Emergency Committee For American Trade - Publications

ECAT 2008 AGENDA

SECTION IV.5: MIDDLE EAST AND SUB-SAHARAN AFRICA

Middle East

U.S trade and investment with the Middle East have expanded significantly over the last decade. In 2007, U.S. goods exports to the Middle East reached $46.3 billion. U.S. goods imports from the Middle East totaled $77.5 billion. U.S. services exports to the Middle East have also expanded, from $9.7 billion in 2005 to $11.3 billion in 2006. U.S. investment in the Middle East equaled $26.5 billion in 2006.

The United States has negotiated free trade agreements (FTAs) with Jordan, Morocco, Bahrain and Oman. FTA negotiations with the United Arab Emirates (UAE) are currently on hold. The Oman FTA and the negotiations with the UAE are discussed in section II.2.

Saudi Arabia

Twelve years after the establishment of the World Trade Organization (WTO) Working Group on Saudi Arabia’s accession on July 21, 1993, Saudi Arabia formally joined the WTO on December 11, 2005. With its accession, Saudi Arabia committed itself to major reforms that will liberalize trade and investment, including commitments on overall transparency, the rule of law, distribution, market access for agricultural and industrial goods and services, and the protection of intellectual property rights.

Key elements of Saudi Arabia’s accession package include:

Binding of tariffs on over 75 percent of U.S. industrial exports at an average rate of 3.2 percent.
Binding of 90 percent of agricultural tariffs at 15 percent or lower, with low tariffs in particular on key U.S. agricultural products, such as corn, rice, soybean meal, apples, raisins and many baked goods.
Participating fully in key sectoral initiatives, including the Information Technology Agreement, chemical harmonization, and the elimination of all duties on aircraft and parts.
Commitments to the Technical Barriers to Trade Agreement, including the elimination of pre-approval requirements.
Commitments to WTO sanitary and phytosanitary rules and commitments to eliminate ban on hormone-treated beef and unnecessary shelf-life requirements.
New market access for key services sectors, including audiovisual, computer and related, distribution, energy, express delivery, financial and telecommunications services.
Implementation of all WTO rules upon accession, including with respect to intellectual property rights, transparency and state-owned enterprises.
Saudi Arabia’s accession to the WTO represents a major step in reducing trade and investment barriers and promoting economic opportunities. ECAT supports Saudi Arabia’s full implementation of its WTO commitments, including in the areas identified below:
Financial Services: In April 2005, Saudi Arabia issued a decree permitting foreign insurance companies to operate as branches of their foreign parent. The decree also permitted the continued operation of existing branches for three years to allow them to reregister under amended regulations that were to be issued by the 2nd quarter of 2006. Saudi Arabia's bilateral accession agreement with the United States reflected the language of the decree and also permitted up-to-60 percent foreign ownership of a locally incorporated public company, provided a minimum of 30 percent of shares were publicly offered through the stock exchange. Saudi Arabia has not yet issued regulations implementing its branching commitment.
Government Procurement: In its accession, Saudi Arabia committed to the process of joining the WTO Agreement on Government Procurement (GPA). In December 2007, Saudi Arabia became an observer to the WTO Committee on Government Procurement, but has not yet formally started negotiations.
Intellectual Property (IP) Rights: Saudi Arabia has enacted laws covering a wide range of IP issues, including enacting more severe penalties for the infringement of IPR rights. It has made significant improvement on enforcement in recent years, but copyright owners have expressed frustration with the lack of transparency in regulations and the enforcement system. ECAT also has concerns with Saudi Arabia’s unilateral pharmaceutical pricing policies and the lack of IP protection for certain patents, including those submitted under its old patent system. In addition, Saudi Arabia is not effectively enforcing rules against the redistribution of Pay-TV signals. Saudi Arabia remained on the U.S. Trade Representative’s Special 301 Watch List in 2007.

ECAT also urges Saudi Arabia to continue its trade and investment liberalization efforts more broadly. In particular, ECAT would like to see further tariff reductions, particularly on goods of interest to U.S. industry, including chocolates, farm products and manufactures. ECAT would also like to see progress towards a potential bilateral investment treaty between the United States and Saudi Arabia.

ECAT Position: ECAT welcomes the important commitments that Saudi Arabia has made in joining the WTO to reduce tariffs, discriminatory policies against foreign entities and other non-tariff barriers, and looks forward to Saudi Arabia’s continuing progress towards full implementation of commitments it made with its WTO accession.

