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AGOA: Successes and Challenges Erastus J.O. Mwencha Secretary General COMESA 14 Jan 2003 – Mauritius
Introduction <ul><li>Market Access is critical for Africa’s sustainable economic growth and development  </li></ul><ul><li...
AGOA WORKS   <ul><li>Africa’s exports to the US under  AGOA  grew by 10.7% in 2001 (this  excludes oil, metals).  </li></u...
AGOA WORKS <ul><li>AGOA has contributed to new Jobs, new investment and increased exports </li></ul><ul><li>Kenya estimate...
AGOA WORKS <ul><li>US-Africa AGOA Forum provides a framework to identify and resolve challenges </li></ul><ul><li>AGOA II ...
AGOA CHALLENGES <ul><li>Eligibility </li></ul><ul><li>Textiles </li></ul><ul><li>Capacity </li></ul><ul><li>Agriculture  <...
AGOA Challenges: Eligibility <ul><li>AGOA Eligibility Criteria should be Inclusive </li></ul><ul><li>AGOA should aim to br...
AGOA CHALLENGES: Expiry of Textile special Provision 2004 <ul><li>Too much focus on textiles </li></ul><ul><li>Effort need...
AGOA CHALLENGES; Expiry of Textile special Provision 2004 <ul><li>Expiry of 2005 Multi Fiber Agreement under WTO  </li></u...
AGOA CHALLENGES;  Expiry of Textile special Provision 2004 <ul><li>Countries need time to increase efficiency in supply ch...
AGOA CHALLENGES  Capacity Building  <ul><li>Capacity in textile technology especially human resource </li></ul><ul><li>Cap...
AGOA CHALLENGES, Agriculture and SPS <ul><li>Africa has comparative Advantage in Agriculture and yet sector has not benefi...
AGOA CHALLENGES; Agriculture and SPS <ul><li>USDA has approved only 45 products for export to USA from 53 African countrie...
AGOA CHALLENGES <ul><li>AGRICULTURE AND THE SPS </li></ul><ul><li>Key  </li></ul><ul><li>The placement of APHIS officer as...
AGOA CHALLENGES: Investment <ul><li>Exports to USA have expanded but Investment still lagging behind; </li></ul><ul><li>En...
AGOA CHALLENGES: Transportation  <ul><li>Transport costs up to 40% of final cost of product; </li></ul><ul><li>Several Afr...
AGOA: OTHER KEY CHALLENGES <ul><li>High cost of doing business in African countries affecting competitiveness (Infrastruct...
AGOA Challenges. Legal Framework and Predictability <ul><li>Non-contractual; Need to move to contractual for post 2008  </...
AGOA and Way Forward <ul><li>Special Textile Provision </li></ul><ul><li>USA to consider extending up to 2006 </li></ul><u...
AGOA and Way Forward <ul><li>Multi Fiber Agreement  </li></ul><ul><li>MFA should be extended to ensure that Africa remains...
CONCLUSION <ul><li>AGOA WORKS AND </li></ul><ul><li>IT CAN ONLY BE BETTER IF ! </li></ul><ul><ul><ul><ul><ul><li>WE WORK T...
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  1. 1. AGOA: Successes and Challenges Erastus J.O. Mwencha Secretary General COMESA 14 Jan 2003 – Mauritius
  2. 2. Introduction <ul><li>Market Access is critical for Africa’s sustainable economic growth and development </li></ul><ul><li>AGOA has provided the required Market Access- Q-free and Duty free for 1800 pd </li></ul><ul><li>70% (or 14) of COMESA Countries are AGOA eligible out of 37 African Countries </li></ul><ul><li>9 COMESA countries qualified for special textile provision </li></ul>
  3. 3. AGOA WORKS <ul><li>Africa’s exports to the US under AGOA grew by 10.7% in 2001 (this excludes oil, metals). </li></ul><ul><li>US imported $7.6 billion of duty free goods under AGOA in 2001 </li></ul><ul><li>Africa’s imports from the US grew by 17.5 % in 2001 to US$7 billion </li></ul>
  4. 4. AGOA WORKS <ul><li>AGOA has contributed to new Jobs, new investment and increased exports </li></ul><ul><li>Kenya estimates that AGOA will contribute to the creation of over 150,000 new jobs </li></ul><ul><li>New and planned investment in Namibia is estimated at US$250 million </li></ul><ul><li>Exports of apparel from Madagascar grew by over 700% to $155 million in 2001 </li></ul><ul><li>70% of apparel workforce are women </li></ul>
  5. 5. AGOA WORKS <ul><li>US-Africa AGOA Forum provides a framework to identify and resolve challenges </li></ul><ul><li>AGOA II is a clear manifestation of importance of Forum </li></ul>
  6. 6. AGOA CHALLENGES <ul><li>Eligibility </li></ul><ul><li>Textiles </li></ul><ul><li>Capacity </li></ul><ul><li>Agriculture </li></ul><ul><li>Investment </li></ul><ul><li>Transportation </li></ul><ul><li>Legal Framework </li></ul><ul><li>Predictability </li></ul>
  7. 7. AGOA Challenges: Eligibility <ul><li>AGOA Eligibility Criteria should be Inclusive </li></ul><ul><li>AGOA should aim to bring on board other countries </li></ul>
