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US-Africa Leaders Press For Long-Term AGOA Extension

by Mike Godfrey, Tax-News.com, Washington

11 August 2014


Although there was no final communiqué after the meeting of the United States-Africa Leaders Summit, which was held in Washington, DC, on August 4-6, a statement from President Barack Obama, its Chair, confirmed that the Leaders agreed on the importance of a prompt, long-term renewal of an enhanced African Growth and Opportunity Act (AGOA).

AGOA is the cornerstone of America's trade and investment policy with sub-Saharan Africa. It offers substantial trade preferences that, along with those under the US Generalized System of Preferences tariff treatment, allow duty-free treatment for almost all goods produced in AGOA-eligible countries – approximately 6,800 products – to enter the US market duty free.

Under the agreement's third country-fabric (TCF) provision, lesser-developed beneficiary countries also enjoy an additional preference in the form of duty-free/quota-free access for apparel made from fabric originating from anywhere in the world.

AGOA is currently in effect until September 30, 2015, and eligible African countries and the US Administration have been, in general, asking for a longer term extension.

In addition to pushing for its long-term extension, the Leaders also pledged to work together to increase its utilization by African countries, and agreed on the importance of increasing US investment in Africa. They affirmed the importance of working together to ensure that negotiations on the post-2015 African development agenda focus on clear, measurable goals.

President Obama's job at the Summit was made easier when the bipartisan leaders of the House of Representatives Ways and Means and Foreign Affairs Committees and the Senate Finance and Foreign Relations Committees issued a joint statement on August 4, which called AGOA "the centerpiece of US trade relations with sub-Saharan Africa," and noted that it has "not only enhanced trade, investment, and job creation throughout the continent, … AGOA has also contributed to the creation of more than 1m jobs in Sub-Saharan Africa and more than 100,000 American jobs."

The Democrat and Republican lawmakers confirmed that "it is in the interest of the US to engage and compete in emerging African markets, to boost US-Africa trade and investment, and to renew and strengthen AGOA. Timely renewal of AGOA is critical to maintaining and promoting investment opportunities in the region."

"In addition," they added, "obstacles to trade among African countries continue to inhibit economic growth in Africa and contribute to the underutilization of AGOA. … The elimination of barriers to trade and investment in Africa, such as high tariffs, forced localization requirements, restrictions on investment and customs barriers, among others, will strengthen and improve regional and global integration."

During the Summit, on August 5, the US Trade Representative Michael Froman also announced that a Trade and Investment Framework Agreement (TIFA) had been signed between the US and the Economic Community of West African States (ECOWAS). The TIFA is intended to provide a mechanism for expanding trade and investment both between the United States and the 15 ECOWAS Member States.

"Building on the launch of our campaign yesterday to renew AGOA, the signing of this TIFA demonstrated that the US welcomes Africa's rise, and looks forward to [working] together toward Africa's regional integration," Froman said.

US-ECOWAS trade (exports plus imports) was valued at USD23.3bn in 2013. US exports to ECOWAS Member States were USD9.9bn last year, but, while US imports from ECOWAS Member States amounted to USD13.4bn, the leading import category, crude oil, reached USD11.8bn of that total.

TAGS: tax | law | tariffs | trade treaty | agreements | United States | import duty | trade | Africa

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