Business Frequently Asked Questions (Courtesy of AGOA)

AGOA passed as part of The Trade and Development Act of 2000 provides beneficiary countries in Sub-Saharan Africa with the most liberal access to the U.S. market available to any country or region with which we do not have a Free Trade Agreement. It reinforces African reform efforts, provides improved access to U.S. credit and technical expertise, and establishes a high-level dialogue on trade and investment in the form of a U.S.-Sub-Saharan  Africa Trade and Economic Forum.

By creating tangible incentives for African countries to implement economic and commercial reform policies, AGOA contributes to better market opportunities and stronger commercial partners in Africa for U.S. companies. The  Act should help forge stronger commercial ties between Africa and the United States, while it helps to integrate Africa into the global economy. U.S. firms may find new opportunities in privatizations of African state-owned  enterprises, or in partnership with African companies in infrastructure projects.

The need for AGOA II legislation was developed in part to improve upon and clarify some of the specific provisions that were not addressed in the original AGOA legislation (or AGOA I). AGOA II is part of the Trade Act of 2002 which President Bush signed into law on August 6, 2002.

AGOA IV provides for special rules for fabrics or yarns produced in commercial quantities (or “abundant supply”) in any designated sub-Saharan African country for use in qualifying apparel articles. Upon receiving a petition from any interested party, the International Trade Commission will determine the quantity of such fabrics or yarns that must be sourced from the region before applying the third country fabric provision. It also provides for 30 million square meter equivalents (SMEs) of denim to be determined to be in abundant supply beginning October 1, 2006. The U.S. International Trade Commission will provide further guidance on how it will implement this provision.

The President may designate Sub-Saharan African countries as eligible to receive the benefits of the Act if they are making progress in such areas as: establishment of market-based economies; development of political  pluralism and the rule of law; elimination of barriers to U.S. trade and investment; protection of intellectual property; efforts to combat corruption; policies to reduce poverty, increase availability of health care and  educational opportunities; protection of human rights and worker rights, and elimination of certain practices of child labor. Progress in each area is not a requirement for AGOA eligibility.

The criteria are standards which the Africans themselves have espoused and most are striving to uphold. But Congress never intended AGOA to be a blank check for all African countries, without regard to performance. It was  meant to offer tangible incentives for African governments to improve their political and economic governance, not to underwrite poor policies.

AGOA provides duty-free and quota-free treatment for eligible apparel articles made in qualifying sub-Saharan African countries through 2015. Qualifying articles include: apparel made of U.S. yarns and fabrics; apparel made of sub-Saharan African (regional) yarns and fabrics until 2015, subject to a cap; apparel made in a designated lesser-developed country of third-country yarns and fabrics until 2012, subject to a cap; apparel made of yarns and fabrics not produced in commercial quantities in the United States; textile or textile articles originating entirely in one or more lesser-developed beneficiary sub-Saharan African countries; certain cashmere and merino wool sweaters; and eligible handloomed, handmade, or folklore articles, and ethnic printed fabrics. Under a Special Rule for lesser-developed beneficiary countries, those countries with a per capita GNP under $1,500 in 1998, will enjoy an additional preference in the form of duty-free/quota-free access for apparel made from fabric originating anywhere in the world. The Special Rule is in effect until September 30, 2012 and is subject to a cap. AGOA IV continues the designation of Botswana and Namibia as lesser-developed beneficiary countries.

All Sub-Saharan African countries meet the per capita GNP requirements of the Special Rule with the exception of the following: Botswana, Gabon, Mauritius, Namibia, Seychelles, and South Africa. However, countries must meet  the general AGOA eligibility requirements and the requirements for apparel benefits in order to qualify for the Special Rule. AGOA II grants Lesser Developed Beneficiary Country status to Botswana and Namibia, qualifying both countries for the Special Rule. The Africa Investment Incentive Act of 2006 (AGOA IV) continues to grant lesser-developed beneficiary country status to Botswana and Namibia.

Although the apparel benefits take effect October 1, 2000, beneficiary countries must first have an effective visa system in place to prevent illegal transshipment and use of counterfeit documentation. They must also institute  enforcement and verification procedures. Details were disseminated to African governments following a cable instruction to all U.S. embassies in Sub-Saharan Africa on September 21, 2000. Countries must also be beneficiary  developing countries under the U.S. Generalized System of Preferences (GSP), which includes 45 Sub-Saharan African countries.

Components that take their shape in the knitting process, rather than being cut from a bolt of cloth.

AGOA authorizes the President to provide dutyfree treatment under GSP for any article, after the U.S. Trade Representative (USTR) and the U.S. International Trade Commission (USITC) have determined that the article is not  importsensitive when imported from African countries.  On December 21, 2000, the President extended duty-free treatment under GSP to AGOA eligible countries for more than 1,800 tariff line items in addition to the standard  GSP list of approximately 4,600 items available to non-AGOA GSP beneficiary countries.  The additional GSP line items which include such previously excluded items as footwear, luggage, handbags, watches, and flatware were implemented after an extensive process of public comment and review.  Sub-Saharan African GSP beneficiary countries are also exempted from competitive need limitations.  In order for any Sub-Saharan African country to receive the liberalized GSP benefits it must first be GSP eligible under the existing criteria of that law.

GSP is extended for Sub-Saharan African beneficiary countries until September 30, 2015.

The U.S. Government has conducted technical assistance seminars in Africa and the United States to explain the benefits of the Act, in order to ensure that African countries are able to take maximum advantage of its provisions.