Washington, DC — Tucked away in the controversial trade bill that passed the U.S. House of Representatives early Saturday morning are provisions that could provide a significant boost to African textile producing countries.
The trade promotion authority bill, which was approved by a 215-212 vote after intensive lobbying by President Bush and his administration, expands the duty-free treatment for textiles contained in the African Growth and Opportunity Act, which was signed into law May 18, 2000. The new legislation is expected to win approval this week in the Senate, where the "fast track" provisions expanding the President's trade authority has more Democratic support than in the House.
The African Growth and Opportunity Act, popularly known as AGOA, was promoted by the Clinton administration to stimulate African development by encouraging increased trade and investment by American firms.
The new trade promotion authority bill contains three measures designed to assist the expansion of Africa's textile industry, which has been among the chief beneficiaries of AGOA. First, the bill breaks a logjam over "knit to shape" garments such as sweaters that are frequently made using yarns and threads with non-African origins.
Under the law as adopted in 1980, African textile fabrics must be wholly made in Africa to qualify for duty free treatment. U.S. Customs determined that if half or more of the exterior surface areas of any garment was knit to shape, then the garment did not qualify for duty-free treatment.
It was an interpretation that Agoa's congressional sponsors have disputed. In a letter to Treasury Secretary Paul O'Neill last March, top Democratic and Republican members of the House Ways and Means Committee, including Chairman William M. Thomas (R-CA) and Ranking member Charles B. Rangel (D-NY), argued that "Customs' interpretation clearly violates legislative intent."
The new legislation makes this intent clear, with the result that the volume of African-made apparel imported into the United States may double. "This is of particular significance to Madagascar and should aid its recovery from recent political unrest," according to Manchester Trade Ltd., a Washington-based business advisory group that lobbied for passage.
Another provision of the new bill treats African apparel produced from African formed fabrics more favorably than African apparel produced from non-African materials. By the eighth and final year of the Agoa program, seven percent of the U.S. market will be reserved for "apparel produced from African fabrics or knit to shape in Africa from American/African spun yard," Manchester Trade said in a memorandum circulated earlier today.
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"Imagine the impetus to cotton production, ginning of cotton, textile mill development and knitting to shape from knowing that by the last year of AGOA, seven percent of the US market will be available for duty-free import of reserved for apparel produced from African fabrics or knit to shape in Africa from American/African spun yarn," Manchester Trade said.
In another revision of the 1980 law, this year's bill grants both Namibia and Botswana status as a "lesser developed beneficiary sub-Saharan country" for the purposes of AGOA. Because of their mineral wealth and small populations, the World Bank and IMF has classified both nations "middle income," which made them ineligible for Agoa's duty-free benefits.
"We cannot import fabrics to transform them into clothing and export them as clothing to the USA," explained Namibian Minister for Trade and Industry Hidipo Hamutenya in a June interview with allAfrica.com. "We just want to be given an opportunity to source raw materials cheaply."
Rep. Ed Royce (R-CA), chairman of the House Subcommittee on Africa, said in a statement that the new provisions would further extend the benefits of AGOA, which he said has been "a boon for the U.S.'s many economic and political interests in Africa."
"AGOA has led to big employment and foreign investment gains in several African countries," Royce said. "It has proved to be a key force in fighting Africa's economic marginalization."
