AGOA Update

The Republican leadership in Congress wants to renew President Obama’s Trade Promotion Authority (TPA)  before reauthorizing the African Growth and Opportunity Act, Paul Ryberg of the African Coalition for Trade reports in his latest newsletter.

Mr Obama needs TPA in order to conclude the Trans-Pacific Partnership (TPP) he is negotiating with Japan,  Australia, Peru, Malaysia, Vietnam,  New Zealand, Chile,  Singapore, Canada,  Mexico, and Brunei Darussalam.

AGOA expires on September 30.  The US Chamber of Commerce’s senior vice president for Asia,  Tami Overby, is reportedly confident the TPP can by completed by June, but that assumes Congress will have surrendered to right to amend the trade pact by giving Mr Obama TPA.

Senate Democrats have misgivings about aspects of the TPP and are loath to give Mr Obama carte blanche to negotiate it without their concerns — here’s an example —  being taken into account.

Uncertainty surrounds not only when AGOA will be renewed but for for how long. African leaders came away from last August’s Washington summit confident that the US administration and Congress would push for 15 years.

Mr Ryberg says some Republicans want to cut that to 5 years for budgetary reasons. He also notes that Senators Jonny Isakson (R-GA) and Chris Coons (D-DE) may press for short-term renewal as leverage to persuade South Africa to drop its anti-dumping duties on US chicken parts. They may also demand South Africa’s exclusion from AGOA altogether.

Meanwhile, the conservative Heritage Foundation has weighed in on the side of quick renewal though “at least 2025” with more generous rules of origin.

Over at Brookings, Witney Schneidman, former deputy assistance secretary of state for Africa, says time is of the essence:

Apparel and footwear companies are the largest supporters of the several hundred thousand direct jobs that AGOA has created in Africa—not to mention the many more indirect jobs. Though, with the uncertainty surrounding the renewal of AGOA as well as the now-crunched timeline, these investments and jobs are in jeopardy. U.S. apparel and footwear companies plan production lines and place orders months in advance so that shirts from Lesotho and jeans from Kenya, for example, will be on the shelves in American stores in time for the next shopping season. As the deadline looms closer, these companies will face too much uncertainty to place their orders from the continent.

Putting off renewal could cost African apparel exporters tens of millions of dollars, My Ryberg argues, pointing to what happened when Congress failed to renew expiring rules of origin until the last minute in 2012. “The lost orders due to the delay in renewing the third country fabric provision were worth approximately $43.5 million.”

Posted by Simon Barber