The African Growth and Opportunity Act (#AGOA) is a trade agreement between the US and 39 sub-Saharan African nations. The impact that AGOA has on the economies of the beneficiary countries is considerable. AGOA is the sole reason that has enabled the SSA countries to compete in the global apparel industry and sustain, even when competitors like India and China have better technology and capital.

2. What is AGOA?
• The African Growth and Opportunity Act (#AGOA) is a
trade agreement between the US and 39 sub-Saharan
African nations.
• It was enacted in 2000 by the Bill Clinton
administration.
• AGOA provides duty-free trade access to the US
market for certain products by the eligible
sub-Saharan African (SSA) countries.
• It was renewed again in 2015 by then president
Barack Obama and is set to expire in 2025, the
longest in the programme’s history.
• (AGOA Info)

3. What are the
qualifications for AGOA
preferences?
• To qualify for the AGOA preferences, the African countries
firstly need to meet the “wearing apparel provisions” by
implementing a special apparel visa system.
• Secondly, they need to satisfy the specific Rule of Origin
(RoO) requirements of the Act (AGOA’s ‘Wearing Apparel’
Rules Of Origin).
• The leading exporters utilizing AGOA trade preferences in
apparel exports include Lesotho, Kenya, and Mauritius.

4. What are the
qualifications for AGOA
preferences?
To enjoy a duty-free treatment in the US apparel market, the T&A
products made in the beneficiary countries need to belong to one
of the following categories:
 Apparel products made using yarns and fabrics sourced from the US
 Apparel products made using SSA regional yarns and fabrics,
subject to a cap
 Apparel products made using yarns and fabrics not produced in
commercial quantities in the US
 Certain cashmere and merino wool sweater products
 Certain hand-loom, handmade, or folklore articles
 Certain ethnic printed fabrics

5. What are the
qualifications for AGOA
preferences?
• AGOA countries with the LDBC status (Lesser-Developed
Countries) further enjoy a duty-free access to US market for
apparel products made from raw-material sourced from any other
countries like China, South Korea or Taiwan, subject to a cap.
• Since most SSA countries still don’t have the capacity, capital
and technology to produce textile products, this special rule,
known as the “third-country fabric” provision, is very helpful,
as it increases their apparel exports, encourages foreign
investment and enhances trade diversification for the
qualifying SSA countries.
• With the intent of promoting market-led economic growth in
SSA, AGOA deepens the trade and investment relations
between US and SSA countries.

6. AGOA beneficiary countries

7. AGOA Country Eligibility (agoa.in)

8. What are the benefits of
AGOA to SSA Countries?
• Apparel production plays a dominant role in the economic
development of many SSA countries highlighted above.
• Hence, AGOA has made apparel products as one of the top
exports for these countries.
• A provision under AGOA allows US apparel imports from
some of these countries to qualify for duty-free
treatment, even when the raw materials (yarns and
fabrics) are sourced from non-AGOA countries like China,
Taiwan, and South Korea.

9. What are the benefits of
AGOA to SSA Countries?
• Since SSA countries still have limited capacity and
technology for textile production, the AGOA Act enables the
African apparel industry to sustain itself.
• The impact that AGOA has on the economies of the
beneficiary countries is considerable.
• AGOA is the sole reason that has enabled the SSA countries
to compete in the global apparel industry and sustain, even
when competitors like India and China have better
technology and capital.

10. AGOA Apparel Exports
AGOA Apparel Exports ( agoa.in)

11. AGOA Apparel Exports
• AGOA inception happened only in the late 2000 and early
2001.
• The above graph reveals how the AGOA exports under
apparel sector peaked in 2004.
• This upwards trajectory can be accounted to two
reasons: firstly, the relative advantage that African
manufacturers had over their Asian competitors who face
trade quotas under the WTO regulations, which then
expired by the end of 2004.
• Secondly, some of the AGOA exporters gained a
competitive advantage as their local currency
movements made their local products cheaper.

12. AGOA Apparel Exports
• The dip in 2009-10 can be accounted to the global financial crisis
that put pressure on the US imports.
• The growth in the economies of these apparel exporting countries
has also led to job creation in those countries, which have further
contributed towards their local economic and social development.
• For instance, Lesotho, an AGOA beneficiary, which is one of the
main apparel exporters under the act, has seen a steep rise in
available jobs: from 19,000 jobs in 1999 to 45,700 jobs in 2011.

