The Obameter

Strengthen the African Growth and Opportunity Act


"Obama will also strengthen the African Growth and Opportunity Act to ensure that African producers can access the U.S. market and will encourage more American companies to invest on the continent."


Sources:

"The Change We Need: Foreign Policy"

Subjects: Foreign Policy, Trade

Updates:

Expiring provision extended, but little to 'strengthen' the law

Updated: Tuesday, November 20th, 2012 | By Louis Jacobson

Barack Obama came to the White House promising to "strengthen the African Growth and Opportunity Act to ensure that African producers can access the U.S. market and will encourage more American companies to invest on the continent.” As we approach the end of his first term, he did achieve a legislative victory -- but it was largely to keep the status quo, rather than expanding the law.

The African Growth and Opportunity Act, signed by President Bill Clinton in 2000, allows several dozen sub-Saharan African countries to export to the U.S. duty-free. The program is set to expire in 2015.

The most concrete legislative action during Obama's term was the enactment of H.R. 5986, which included provisions affecting AGOA as well as trade with the Dominican Republic and Burma (sometimes called Myanmar). The bill extended provisions within AGOA that allowed African nations to import raw textiles from non-African nations, process them in Africa, and then export them to the United States duty free. This commerce totals $1.3 billion in products, said Rosa Whitaker, who heads the Whitaker Group, a consulting group specializing in trade with Africa.

When the law was written, this "third country” provision had been scheduled to expire as the African textile industry gradually improved its infrastructure, said Nathaniel Adams, a senior associate with the Whitaker Group. But the expected improvements never materialized, and policymakers realized that the sudden expiration of the "third country” provision threatened to throw perhaps 150,000 African textile workers out of a job.

The bill faced scheduling and procedural challenges in Congress, its substance wasn't controversial, Adams said. In fact, the House and Senate both easily passed the measure on the same day -- Aug. 2, 2012 -- the House by a voice vote and the Senate by unanimous consent. Obama signed it eight days later. "AGOA continues to be critical to expanding and diversifying our trade and investment relationship with Africa,” the White House said in a statement announcing Obama's signing of the bill.

Still, the bill Obama signed was essentially legislation to keep the status quo, rather than to "strengthen the act,” as Obama had promised. By contrast, an effort undertaken in 2009 by Rep. Jim McDermott, D-Wash., to extend the act to 2019 and expand its reach died in the 111th Congress and was not repeated in the 112th Congress.

There's one feature of the legislation that does expand AGOA, at least in a technical sense. The measure signed by Obama adds South Sudan to the list of nations that qualify for trade status under AGOA. South Sudan voted for independence in 2011, meaning it didn't exist as an independent state when the law was written.

In addition, Obama has made a number of other moves that could eventually bolster trade with Africa. In June 2011, the U.S. announced an African Competitiveness and Trade Expansion initiative to provide up to $120 million over four years to improve Africa's trade capacity, including for products that can enter duty-free under AGOA. The same month, the United States proposed a new partnership with the East African Community that would include a possible regional investment treaty and other trade agreements. Finally, Obama used his executive powers to designate 40 sub-Saharan African countries eligible for AGOA benefits in 2012.

Obama hasn't exactly fulfilled his promise to "strengthen the African Growth and Opportunity Act,” but he did push for extension of a crucial provision that was about to expire, and he expanded the roster of eligible countries to South Sudan. He also made some other moves to promote trade with Africa on the periphery of the act. We rate this promise a Compromise.

Sources:

Text of H.R. 5986

White House, "Fact Sheet: Obama Administration Accomplishments in Sub-Saharan Africa," June 14, 2012

White House, "Statement by the Press Secretary on Key Trade Measures in H.R. 5986," August 10, 2012

Interviews with Rosa Whitaker and Nathaniel Adams of the Whitaker Group, Nov. 20, 2012

Rep. McDermott has introduced bill to strengthen the act

Updated: Wednesday, January 6th, 2010 | By Robert Farley

The African Growth and Opportunity Act, which was launched under the Clinton administration in 2000, allows several dozen sub-Saharan African countries to export to the U.S. duty-free. While the program, which is set to expire in 2015, counts a number of successes, most experts agree it has not fulfilled its potential.

On Aug. 5, 2009, President Barack Obama delivered a video message to participants at the annual African Growth and Opportunity Act Forum in Kenya, during which the president reiterated his commitment to AGOA and to making it work better.

"Over the last decade, AGOA has transformed the U.S.-African trade relationship," Obama said. "Opening America"s doors to your exports has been good for Africa — creating African jobs, bringing millions of dollars of investment to sub-Saharan Africa and sparking new trade across the continent. And it"s been good for America — with African exporters seeking U.S. expertise, investments and joint-ventures. And today, we"re your single largest trade partner.

"At the same time, it"s clear that U.S.-African trade has yet to realize its full potential. And if the current recession teaches us anything, it"s that in a global economy not only the opportunities are shared. So are the risks. So there"s so much more we can do together to plant the seeds of our economic recovery, and to achieve lasting prosperity."

Obama concluded by saying, "And to all Africans who are pursuing a future of hope and opportunity, know this: You have a partner and a friend in the United States. That"s why we"ll work with you to develop strong institutions, clear legal frameworks and the regulations and infrastructure that help bring new products to market."

Obama did not talk then about any specific measures he might pursue to strengthen the AGOA.

But on Nov. 17, 2009, Rep. Jim McDermott, D-Wash., introduced H.R. 4101, which seeks to strengthen and improve the AGOA. Among its provisions, it would: extend benefits to all AGOA countries until 2019 and make benefits to AGOA Less Developed Countries permanent; increase the focus on trade capacity building and ensure other poor nations receive trade benefits with the United States; and include provisions to protect the trade interests of AGOA countries in apparel categories where they are particularly competitive.

Said McDermott: "This bill will build upon the successes of the African Growth and Opportunity Act and improve the opportunity for trade with our African partners while helping poor nations outside of Africa benefit from duty-free trade with the United States. And while this legislation will help a new group of countries, it also includes a series of protections designed to ensure African nations already benefiting from trade preferences won"t be negatively affected."

In a statement before the House Committee on Ways and Means, Subcommittee on Trade, on Nov. 17, McDermott said, "While there are details to work out, I think there is broad agreement that our trade programs need to be stable, they need to be simplified, they need to be more effective, and they need to help more people."

We want to see where this bill goes before we render a final decision on this promise. But the fact that a bill was introduced, and in light of Obama's comments in support of reforming the AGOA, we will move this one to In the Works.

Sources:

White House Web site, Presidential Proclamation - To Take Certain Actions Under the African Growth and Opportunity Act, Dec. 23, 2009

White House Web site, President Barack Obama"s video message to the AGOA Forum in Kenya , Aug. 5, 2009

White House Web site, Ambassador Kirk at the AGOA Forum , Aug. 4, 2009

Los Angeles Times, "Struggling to make it in Kenya," by Edmund Sanders, Aug. 5, 2009

Rep. Jim McDermott's Web site, Press release: Rep. McDermott Introduces Bill to Improve Trade Benefits to Poor Countries , Nov. 20, 2009

Congressional Quarterly,   Statement of Rep. Jim McDermott before the House Ways and Means Committee — Subcommittee on Trade, Nov. 17, 2009

Reuters, "U.S. Ends Trade Benefits For 3 Countries," Dec. 24, 2009

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