Bahrain

The United States launched FTA negotiations in January 2004 with Bahrain. These negotiations concluded on May 27, 2004, and the U.S.-Bahrain FTA was signed on September 14, 2004. In 2006, Congress approved and implemented the U.S.-Bahrain Free Trade Agreement (FTA) through the approval of H.R. 4340, the United States-Bahrain Free Trade Agreement Implementation Act. The House passed H.R. 4340 on December 7, 2005, by a vote of 327-to-95. The Senate approved H.R. 4340 on December 13, 2005, by unanimous consent. The President signed the legislation implementing the U.S.-Bahrain FTA on January 11, 2006. The U.S.-Bahrain FTA entered into force on August 1, 2006.

Major Provisions of the U.S.-Bahrain Free Trade Agreement

The primary provisions of the U.S.-Bahrain FTA include the following:

Manufactured goods: Provides that 100 percent of bilateral trade in consumer and industrial goods will be duty-free upon entry into force, expanding opportunities in particular for exports of aircraft, information and communication technology products, machinery, vehicles, and pharmaceutical goods. Tariffs on virtually all items on U.S. and Bahrain tariff schedules will also be eliminated immediately, with the rest eliminated over 10 years.
Agriculture: Provides that 81 percent of U.S. agricultural exports will be duty-free immediately upon entry into force, expanding opportunities in particular for meats, fruits and vegetables, cereals, and dairy products. Remaining tariffs will be eliminated over 10 years. Bahrain also agreed to adopt a science-based and transparent regime to address sanitary and phytosanitary barriers.
Services: Provides that Bahrain will make significant openings in its services market through a negative list approach and includes strong disciplines on transparency. In particular, the FTA includes significant market access for financial and telecommunications services.
Information Technology: Bahrain joined the WTO ITA prior to completing FTA negotiations, ensuring duty-free imports to Bahrain for many information technology products. In addition, Bahrain committed to non-discrimination and national treatment of e-commerce and digital products, and agreed not to impose customs duties on products delivered electronically.
Textiles and apparel: Provides duty-free treatment immediately for qualifying textiles and apparel (based on a yarn-forward rule), with an additional allowance of 65 million square meters equivalents for the first 10 years for non-qualifying items.
Government procurement: Includes important new non-discrimination, anti-corruption, and transparency rules for government contracting.
Intellectual property rights: Includes state-of-the-art protections for trademarks, copyrights, patents, and trade secrets, including stronger penalties, patent-term restoration, data exclusivity and disciplines to strengthen enforcement.
Transparency: Includes state-of-the-art transparency standards, including in such areas as customs and regulatory rulemaking (i.e., providing, for example, Internet publication of laws and regulations, expedited release procedures, and provisions for express shipments).
Labor and environment: Includes binding commitments to enforce effectively labor and environmental laws subject to dispute settlement. The parties reaffirmed their commitment to International Labor Organization principles and that it is inappropriate to weaken or reduce labor or environmental protection to encourage trade or investment. The parties also agreed to ensure that their environmental laws provide for high levels of environmental protection.
Dispute settlement: Provides that obligations in commercial, labor and environment areas are enforceable through a strong and innovative dispute settlement system.

A separate investment chapter was not included since the United States and Bahrain already have a strong bilateral investment treaty in force.

Opportunities Created

Two-way trade between the United States and Bahrain surpassed $1.2 billion in 2007. In 2006, U.S. goods exports to Bahrain totaled $591 million, which included aircraft, vehicles, machinery, toys, sports equipment, and pharmaceutical products. Among the key U.S. agricultural commodity exports that have begun to benefit from the U.S.-Bahrain FTA are meats, fruits and vegetables, cereals, and dairy products. The FTA with Bahrain helps support its continued economic reform and openness to investment, as well as its commitment to openness, transparency, high-standard intellectual property protection that keeps pace with digital innovations and the rule of law. It also represents an important step towards a broader Middle East FTA that the Administration seeks to have established by 2013.

ECAT Position: ECAT supports full implementation of the U.S.-Bahrain Free Trade Agreement in a manner that promotes market access and strong rules, including on intellectual property and transparency.

Morocco

The United States and Morocco launched FTA negotiations on January 21, 2003. The U.S.-Morocco FTA was concluded on March 2, 2004, and signed on June 15, 2004. The U.S.-Morocco FTA was approved by the Senate by a vote of 85-to-13 on July 21, 2004, and by the House by a vote of 323-to-99 on July 22, 2004. The President signed the implementing legislation into law on August 17, 2004. Morocco’s parliament approved the FTA on January 19, 2005, and the FTA entered into force on January 1, 2006.

