Each year the US President reviews and designates sub-Saharan African economies as AGOA beneficiaries

Each year the US President reviews and designates sub-Saharan African economies as AGOA beneficiaries

The US has launched its annual review into the eligibility of sub-Saharan African countries to receive benefits under the African Growth and Opportunity Act (AGOA).

Each year the President reviews and designates sub-Saharan African economies as AGOA beneficiaries – including preferential treatment for imports of certain textile and apparel articles – as long as specified eligibility requirements are met. The current assessment will apply for 2018.

Not all AGOA members are eligible for the apparel provision.

The following sub-Saharan African countries were designated as beneficiary sub-Saharan African countries in 2017: Angola, Benin, Botswana, Burkina Faso, Cabo Verde, Cameroon, Central African Republic, Chad, Comoros, Republic of Congo, Cote d'Ivoire, Djibouti, Ethiopia, Gabon, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Sierra Leone, South Africa, Tanzania, Togo, Uganda, and Zambia.

But of these, Angola, Central African Republic, Comoros, Republic of Congo, Djibouti, Gabon, Mauritania, Sao Tome & Principe and Togo are not eligible for the apparel provision.

The following were not designated as beneficiary SSA countries in 2017: Burundi, Democratic Republic of Congo, Gambia, Equatorial Guinea, Eritrea, Seychelles, Somalia, South Sudan, Sudan, Swaziland, and Zimbabwe.

The requirements for AGOA eligibility include that the country has established or is making substantial progress toward establishing, among other things, a market-based economy, the rule of law, political pluralism, the right to due process, the elimination of barriers to US trade and investment, economic policies to reduce poverty, a system to combat corruption and bribery, and the protection of internationally recognized worker rights.

In addition, the country may not engage in activities that undermine US national security or foreign policy interests or engage in gross violations of internationally recognised human rights.

The Office of the US Trade Representative (USTR) is calling for public comments no later than 4 August, with information presented at a public hearing on 23 August considered in developing recommendations on AGOA country eligibility for 2018. The deadline for filing post-hearing briefs, statements, or comments is 30 August.

In addition, comments related to the AGOA child labour criteria may be considered by the Department of Labor as it prepares its required report on that issue.

If the president determines that an AGOA beneficiary is not making continual progress in meeting the eligibility requirements, the designation of that country as a beneficiary must be terminated.

However, the president may also withdraw, suspend, or limit the application of duty-free treatment with respect to specific articles from a country if it would be more effective in promoting compliance with AGOA eligibility requirements than terminating the designation of the country as a beneficiary.

Out-of-cycle review

A public hearing began in the US this week to review of the eligibility of Rwanda, Tanzania, and Uganda to continue to receive benefits under AGOA after a petition was filed by the US-based Secondary Materials and Recycled Textiles Association (SMART) against the countries' decision to phase out imports of used clothing.

The out-of-cycle review could mean that could mean the duty-free benefits on imports from these countries into the US under AGOA are withdrawn, suspended or limited.

The East African Community (EAC) includes the Republic of Kenya, Republic of Rwanda, United Republic of Tanzania, and Republic of Uganda.

However, Kenya is being excluded from the current review due to actions it has taken, including reversing tariff increases and committing not to ban imports of used clothing – although the US says it will watch closely to ensure the country follows through on its commitments. Kenya's reprieve comes after it hired Washington lobbying firm Sonoran Policy Group (SPG) to help prevent the country's expulsion from AGOA.

Associations representing US apparel brands, retailers and importers have urged the US not to suspend or terminate the AGOA benefits, pointing out that beneficiary countries are now taking steps to maximise utilisation of the trade deal and to foster sustainable economic growth following its ten-year renewal.

"Withdrawing benefits now would undermine those initiatives, including those fostering market based economies or leading to the elimination of barriers to US trade and investment," they say. "Even the threat of withdrawal induces uncertainty that puts progress toward those reforms in jeopardy."

US apparel groups urge ongoing AGOA benefits for East Africa