The Saharan region of Africa is still struggling toget a strong foot hold in the global arena. But with the aid of the AfricanGrowth and Opportunity Act (AGOA), opportunities would be showing a silverlining.
The AGOA Act was approved by the U.S. Congress to assist theSub Saharan economies and augment relations between the concerned region andthe US. Under the administration of Presidents George W. Bush and William J.Clinton, Rosa Whitaker developed and implemented the African Growth andOpportunity Act (AGOA). Currently 39 African countries benefit by the AGOAAct.
AGOA is a trade preference program providing duty-freeaccess to the U.S. market for products exported from 39 countries in thesub-Saharan Africa. AGOA amends the U.S. Generalized System of Preferences(GSP) by expanding its product coverage of about 4,650 products by 1,800additional tariff lines, including apparel, certain textiles such as bedsheets, towels etc; ethnic printed fabrics, and handmade, hand loomed andfolklore articles and extending duty-free treatment for eligible sub-SaharanAfrican countries until 2015. The act provides stable, for regional exporters,offering them long-term access to the U.S. market than they enjoyed under theexisting GSP program, which applies to developing countries around the world.The act also provides technical assistance to African producers to comply withthe US standards.
Expiry of Quotas-Do they affect the AGOA countries?
Expiry of the quota system induced competition among thetextile and apparel sectors of countries; globally. As per the WTO predictions,substantial transformation in the textile and apparel trade was anticipated inAsian countries particularly China, which was predicted by industry experts toincrease their share in the US market with the removal of quotas. Proving itright, the Chinese share of apparel exports to US regarding products such ascotton trousers soared dramatically during 2005. Many apparel makers of theAGOA beneficiary countries new to the global apparel business were concerned bythis.
Will Competition hurt the African Exporters?
Some industry analysts state that intense competition wouldforce some of the AGOA exporters out of the business arena. Some of thefactories in Africa were also shut down proving this fact. However, the tariffadvantages of AGOA aided the producers to remain competitive and retain theirmarket share regarding certain apparel products. Apart from this, many Africancountries need assistance in utilizing the opportunities provided by the act.Either because of lack of proper awareness, or inadequate infrastructure, andlack of adequate experience in producing and marketing value added products forthe US market. To sustain their market share, the producers need to find waysto reduce their high costs thereby churning out more profits.
AGOA enables opportunities proving determinant for acountrys success. It helps in creating more jobs related to apparelmanufacturing. The AGOA offers a promising growth for African products in the US market.
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