Washington, DC — Praising the "undeniable success" of the African Growth and Opportunities Act (Agoa), Assistant U.S. Trade Representative Florizelle B. Liser told the House Subcommittee on Africa Tuesday that passage of new legislation known as Agoa III is critical "if we hope to sustain these achievements over the long term."
"Agoa is in jeopardy," subcommittee chairman Ed Royce (R-California) said, opening the hearing. "I'm told that apparel orders for Africa already are being cancelled due to uncertainty over Congress' action."
Agoa III extends duty free access for apparel made from fabrics of another country to September 2007. This provision for "third country fabric" is set to expire September 30. Congressional inaction on an extension "could have serious impact - losses of jobs, the closing of factories," Lister told the subcommittee.
Agoa-generated market access has helped boost U.S. imports from Africa by 43 percent to US$25.6bn, Liser said. "Particularly impressive is the 32 percent growth in non-oil Agoa exports."
Much of this has been in garments and concentrated in just a handful of African nations. "Out of the current 37 Agoa-eligible countries, only about seven of them have fully benefited from Agoa," Bread for the World president, the Rev. David Beckman, told the subcommittee. Nonetheless, Beckman says, the impact is significant. "Agoa has become a household name in many African countries," he said. "The longer Congress waits to make this important decision on third country fabrics, the greater the losses in jobs and investments, which African countries can ill afford."
The issue is especially urgent, said Beckman, because in January 2005, the World Trade Organization (WTO) lifts all textile and apparel quotas "exposing Africa's fledgling textile and apparel industry to stiff competition from Asian economies."
Bread for the World is part of a coalition of groups and individuals working for extending and strengthening the African Growth and Opportunity Act (Agoa). Proponents won a small victory last week when the Ways and Means Committee of the U.S. House of Representatives approved H.R. 4103 by voice vote.
"The original Agoa, passed in 2000, has proven to be one of the most effective means of helping African nations develop and attract investment and enhance the standard of living for all of their citizens," Ways and Means Chairman Bill Thomas (R-CA) said in a statement after the vote. "I expect to bring this bipartisan bill to the House floor quickly and expect it to become law without much opposition."
Like the legislation adopted in 2000, this year's version enjoys broad bipartisan support. The ranking Democrat on the Committee, Charles Rangel (D-NY) said the new bill would "create more opportunity both in Africa and in the United States." Supporters claim that Agoa has created more than 150,000 jobs in the five African countries that are chief Agoa beneficiaries.
"If AGOA is not renewed in time, all the investment will go down the drain, Swaziland Prime Minister A.T. Dlamini told a 'Call to Action' breakfast in Washington in the Rayburn House Office Building, "because investors will close shop and leave the country." About 28,000 jobs have been created in his country because of Agoa, the Prime Minister said.
Testifying before the House Ways and Means Committee last week, Lesotho's minister of Trade and Industry, Cooperatives and Marketing, Mpho Malie, said that customer orders have slowed as they have begun to realize that preferential treatment for countries like his may be coming to an end. "We have cancelled or held back orders amounting to US40-million, and this has affected 23 textile-clothing factories in Lesotho employing over 37,000 people."
In much the same vein, Beckman told the Africa subcommittee that Congressional failure to extend the third country fabric provision could cost Kenya 30,000 jobs and $30 to $40 million in revenue this year.
Although there is bipartisan support for extending Agoa, legislation has been stalled. Election year distractions, the fears and pressures of powerful textile interests and lingering anger over the stance of African nations at the World Trade Organization's Cancun, Mexico meeting last September have worked against speedy consideration of the legislation.
The Senate bill extends Agoa benefits until 2015 and permits the use of third country fabrics for four years; the House bill extends benefits until 2020. "A minimum period needed to allow Africa to build adequate capacity for fabric and apparel manufacturing" is the year 2007, said Bread for the World's Beckman. And Agoa legislation itself, which gives a broad range of goods preferential treatment should be extended until 2015, he told the subcommittee.
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President Bush has said that he favors extending Agoa, but White House operatives have not pushed strongly for either bill. Nor have Senate Republican party leaders seemed especially interested in Agoa.
Mauritian Prime Minister Paul Berenger, who will assume the chairmanship of the Southern African Development Community (SADC) in August, meets with President Bush Wednesday with Agoa is high on Berenger's agenda.
Asked after Tuesday's hearing when he thought the Congress might vote on Agoa legislation, Royce said he hoped to see action soon. "Not next week, but 'quickly' is descriptive of what is going to happen," Royce said in a brief interview with AllAfrica, adding: "I think the President intends to have this legislation on his desk before September."
Aides and analysts close to the issue are hopeful that that there will be Agoa legislation. "But when?" said one Hill aide. "Every day is costing jobs and income in Africa."
