July 25, 2014
African Growth and Opportunity Act (AGOA)
Overview
What is AGOA? AGOA, the cornerstone of U.S. trade
policy toward sub-Saharan Africa since 2000, is a nonreciprocal U.S. trade preference program that provides
duty-free access to the U.S. market for most exports from
eligible sub-Saharan African countries. In addition to this
preferential market access, the Act also requires an annual
forum, known as the AGOA Forum, held between U.S. and
AGOA country officials to discuss trade-related issues.
Additionally, AGOA provides direction to select U.S.
government agencies regarding their trade and investment
support activities in the region.
What countries are eligible? AGOA lists 49 sub-Saharan
African countries that are potential candidates for AGOA
benefits. AGOA eligibility criteria address issues such as
trade and investment policy, governance, and worker rights,
among other issues, which countries must satisfy to be
beneficiaries of the AGOA preferences. The President
annually reviews and determines each country’s AGOA
eligibility. There are currently 41 AGOA-eligible countries.
This includes Madagascar, whose eligibility was reinstated
in June, as well as Swaziland, whose eligibility will be
removed effective January 1, 2015.
What is the authorization status? The AGOA preference
program was initially enacted in 2000. It has been amended
five times, including one overall extension in 2004, as well
as technical modifications and extensions of time-limited
provisions (e.g., third-country fabric provision). AGOA
authorization is currently set to expire on September 30,
2015.
What’s the goal? Through AGOA, the U.S. Congress
seeks to increase U.S. trade and investment with the region,
promote sustainable economic growth through trade, and
encourage the rule of law and market-oriented reforms.
“[T]o keep our trade growing, we need to renew
AGOA. But we’ve also got to make some decisions
about how we can make it more effective.”
President Obama, July 1, 2013
Supporting Views—Supporters of AGOA argue that the
program affords African producers a vital competitive
advantage in the U.S. market, thereby enabling exports,
encouraging investment in the region, boosting private
sector activity and economic growth, and ultimately
generating demand for U.S. goods and services as the
region’s economies develop.
Opposing Views—Opposition to AGOA comes primarily
from U.S. producers that may face increased import
competition from AGOA countries. Due to the relatively
small level of U.S. imports under the program, such
concerns may be relatively limited. Many observers are
generally supportive of AGOA, but would like reforms.
Key Aspects of AGOA
Trade Preferences—The primary component of AGOA is
the duty-free treatment of U.S. imports of certain products
from beneficiary countries. This tariff savings can
potentially help AGOA exporters compete with lower-cost
producers in other countries.
Relation to the Generalized System of Preferences—The
Generalized System of Preferences (GSP) is another U.S.
preference program, but unlike AGOA, GSP is not
regionally based. The AGOA preferences include all
products covered by GSP, as well as some products
excluded from GSP, such as autos and certain types of
textiles and apparel. In both GSP and AGOA, additional
benefits are granted to least-developed countries.
Apparel and Third-Country Fabric Provision—AGOA’s
duty-free treatment on certain apparel products is
significant because (1) apparel articles face relatively high
U.S. import tariffs; (2) they are excluded from GSP; (3)
they can be manufactured in developing countries as their
production utilizes lower-skilled labor and requires little
capital investment; and (4) production in this sector can be
a first-step toward higher value-added manufacturing. The
third-country fabric provision in AGOA, which some argue
is critical for AGOA countries’ competitiveness in the
sector, allows some U.S. apparel imports from
least-developed sub-Saharan African countries to qualify
for duty-free treatment even if the yarns and fabrics used in
their production are imported from non-AGOA countries.
Trade Capacity Building—Unlike other U.S. preference
programs, AGOA directs the President to provide U.S.
government technical assistance and trade capacity building
(TCB) in AGOA beneficiary countries. This assistance is
intended to encourage governments to (1) liberalize trade
policy; (2) harmonize laws and regulations with WTO
membership commitments; (3) engage in financial and
fiscal restructuring; and (4) promote greater agribusiness
linkages. The United States Agency for International
Development (USAID) administers certain TCB-related
projects in support of AGOA, including funding for the
three African Trade Hubs, which work to increase AGOA
utilization by beneficiary countries.
www.crs.gov | 7-5700
African Growth and Opportunity Act (AGOA)
Executive Branch Initiatives—AGOA encourages the
President to seek partners in the region for reciprocal free
trade agreements (FTAs). Negotiations were initiated with
the South African Customs Union (SACU), but were
eventually suspended in 2006. Until the provision expired
in 2008, AGOA also required the President to provide an
annual report to Congress on U.S. trade and investment
policy with sub-Saharan Africa and AGOA
implementation. AGOA also includes directives for the
Overseas Private Investment Corporation (OPIC), the
Export-Import Bank, and the U.S. Foreign Commercial
Service on expanding their activities in sub-Saharan Africa.
