THE AMCHAM POST JUNE 30  2022 

The American Apparel and Footwear Association (AAFA) is urging the US Trade Representative (USTR) to renew the African Growth and Opportunity Act (AGOA) for at least another ten years, noting as companies are poised to diversify out of China, Africa is a logical place for many of them.

In a letter to William Shpiece, chair of the Trade Policy Staff Committee for USTR, Beth Hughes, vice president of trade and customs policy for the AAFA, says if AGOA were to be renewed this year for at least another ten years, companies would have the necessary certainty and timeframe they need to grow a vertical, responsible, and competitive industry in Africa up to and past 2025.

She notes even though the AGOA expiration date is three years away, US investment in the region already faces mounting uncertainty.

“Companies are poised to diversify out of China, and Africa is a logical place for many of them. The on-again, off-again nature of the program before the ten-year renewal was extremely disruptive and meant the industry was not able to take full advantage of the first 15 years of the program.

The ten-year renewal, with state-of-the-art rules of origin, in 2015 was an important first step but was not nearly long enough – as we repeatedly noted in 2015 – to sustain the kind of long-term trade and investment that is needed to alter centuries of underdevelopment,” Hughes says.

“As more companies are beginning to utilize AGOA, and specifically the third-country fabric provision, the quota fill rate will be significantly increasing in the coming years. Therefore, we also suggest raising the existing 3.5% limit to at least 4.5%, with a growth provision, so that it not be a constraint going forward.”

Hughes also points to Ethiopia, which lost its AGOA benefits on 1 January following the humanitarian crisis in Tigray and nearby regions.

“We understand that some progress has been made on the benchmarks outlined in an official letter sent to Ethiopia late last year. We are hopeful that the Ethiopian Government continues to make progress and meet all of the benchmarks in order to reinstate their AGOA benefits as soon as possible,” Hughes says. “Our companies are committed to Ethiopia and their workers. However, if Ethiopia cannot regain their benefits, the costs to do business there will eventually become too great for many.”

By Laura Husband, Just-Style (24 June 2022)