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Washington Outlook Archive

US Extends Sub-Saharan Africa Trade Pact

James A. Morrissey, Washington Correspondent

Congress has passed and President Bush has signed legislation extending the 37-nation Sub-Saharan free trade agreement (AGOA) until 2015. The law is designed to promote increased trade, investment and economic cooperation between the United States and African nations. In signing the agreement, President Bush said people are now making goods that US consumers want to buy; and that's helpful, and that's how you spread wealth.

Overall trade growth is occurring. In 2004, exports to the United States from the AGOA nations increased by 80 percent over the previous year. However, textile and apparel trade is relatively insignificant. When the pact was originally negotiated, US textile manufacturers fought hard and succeeded in getting a rule of origin that would require use of yarn and fabric made in the participating countries in order for finished products to enjoy duty- and quota-free access to the US market. There also was a provision permitting some use of inputs from non-participating countries. US manufacturers feared that the free access to the US market would result in massive illegal transshipments. Up to this point that has not been the case, as imports from the area account for less than one percent of total US imports of textiles and apparel. However, some textile makers in Africa complain that illegal shipments are competing with their products and displacing their opportunities for growth.

June 2005