13. Are there any drawbacks of AGOA?
• AGOA has no doubt helped SSA countries build their export
competitiveness along with diversifying their economic structure
in the past decade.
• But, a CRS* report highlights that the AGOA apparel production
has only concentrated on the lowest skill tasks.
• Thus, the knowledge transfer to the local workforce has been
limited, which, along with the limited capital and technology
constraints cannot help the SSA countries maintain global
competitiveness if this preferential treatment is not provided.
• Hence, till AGOA is offering them preferential treatment, the SSA
countries’ exports are thriving, but they need to build on their
strengths to survive without AGOA.
(CRS: Congressional Research Service Reports are the encyclopedic,
public domain research reports written to clearly define issues in a
legislative context)

14. African Countries as the Next T&A Hub
• AGOA received a new authorization in 2015, which is
going to last till 2025 including the special third-country
fabric provision.
• This renewal will encourage more long-term investment
in the beneficiary countries.
• This will help the SSA apparel manufacturers to develop
the flexibility to source their raw material from the
most cost and quality effective suppliers globally.

15. African Countries as the Next T&A Hub
• AGOA attracted investments will also help in the development of a
textile industry in the region as US apparel market is an enormous
opportunity and this will incentivise the foreign investors to
establish textile mills in Africa near the buyers.
• This trend has already started in Kenya, Ethiopia, and many other
SSA countries. Hence, eventually by 2025, the African countries
can very well become the next textile and apparel hub in the
global apparel industry picture.

16. Why is Trump administration
repealing AGOA?
• With Donald Trump’s inauguration as the 45th president of
the US, fundamental questions are being raised regarding
the US-African relationship under AGOA.
• While Trump has spoken openly about his resistance to TPP,
there is not much clarity on the status of AGOA.
• Trump is in favour of bilateral trade agreement which
benefits US employment status.
• Due to this, AGOA might come under close examination as
the agreement promotes African imports to the US without
simultaneously promoting US exports to Africa.

17. Why is Trump administration
repealing AGOA?
• Repealing the Act would wipe out the EPZ* sub-sector that employs about
40,000 Kenyans, and greatly reduce trade as textile and apparel products
account for about 80 per cent of Kenya’s total exports to the US.
• The 2015 Economic Survey shows that Kenya’s textile export to the US
were worth $283.3 million in 2014.
• Rwanda earned $187,000 in 2014 and $435,000 in 2015, mainly from
apparel and macadamia exports to the US market.” (The East African)
• Despite all the speculations, it is unlikely that the AGOA will be
withdrawn as it will provide very little direct benefit to the US. Also, in
an event of discontinuation, it is a possibility that the intra-Africa trade
could incentivize to make up for the lower trade with the US.
(EPZ: Export Processing Zone is a free trade zone for developing
country to promote exports. Incentives are offered to do the same as
well. AKA development economic zone or special economic zone.)

18. Conclusion
• Now, we have evaluated all the possible benefits and
limitations that AGOA brings upon the beneficiary countries.
• What in your view is the possibility of “Made in Africa”
apparel to be competing in the global marketplace, when
the raw material sourcing is still overly dependent
on other countries?
• And is AGOA enough of a driver for investors to develop the
region as the textile hub?

19. References:
• About AGOA. Retrieved from https://agoa.info/about-agoa.html
• AGOA’s ‘Wearing Apparel’ Rules Of Origin. Retrieved from https://agoa.info/about-
agoa/apparel-rules-of-origin.html
• AGOA Country Eligibility. Retrieved from https://agoa.info/about-agoa/country-
eligibility.html
• Sector Data: Apparel Trade. Retrieved from https://agoa.info/data/apparel-trade.html
• AGOA treaty facing possible repeal in Trump administration. (n.d.). Retrieved June 02,
2017, from http://www.theeastafrican.co.ke/business/Agoa-treaty-repeal-Trump/2560-
3784086-item-1-kxsgve/index.html
• Congressional Research Service Reports. Retrieved from
https://en.wikipedia.org/wiki/Congressional_Research_Service_reports
• What is Export Processing Zone? Retrieved from http://thelawdictionary.org/export-
processing-zone-epz/