AGOA Frequently Asked Questions

Q: How does it benefit U.S. firms?
A: By creating tangible incentives for African countries to implement economic and commercial reform policies, AGOA contributes to better market opportunities and stronger commercial partners in Africa for U.S. companies. The Act should help forge stronger commercial ties between Africa and the United States, while it helps to integrate Africa into the global economy. U.S. firms may find new opportunities in privatizations of African state-owned enterprises, or in partnership with African companies in infrastructure projects.

Q: Why the need for an AGOA II bill?
A: The need for AGOA II legislation was developed in part to improve upon and clarify some of the specific provisions that were not addressed in the original AGOA legislation (or AGOA I). AGOA II is part of the Trade Act of 2002 which President Bush signed into law on August 6, 2002.

Q: What specific changes did the AGOA II legislation make to the original AGOA law?
A: A table comparing AGOA I and AGOA II can be viewed at this link http://www.agoa.gov/faq/AGOA_comparison_table.pdf

Q: What specific changes did the AGOA Acceleration Act of 2004 make to the original AGOA law?
A: By modifying certain provisions of the African Growth and Opportunity Act (AGOA), the AGOA Acceleration Act of 2004 (AGOA III, signed by President Bush on July 12, 2004) extends preferential access for imports from beneficiary Sub Saharan African countries until September 30, 2015; extends third country fabric provision for three years, from September 2004 until September 2007; and provides additional Congressional guidance to the Administration on how to administer the textile provisions of the bill.

These modifications - often collectively referred to in the region as "AGOA III" - are effective on July 13, 2004.

AGOA Acceleration Act of 2004 (AGOA III) Summary:

• Extends overall the program from 2008 until 2015.
• Extends third country fabric provision for three years, from September 2004 until September 2007, including a phase down in year three. The cap would remain at the full current level available in years one and two. In the third year, the cap would be phased down by 50 percent.
• Includes a statement of Congressional policy that textile and apparel provisions under the program should be interpreted in a broad and trade-expanding manner to maximize opportunities for imports from Africa, accompanied by minor technical corrections to reverse restrictive interpretations by Customs officials. These minor technical corrections include a modification to the rule of origin to allow articles assembled either in the United States or Sub-Saharan Africa to qualify for AGOA treatment (hybrid).
• Expands current eligibility to allow non-AGOA produced collars, cuffs, drawstrings, padding/shoulder pads, waistbands, belts attached to garments, straps with elastic, and elbow patches for all import categories to be eligible. Also included is the continued use of fabric from AGOA countries that also become free trade partners with the United States.
• Increases the De Minimis Rule from its current level of seven percent to 10 percent. This rule states that apparel products assembled in Sub-Saharan Africa which would otherwise be considered eligible for AGOA benefits but for the presence of some fibers or yarns not wholly formed in the United States or the beneficiary Sub-Saharan African country will still be eligible for benefits as long as the total weight of all such fibers and yarns is not more than a certain percent (currently seven percent) of the total weight of the article.
• Includes findings and statements of policy about the benefits of AGOA to Africa and supporting various Sub-Saharan Africans efforts such as reducing poverty, promoting peace, attracting investment and trade, and fighting HIV-AIDS.
• Provides a Sense of the Congress that Africans should support WTO negotiations and trade liberalization.
• Expands the current "folklore" AGOA coverage to include certain machine-made ethnic printed fabric made in Sub-Saharan Africa or the United States.
• Encourages bilateral investment agreements.
• Directs the Administration to implement an interagency trade advisory committee.
• Encourages the development of infrastructure projects that increase trade capacity through the ecotourism industry.
• Directs the President to assign personnel for the purpose of providing agricultural technical assistance to select AGOA countries and advising them on improvements in their sanitary and phytosanitary standards to help them meet U.S. requirements.
• Promotes investment in infrastructure projects that support the development of land transport, roads, railways, ports, the expansion of modern information and communication technologies, and agriculture.
• Facilitates increased coordination between customs services at ports and airports in the United States and Sub-Saharan countries to reduce time in transit and increase efficiency and safety procedures.

Amendment to AGOA Acceleration Act of 2004 Summary:

• The "Micsellaneous Trade and Technical Corrections Act of 2004" signed into law on December 3, 2004 includes an amendment to the "AGOA Acceleration Act of 2004." The amendement grants lesser-developed beneficiary country status to Mauritius. This status qualifies the country for the Special Rule for Apparel, allowing Mauritius to use non-U.S. fabric and yarn in apparel wholly assembled in Mauritius and still qualify for duty- and quota-free treatment. The amendment limits Mauritius to a cap of 5% of the Special Rule cap, about 27 million square meter equivalents (SMEs).

