SOUTH AFRICA: World Bank Calls For Agoa Extension
In a discussion paper on the effects of preferential access to the US market under Agoa, World Bank economists Paul Brenton and Takako Ikezuki appealed for Agoa benefits to be extended or made permanent.
"It is clear that preferences on clothing are the main source of gains under Agoa and a stimulus to export diversification for a small but increasing group of countries," Brenton and Ikezuki stated in the paper.
They added that the current temporary and relatively short statutory period of Agoa constrained a significant investment response, while restrictive rules of origin dampened exports to the US.
"The issue with the more restrictive rules of origin is not just the constraints that the rules impose on the sourcing of inputs, forcing producers to use higher cost fabrics and materials," they said.
"It is also the costs and difficulties in proving conformity with these rules compared to the more liberal rules where fabrics are globally sourced."
South Africa and Mauritius were cited as examples of Agoa beneficiaries faced with stricter rules of origin governing their exports to the US market.
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