Major Provisions of the U.S.-Morocco Free Trade Agreement

Among the primary provisions of the U.S.-Morocco FTA are the following:

Agriculture: Provides expanded access through tariff reduction, tariff elimination and an expansion of tariff-rate quotas. U.S. exports of pistachios, cranberries, pecans, whey products, processed poultry products, and pizza cheese will immediately receive duty-free treatment upon entry-into-force. Tariffs on other products will be phased out over five years, including on walnuts, grapes, pears, and cherries. The Agreement covers all agricultural products. Key U.S. agricultural exports that will also have expanded opportunities include sorghum, corn, soybeans, and beef.
Manufactured Goods: Provides that more than 95 percent of consumer and manufactured exports will be duty-free upon entry into force of the agreement. All remaining tariffs will be removed within nine years.
Textiles and Apparel: Provides duty-free treatment for qualifying textiles and apparel (based on a yarn-forward rule), with an additional 30 million square-meter-equivalent allowance for Moroccan exports containing third-country fabric.
Services: Liberalizes services trade and investment in Morocco through a negative-list approach with relatively few exceptions and includes strong disciplines on transparency.
Investment: Expands investment opportunities and incorporates generally strong protections, including an investor-state mechanism, for U.S. investment.
Intellectual Property Rights: Includes state-of-art protections for trademarks, patents, copyrights, and trade secrets, including strong penalties, patent-term restoration and data exclusivity.
Information Technology: Parties committed to non-discrimination and national treatment of digital products, and to not impose customs duties on products delivered electronically.
Government procurement: Includes important new anti-corruption and transparency rules for government contracting.
Transparency: Includes state-of-the-art transparency standards, including in such important areas as customs and regulatory rulemaking.
Labor and environment: Includes commitments to enforce effectively domestic labor and environmental laws. The parties reaffirmed their commitment to International Labor Organization principles and that it is inappropriate to weaken or reduce labor or environmental protections to encourage trade or investment. The parties also agreed to ensure that their environmental laws provide for high levels of environmental protection.
Dispute settlement: Provides that obligations in commercial, labor and environment areas are enforceable through a strong and innovative dispute-settlement system allowing for monetary fines and other penalties for the failure to meet commitments.

Opportunities Created

Morocco is an emerging market, and two-way trade with the United States continued to grow at an increasing pace in 2007. U.S. goods exports to Morocco amounted to $1.3 billion in 2007 and U.S. goods imports from Morocco totaled almost $610 million. Leading U.S. exports include aircraft, cereals, and machinery, and there have been recent increases in U.S. exports of textiles, metals and agricultural products. This agreement is important to create new opportunities for U.S. companies, workers, farmers and their families. The U.S.-Morocco FTA helps U.S. companies, which have been at a disadvantage compared to the EU (which has an association agreement with Morocco covering industrial goods). This agreement will also help Morocco lock in key economic reforms, including initiatives to streamline investment procedures and eliminate barriers to investment.

ECAT Position: ECAT supports full implementation of the U.S.-Morocco FTA in a manner that promotes market access and strong rules, including on investment, intellectual property and transparency.

Jordan

On October 24, 2000, the United States and Jordan signed the U.S.-Jordan Free Trade Agreement. The U.S.-Jordan FTA was approved by the House on July 31, 2001, by voice vote and by the Senate on September 24, 2001 by voice vote. The President signed the implementing legislation into law on September 28, 2001, and the U.S.-Jordan FTA entered into force on December 17, 2001.

Major Provisions of the U.S.-Jordan Free Trade Agreement

Negotiated prior to the renewal of Trade Promotion Authority, the U.S.-Jordan FTA represents an important step towards the very strong agreements negotiated after Trade Promotion Authority was renewed in 2002, except that the agreement fails to incorporate a strong or time-limited dispute-settlement chapter providing time-limits on dispute settlement. The primary provisions of the U.S.-Jordan FTA are the following:

Agriculture and manufactured goods: The FTA provides for the elimination of virtually all industrial and agricultural tariffs within 10 years.
Services: Provides some liberalization in services trade.
Intellectual Property Rights: Includes strong protections for intellectual property.
Information Technology: Jordan became the first country in the Middle East to join the WTO Information Technology Agreement, and the U.S.-Jordan FTA was the first to include e-commerce provisions, including binding commitments not to impose customs duties on electronic transmissions, not to impose unnecessary regulation on electronic commerce and not to place unnecessary barriers to market access for digitized products or on delivery of services through electronic means.
Transparency: Includes strong transparency standards.
Labor and environment: The U.S.-Jordan FTA was the first trade agreement to include commitments to enforce effectively domestic labor and environmental laws. The parties reaffirmed their commitment to International Labor Organization principles and that it is inappropriate to weaken or reduce labor or environmental protections to encourage trade or investment. The parties also agreed to ensure that their environmental laws provide for high levels of environmental protection. The U.S.-Jordan FTA made no provision for technical assistance or a cooperative framework for labor and environment.
Dispute settlement: The U.S.-Jordan FTA does not include state-of-the art dispute settlement. There are no time limits for the formation of panels and panel reports are explicitly considered non-binding.

