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Building capacity to help Africa trade better

Hearing on Advancing the U.S. Trade Agenda: Trade with Africa and the African Growth and Opportunity Act

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Hearing on Advancing the U.S. Trade Agenda: Trade with Africa and the African Growth and Opportunity Act

Hearing on Advancing the U.S. Trade Agenda: Trade with Africa and the African Growth and Opportunity Act
Photo credit: Ways and Means Committee Democrats

House Ways and Means Trade Subcommittee held a hearing on trade with Africa and the African Growth and Opportunity Act on July 29, 2014 in Washington, DC.

BACKGROUND

In 2000, Congress first passed the African Growth and Opportunity Act (AGOA) to provide duty-free access to a wide variety of products from sub-Saharan African countries that meet certain criteria. Benefits under AGOA are extensive, allowing for duty-free access for many apparel and agriculture products that are not included in the Generalized System of Preferences (GSP) and providing preferential treatment on about 2000 more tariff lines than GSP. In addition, AGOA includes certain special rules of origin to further encourage trade and development in Africa. 

The program is designed to promote economic development in sub-Saharan Africa by granting increased access to U.S. markets. The AGOA Ambassadors Working Group estimates that AGOA has generated about 350,000 direct jobs and 1,000,000 indirect jobs in Sub-Saharan Africa and about 100,000 jobs in the United States. 

Since adoption of AGOA in 2000, U.S. trade with sub-Saharan Africa has grown about four-fold, rising from $7.6 billion in 2001 to $24.8 billion in 2013. Approximately 90 percent of imports from AGOA-eligible countries entered under the AGOA program, though the level of utilization varies from country to country. Major products exported to the United States under AGOA include crude petroleum ($20 billion), automobiles and parts ($2.1 billion), refined petroleum products ($1.2 billion), and textiles and apparel ($907 million).

AGOA has had a positive impact on foreign direct investment flows to sub-Saharan Africa, particularly in the textile and apparel sectors, as well as the automotive sector. U.S. investment since enactment of AGOA has increased six-fold. Even as trade and investment have grown, significant barriers remain in Africa, including high tariffs, forced localization requirements, legal restrictions on investment, and customs barriers, among others. Substantial supply-side constraints, such as poor infrastructure, lack of regional integration, and other obstacles, also contribute to depress trade and investment flows. 

As Congress considers renewal of AGOA, which expires in September 2015, this hearing is an important element of the Committee’s fact-gathering activities. To this end, the Committee encourages interested parties to submit for the record specific comments on AGOA and AGOA renewal, pursuant to the below instructions. The period for comments will be held open longer than usual to accommodate comments from interested parties.

In announcing this hearing, Chairman Nunes said, “AGOA is an important development tool that has been proven to promote economic growth and jobs both in developing countries in Africa and the United States. I am committed to ensuring a bipartisan, timely, and seamless renewal of the program before it expires in September 2015. In addition, we are studying potential changes to the program to improve its effectiveness and utilization. We are also exploring how Africa can reduce barriers and become more attractive for trade and investment within Africa, as well as globally, such as through full implementation of the WTO Trade Facilitation Agreement.” 

FOCUS OF THE HEARING:

The focus of the hearing is on AGOA and U.S. trade policy in sub-Saharan Africa. The hearing focus will include: (1) deepening and expanding trade and investment ties with sub-Saharan Africa; (2) the effectiveness of AGOA and potential revisions to the program to promote improved utilization; (3) barriers to trade in Africa; (4) barriers to regional integration in Africa; and (5) capacity building and efforts to promote regional integration and integration into global supply chains, including through implementation of the WTO Trade Facilitation Agreement.

Witness List

Ben Leo
Senior Fellow, Director of Rethinking U.S. Development Policy, Center For Global Development

William C. McRaith
Chief Supply Chain Officer, PVH Corp.

Witney Schneidman
Senior International Advisor, Covington & Burling LL; Nonresident Fellow, Africa Growth Initiative, Brookings

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