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US Reviews Duty-Free Aid Commitment To Africa

by Mike Godfrey, Tax-News.com, Washington

07 July 2014


US President Barack Obama has reinstated Madagascar's eligibility for African Growth and Opportunity Act (AGOA) tariff benefits, effective immediately, but has withdrawn Swaziland's eligibility, with effect from January 1, 2015.

At the center of AGOA are its substantial trade preferences that, along with those under the US Generalized System of Preferences tariff treatment and its third country-fabric provision, allow duty-free treatment for almost all goods produced in sub-Saharan AGOA-eligible countries – approximately 6,800 products – to enter the US market duty free.

AGOA has effect until September 30, 2015. Since 2000, it has contributed to a more than doubling of US trade with eligible African countries, who are now asking for a longer term extension. President Obama has recently initiated a review of how AGOA could be improved to boost trade with and within Africa.

The current program offers tangible incentives to African countries "for undertaking difficult political and economic reforms that promote long-term growth and development." Swaziland began benefitting from the program in 2001, when its Government accepted the AGOA eligibility criteria, "which include respect for the rule of law, poverty reduction, combating corruption, respect for worker rights and human rights, child labor protections, and market openness."

As part of its review of countries at the end of last year, the US Government took special note of continuing concerns regarding workers' rights issues in Swaziland, and confirmed that it would conduct an AGOA eligibility review of Swaziland in May this year. The Office of the US Trade Representative has now emphasized that, after the review, the decision to withdraw Swaziland's AGOA eligibility, which will particularly affect its textile industry, has come after years of engaging with its Government on those concerns.

"The withdrawal of AGOA benefits is not a decision that is taken lightly," said US Trade Representative Michael Froman. "We have made our concerns very clear to Swaziland over the last several years and we engaged extensively on concrete steps that Swaziland could take to address the concerns. We hope to continue our engagement with the Government of Swaziland on steps it can take so that worker and civil society groups can freely associate and assemble and AGOA eligibility can be restored."

At the same time, it was confirmed that the decision to reinstate Madagascar's AGOA eligibility, after it had been removed on January 1, 2010, following a 2009 coup d'état, recognized "that nation's return to democratic rule, as well as its commitment to promote transparency, combat corruption, and begin rebuilding Madagascar's economy."

Froman added that "we are pleased that Madagascar has returned to the family of AGOA nations. We are hopeful that Madagascar will take advantage of AGOA's potential to create employment, expand bilateral trade, and contribute to the economic well-being, security, and health of its people."

TAGS: tax | business | Swaziland | tariffs | Madagascar | manufacturing | United States | import duty | trade | Africa

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