AGOA Forum—AGOA requires the President to convene
an annual forum to discuss expanding trade and investment
relations and the implementation of AGOA. The 13th
AGOA Forum is to take place in Washington D.C. on
August 4, 2014, in conjunction with the larger African
Leaders Summit and will likely focus on AGOA’s renewal.
U.S. Imports Under AGOA
U.S. non-energy imports under AGOA have grown from
$1.3 billion in 2001 to $4.9 billion in 2013, but they remain
highly concentrated in select countries and industries.
• U.S. imports under AGOA were $38.2 billion in 2013.
Renewal Debate
AGOA appears to enjoy broad bipartisan congressional
support. Despite general support, there is ongoing debate
regarding potential changes to the program, including those
that could help better achieve its stated trade and
development goals. In addition, African countries’
willingness to implement the recent WTO trade facilitation
agreement may affect support for the program. Key issues
regarding AGOA’s reauthorization include:
Country eligibility and reauthorization—Many views
exist regarding the appropriate strength and coverage of
AGOA eligibility criteria and the length of AGOA
authorization. Some stakeholders would like less stringent
eligibility requirements, less frequent reviews, and a longer
or indefinite reauthorization period, while others argue that
shorter authorization terms allow for greater congressional
oversight and that strong eligibility requirements and
annual reviews encourage reform.
Utilization of benefits—Nearly 75% of U.S. non-energy
imports under AGOA come from South Africa alone, and in
2013, over half of AGOA beneficiaries’ exports to the U.S.
market were each worth less than $1 million. Creation of
AGOA country export strategies and greater targeting of
TCB toward potentially competitive sectors is viewed by
some as an important way to increase use of the program.
• Crude oil accounted for 75% of U.S. AGOA imports,
but crude imports have declined by $30 billion since
2011, largely due to U.S. production. Nigeria, Angola,
Chad, Republic of Congo, and Gabon are the major
oil exporters under AGOA.
Product coverage—AGOA covers most products, but
some, mostly agricultural products, remain excluded.
Including more products under AGOA may increase use of
AGOA benefits, but may be opposed by U.S. producers.
• Non-energy imports (excluding crude and refined
petroleum products) were $4.9 billion, with much of
this coming from South Africa ($3.7 billion, with $2.2
billion in South African autos alone). Other top
products were apparel and metals.
Trade capacity building funding—Many supporters argue
that AGOA may be underutilized due to beneficiary
countries’ inability to take advantage of AGOA benefits.
Although AGOA mandates that TCB assistance be
provided to increase use of the program, there is debate
over the appropriate types and levels of TCB, as well as the
effectiveness of TCB overall.
• Aside from South Africa and the oil producers,
Kenya, Lesotho, and Mauritius, which export mostly
apparel products, are the top users of the preference
program. Together with South Africa these countries
accounted for 93% of all U.S. non-energy imports
under AGOA in 2013.
Figure 1. U.S. Non-Energy Imports Under AGOA
(2013, in million U.S. dollars)
All Other
355
Mauritius
199
Lesotho
321
Kenya
343
South Africa
3,668
0
1,000
2,000
3,000
4,000
Duty-free, quota-free beyond Africa—Some argue that
all least-developed countries, including non-African ones,
should receive AGOA preferences, but others are concerned
that this could erode the competitiveness of African exports
to the United States, as they might face greater competition.
Reciprocal access and two-way trade—Given recent
economic growth in Africa, some observers are now calling
for a greater focus on two-way trade in AGOA and a
greater push for reciprocal trade agreements with some
AGOA-eligible countries. There is particular focus on those
countries that have already negotiated reciprocal
agreements with other parties. Such agreements, like that
between South Africa and the European Union, could
disadvantage U.S. exports to Africa.
For a more detailed look at AGOA, see CRS Report
R43173, African Growth and Opportunity Act (AGOA):
Background and Reauthorization, by Brock R Williams.
Source: Analysis by CRS. Data from USITC.
Notes: Non-energy refers to all goods except HTS Chapter 27.
Brock R. Williams, bwilliams@crs.loc.gov, 7-1157
www.crs.gov | 7-5700
IF00041