  8. 8. AGOA CHALLENGES: Expiry of Textile special Provision 2004 <ul><li>Too much focus on textiles </li></ul><ul><li>Effort needed to support export of the more than 6000 products </li></ul><ul><li>Expiry of textile provision would affect LDCs negatively </li></ul><ul><li>There has been insignificant investment in textile plants since AGOA was effected </li></ul><ul><li>Thousands of people especially women will lose jobs as companies close down </li></ul><ul><li>All the gains of AGOA will be lost. </li></ul>
  9. 9. AGOA CHALLENGES; Expiry of Textile special Provision 2004 <ul><li>Expiry of 2005 Multi Fiber Agreement under WTO </li></ul><ul><li>The 2008 expiry of AGOA is of concern to investors as return on investment is not guaranteed for long-term investments </li></ul>
  10. 10. AGOA CHALLENGES; Expiry of Textile special Provision 2004 <ul><li>Countries need time to increase efficiency in supply chain; </li></ul><ul><li>Countries need to agreed on regional approach to have share production </li></ul><ul><li>Countries have already started expanding cotton production and textile plants are undergoing rehabilitation </li></ul><ul><li>EXTENSION IS VERY CRITICAL </li></ul>
  11. 11. AGOA CHALLENGES Capacity Building <ul><li>Capacity in textile technology especially human resource </li></ul><ul><li>Capacity in agriculture particularly in SPS and in Biotechnology </li></ul><ul><li>Building capacity of Entrepreneurs on doing business in USA </li></ul><ul><li>Capacity building to enhance supply response </li></ul>
  12. 12. AGOA CHALLENGES, Agriculture and SPS <ul><li>Africa has comparative Advantage in Agriculture and yet sector has not benefited from AGOA </li></ul><ul><li>Africa’s share of agriculture exports to USA fell from 6% to 4% during past 3 yrs </li></ul><ul><li>Countries that have tried to export have met barriers because of long procedural requirements. </li></ul>
  13. 13. AGOA CHALLENGES; Agriculture and SPS <ul><li>USDA has approved only 45 products for export to USA from 53 African countries </li></ul><ul><li>COMESA has only 4 approved products (Onions, pineapples, snow peas and Yams) </li></ul><ul><li>Some key products excluded (Tobacco, sugar Peanuts Cotton) </li></ul><ul><li>In Africa, capacity to ensure that fresh foods meet US standards is inadequate </li></ul>
  14. 14. AGOA CHALLENGES <ul><li>AGRICULTURE AND THE SPS </li></ul><ul><li>Key </li></ul><ul><li>The placement of APHIS officer as of Jan 2003 in Botswana is commendable </li></ul><ul><li>URGENT NEED FOR FAST-TRACK APPROVAL SYSTEM </li></ul>
  15. 15. AGOA CHALLENGES: Investment <ul><li>Exports to USA have expanded but Investment still lagging behind; </li></ul><ul><li>Encourage USA Investment into Africa by providing incentives; </li></ul><ul><li>Expedite operationalization of equity funds </li></ul><ul><li>Access by African Enterprises to USA funds </li></ul>
  16. 16. AGOA CHALLENGES: Transportation <ul><li>Transport costs up to 40% of final cost of product; </li></ul><ul><li>Several African and COMESA countries landlocked </li></ul><ul><li>Insufficient air transport linkages </li></ul><ul><li>Need to expedite Infrastructure fund </li></ul>
  17. 17. AGOA: OTHER KEY CHALLENGES <ul><li>High cost of doing business in African countries affecting competitiveness (Infrastructure, energy, efficiency of ports, exchange rate, taxation, etc) </li></ul><ul><li>Capacity to comply with various requirements </li></ul><ul><li>Political Stability </li></ul><ul><li>HIV Aids, Malaria </li></ul>
  18. 18. AGOA Challenges. Legal Framework and Predictability <ul><li>Non-contractual; Need to move to contractual for post 2008 </li></ul><ul><li>Unpredictable business environment (In case of country slippage), risk should not be on investors </li></ul>
  19. 19. AGOA and Way Forward <ul><li>Special Textile Provision </li></ul><ul><li>USA to consider extending up to 2006 </li></ul><ul><li>Agriculture and SPS </li></ul><ul><li>USDA should establish a fast track approval system for selected products and aim at reducing PRA from 24 months to 6 months </li></ul><ul><li>Africa through RECs (e.g. COMESA) to support improvements to regional testing laboratories </li></ul>
  20. 20. AGOA and Way Forward <ul><li>Multi Fiber Agreement </li></ul><ul><li>MFA should be extended to ensure that Africa remains competitive . </li></ul><ul><li>Extension of 2008 Deadline </li></ul><ul><li>To consider a negotiated extension that is WTO compatible </li></ul><ul><li>US Investment in Africa </li></ul><ul><li>US should consider tax breaks for USA companies investing in Africa and exporting back into the USA under AGOA . </li></ul>
  21. 21. CONCLUSION <ul><li>AGOA WORKS AND </li></ul><ul><li>IT CAN ONLY BE BETTER IF ! </li></ul><ul><ul><ul><ul><ul><li>WE WORK TOGETHER </li></ul></ul></ul></ul></ul><ul><ul><ul><li>I THANK YOU FOR YOUR ATTENTION </li></ul></ul></ul><ul><ul><li>Web page: www.comesa.int </li></ul></ul>

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