three-year renewal of the Third Country Fabric provision, one of the law’s key elements. But just about every effort to extend or enhance AGOA has been fraught with delays and political maneuvering.

In 2012, for example, African textile producers were pushed to the brink when Congress waited until the last minute to approve an extension of the Third Country Fabric Provision, which was due to expire in September of that year. The delay forced the layoff of 30,000 African textile workers, after U.S. buyers, worried about the future of AGOA, took their business elsewhere.

AGOA supporters worried that the same thing would happen this year. Congress was slow to introduce an AGOA extension bill and U.S. buyers were getting nervous about renewal, as apparel orders are usually placed nine months in advance of delivery. As the legislative process dragged on, U.S. buyers threatened to withdraw their orders unless the African manufacturers «guaranteed» the duties.

The situation was especially troublesome to Mauritian textile producers. «Mauritius’ apparel exports to the United States are almost entirely dependent upon renewal of AGOA,» Ryberg said. «The United States is the second largest destination after the European Union, and exports to the US were worth $223 million.» He said it would be unlikely that textile firms would close because many also sell to the EU, «but there would certainly be layoffs.»

Ryberg said that Mauritian apparel exports to the U.S. during the first quarter of 2015 were down 4 percent from the same period last year, reflecting the skittishness of U.S. buyers. This mirrored a 2.6 percent drop overall in African textile imports under AGOA during that period.

Several unexpected dynamics caused legislative delays in the law’s renewal this year: a controversy over U.S. chicken trade with South Africa that could have ended with SA’s participation in AGOA, negotiations over the length of the renewal (African leaders wanted 15, a compromise of 10 was reached), calls to tighten eligibility rules that allow countries to receive AGOA benefits (some complained that repressive regimes like Ethiopia are not worthy of U.S. trade preferences), and discussions about whether more imports of African agricultural products should be allowed.
All of these issues were eventually resolved. But the most serious threat to a timely renewal was brewing in the political belly of Congress, where it was decided to combine AGOA into a set of controversial trade votes that had pitted President Obama against many in his own party in Congress. That showdown proved to be one of the most headline-grabbing rifts between the White House and the legislative branches of Obama’s presidency.

At issue was legislation that would give the President socalled «fast-track authority» to approve trade deals, such as the Trans-Pacific Partnership (TPP). Republicans generally favored the deal, while many Democrats were concerned about the impact on U.S. workers and wanted trade adjustment assistance to be available to those displaced by international trade. A worker assistance bill was offered, and some leaders in Congress believed it had a better chance of passing if it was tied to AGOA, which had broad bipartisan support. The two bills were thus joined, which worried AGOA supporters. They preferred having Africa trade judged on its own merits.

These tactics caused a series of nail-biting votes and complex procedural maneuvering on the floors of the House and the Senate until the deadlock was broken and both trade bills were passed and sent to the White House for the president’s signature on Thursday, allowing AGOA supporters to heave a collective sigh of relief and for Obama to reap a legislative victory. Ironically, attaching AGOA to the trade assistance bill, which aims to help U.S. workers, was also an indirect help to workers in Africa. Passage of AGOA will help keep the African textile industry going for a decade or more, giving Africa a guaranteed market access at a time when it might otherwise suffer from the expansion of U.S. trade with Asia, which will come under the TPP plan.

«AGOA was renewed as part of the package of trade measures that included the Trade Promotion Authority (TPA), which authorizes the President to conclude free trade agreements,» explained Ryberg, the Washington lawyer.

«The Trans-Pacific Partnership (TPP) is the next free trade agreement in line, which when concluded, will pose new competitive challenges for Mauritius and other AGOA beneficiaries,» he said. «So it is appropriate that AGOA has been renewed at the same time so that AGOA’s duty-free preferences will enable the Mauritian apparel industry to evolve and compete in this new environment.»

 

Source: ‘link of article from Le Mauricien’.

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