African Growth and Opportunity Act
In May 2000, the U.S. Congress approved legislation known as the African Growth and Opportunity Act, or AGOA (Title I, Trade and Development Act of 2000; P.L. 106-200). The purpose of this legislation was to assist the economies of sub-Saharan Africa and to improve economic relations between the United States and the region.
Eligibility
The legislation authorized the President of the United States to determine which sub-Saharan African countries would be eligible for AGOA on an annual basis. The eligibility criteria was to include improved labor rights and movement toward a market-based economy. Each year, the President evaluates the sub-Saharan African countries and determines which countries should remain eligible. Currently, there are 37 AGOA-eligible countries.
Benefits and Results
AGOA provides trade preferences for quota- and duty-free entry into the United States for certain goods, expanding the benefits under the Generalized System of Preferences (GSP) program. Notably, AGOA expanded market access for textile and apparel goods into the United States for eligible countries. This resulted in the growth of an apparel industry in southern Africa, and created hundreds of thousands of jobs. However, the dismantling of the Multi Fibre Agreement's world quota regime for textile and apparel trade in January 2005 threatens to reverse some of the gains made in the African textile industry due to increased competition from developing nations outside of Africa, particularly China. Already, many factories have been shut down in Lesotho, where most of the growth occurred.
AGOA has resulted in limited successes in some countries. In addition to growth in the textile and apparel industry, some AGOA countries have begun to export new products to the United States, such as cut flowers and horticultural products. Agricultural products is a promising area for AGOA trade, however much work needs to be done to assist African countries in meeting U.S. sanitary and phytosanitary standards. The U.S. government is providing technical assistance to AGOA eligible countries to help them benefit from the legislation, through the U.S. Agency for International Development (USAID) and other agencies. The U.S. government has established three regional trade hubs in Africa for this purpose, in Accra, Ghana; Gaborne, Botswana; and Nairobi, Kenya.
Initially, AGOA was set to expire in 2008. In 2004, Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015.