Q: What benefits are provided for Botswana, Namibia, and Mauritius?
A: AGOA II permits Botswana and Namibia to qualify for the "Special Rule," which permits lesser developed AGOA beneficiary countries to utilize fabric manufactured anywhere in the world (extended until September 30, 2007 under AGOA III). Since Botswana's and Namibia's per capita GNP exceeded $1,500 (the 1998 World Bank level), they were not designated as a lesser developed beneficiary country and were not eligible for the Special Rule under the original AGOA legislation. An amendment to the AGOA Acceleration Act of 2004 grants lesser-developed beneficiary country status to Mauritius, also qualifying the country for the "Special Rule." The amendment limits Mauritius to a cap of 5% of the Special Rule cap, about 27 million square meter equivalents (SMEs).

Q: What conditions are placed on participation by African countries?
A: The President may designate Sub-Saharan African countries as eligible to receive the benefits of the Act if they are making progress in such areas as: establishment of market-based economies; development of political pluralism and the rule of law; elimination of barriers to U.S. trade and investment; protection of intellectual property; efforts to combat corruption; policies to reduce poverty, increase availability of health care and educational opportunities; protection of human rights and worker rights, and elimination of certain practices of child labor. Progress in each area is not a requirement for AGOA eligibility.

Q: Which countries have been designated as AGOA eligible?
A: Angola; Benin; Botswana; Burkina Faso; Cameroon; Cape Verde; Chad; Republic of Congo; Democratic Republic of Congo; Djibouti; Ethiopia; Gabon; The Gambia; Ghana; Guinea; Guinea-Bissau; Kenya; Lesotho; Madagascar; Malawi; Mali; Mauritania; Mauritius; Mozambique; Namibia; Niger; Nigeria; Rwanda; Sao Tome and Principe; Senegal; Seychelles; Sierra Leone; South Africa; Swaziland; Tanzania; Uganda; Zambia.

Q: Does the United States have the right to set eligibility criteria for African countries?
A: The criteria are standards which the Africans themselves have espoused and most are striving to uphold. But Congress never intended AGOA to be a blank check for all African countries, without regard to performance. It was meant to offer tangible incentives for African governments to improve their political and economic governance, not to underwrite poor policies.

Q: What are the provisions governing apparel imports?
A: AGOA provides duty-free and quota-free treatment for eligible apparel articles made in qualifying Sub-Saharan African countries through 2015. Qualifying articles include: apparel made of U.S. yarns and fabrics; apparel made of Sub-Saharan African (regional) yarns and fabrics, subject to a cap; apparel made in a designated lesser-developed country of third-country yarns and fabrics, subject to a cap; apparel made of yarns and fabrics not produced in commercial quantities in the United States; certain cashmere and merino wool sweaters; and eligible handloomed, handmade, or folklore articles; and ethnic fabrics. Under a Special Rule for lesser-developed beneficiary countries, those with a per capita GNP under $1,500 in 1998, will enjoy an additional preference in the form of duty-free/quota-free access for apparel made from fabric originating anywhere in the world. The Special Rule is in effect until September 30, 2007 and is subject to a cap. AGOA II designates Botswana and Namibia as lesser-developed beneficiary countries.

Q: Which countries fall under the per capita GNP ceiling for the Special Rule?
A: All Sub-Saharan African countries meet the per capita GNP requirements of the Special Rule with the exception of the following: Botswana, Gabon, Mauritius, Namibia, Seychelles, and South Africa. However, countries must meet the general AGOA eligibility requirements and the requirements for apparel benefits in order to qualify for the Special Rule. AGOA II grants Lesser Developed Beneficiary Country status to Botswana and Namibia, qualifying both countries for the Special Rule.

Q: When do the apparel benefits take effect?
A: Although the apparel benefits take effect October 1, 2000, beneficiary countries must first have an effective visa system in place to prevent illegal transshipment and use of counterfeit documentation. They must also institute enforcement and verification procedures. Details were disseminated to African governments following a cable instruction to all U.S. embassies in Sub-Saharan Africa on September 21, 2000. Countries must also be beneficiary developing countries under the U.S. Generalized System of Preferences (GSP), which includes 45 Sub-Saharan African countries.

Q: What does the term "knit-to-shape" mean?
A: Components that take their shape in the knitting process, rather than being cut from a bolt of cloth.

Q: What are the Act’s GSP provisions?
A: AGOA authorizes the President to provide dutyfree treatment under GSP for any article, after the U.S. Trade Representative (USTR) and the U.S. International Trade Commission (USITC) have determined that the article is not importsensitive when imported from African countries. On December 21, 2000, the President extended duty-free treatment under GSP to AGOA eligible countries for more than 1,800 tariff line items in addition to the standard GSP list of approximately 4,600 items available to non-AGOA GSP beneficiary countries. The additional GSP line items which include such previously excluded items as footwear, luggage, handbags, watches, and flatwarewere implemented after an extensive process of public comment and review. Sub-Saharan African GSP beneficiary countries are also exempted from competitive need limitations. In order for any Sub-Saharan African country to receive the liberalized GSP benefits it must first be GSP eligible under the existing criteria of that law.

GSP is extended for Sub-Saharan African beneficiary countries until September 30, 2015.

Q: How can African countries become more familiar with the benefits of the Act?
A: We have conducted technical assistance seminars in Africa and the United States to explain the benefits of the Act, in order to ensure that African countries are able to take maximum advantage of its provisions.