Opportunities Created

The U.S.-Jordan trade and investment relationship remains modest, but is growing. U.S. goods exports to Jordan more than doubled since 2000, expanding from $312 million in 2000 to $856.5 million in 2007. Exports of vehicles and machinery have particularly expanded. Imports from Jordan have grown even more rapidly, from $73 million in 2000 to $1.3 billion in 2007, mostly in apparel, which has been spurred in significant part by Qualifying Industrial Zones (QIZs) with Israel. This agreement will help Jordan lock in key economic reforms and promote greater and more diverse economic opportunities.

ECAT Position: ECAT supports full implementation of the U.S.-Jordan Free Trade Agreement in a manner that liberalizes trade and investment flows between the United States and Jordan.

Sub-Saharan Africa

U.S. trade and investment with the 48 countries of sub-Saharan Africa (SSA) have increased overall in recent years, but still represent a low percentage of total U.S. trade and investment. Total two-way goods trade between the United States and the SSA countries continued to increase, by almost 15 percent, from $71.3 billion in 2006 to $81.7 billion in 2007. U.S. goods exports to the SSA countries equaled $14.4 billion in 2007. U.S. goods imports from the SSA countries increased from $59.2 billion in 2006 to $67.3 billion in 2007, with energy representing 81.4 percent of U.S. imports. U.S. services exports to African countries equaled $8.1 billion in 2006. U.S. foreign direct investment in the SSA countries increased to over $19 billion in 2006. As discussed in section II.2, U.S. FTA negotiations with the Southern African Customs Union are currently on hold.

African Growth and Opportunity Act

The United States has long provided many of the SSA countries with duty-free access for non-sensitive goods through the Generalized System of Preferences (GSP) program. After years of Congressional and Administration consideration, the United States expanded those benefits through the African Growth and Opportunity Act (AGOA), which was enacted on May 18, 2000, as part of the Trade and Development Act of 2000. The original legislation was amended on two occasions, as discussed below, and the AGOA preferences are currently set to expire on September 30, 2015.

The impetus for AGOA grew out of recognition – both in the United States and in Africa – that trade and investment can serve as engines for African economic growth and development. AGOA provides duty-free, quota-free treatment for certain apparel from eligible sub-Saharan African (SSA) countries and provides duty-free access to certain products not currently eligible for such treatment under the Generalized System of Preferences program (GSP). AGOA also provides a framework for trade-capacity building to help countries take advantage of the trade preferences. AGOA establishes the U.S-sub-Saharan Africa Trade and Economic Cooperation Forum to facilitate regular ministerial-level trade and investment policy discussions. The primary provisions are as follows:

Eligibility Criteria: Sub-Saharan African countries eligible for the benefits of AGOA must meet the GSP’s eligibility requirements, as well as several new requirements, including making progress toward establishing or adopting (1) a market-based economy, (2) the rule of law and political pluralism, (3) economic policies to reduce poverty, (4) a system to combat corruption and bribery, and (4) the protection of internationally recognized worker rights. Eligible countries must also be found to be making progress toward eliminating barriers to U.S. trade and investment. Countries may not be found to be eligible if they engage in activities that undermine U.S. national security or foreign-policy interests or engage in gross violations of internationally recognized human rights.
Textile and Apparel Provisions: AGOA provides duty-free, quota-free treatment through September 30, 2008, for the following articles:
- Apparel assembled in eligible SSA countries from U.S. fabric made from U.S. yarn;
- Apparel that is cut and assembled or knit-to-shape in sub-Saharan Africa from U.S.-made fabric that is made from U.S. yarn and assembled with U.S. thread;
- Apparel wholly assembled from regional fabric, up to a cap of 1.5 percent of total U.S. apparel imports in year one, growing to 3.5 percent of such imports in year eight; lesser developed SSA countries may use third-country fabric for the first four years of the program;
- Knit-to-shape sweaters made from cashmere or fine merino wool up to 18.5 microns;
- Apparel cut and assembled or knit-to-shape in sub-Saharan Africa from fabric or yarns not available in commercial quantities in the United States; and
- Hand-loomed, handmade, and folklore articles.

Eligible countries must also adopt effective visa systems, domestic laws and enforcement procedures to prevent unlawful transshipment; permit the U.S. Customs Service to verify information; and cooperate fully with the United States to prevent circumvention and transshipment.

AGOA also establishes procedures to monitor imports and investigate injurious import surges of articles made from regional and/or third-country fabric and authorizes a tariff snapback (to the normal-trade-relations tariff rate), where an injurious import surge is found.

Trade Benefits for Other Products: AGOA provides duty-free treatment for eligible sub-Saharan African countries through September 30, 2008, for other import-sensitive articles (except textiles and apparel) that are currently ineligible for such treatment under GSP, including certain footwear and luggage. The legislation also eliminates the restrictions under the GSP program that limit the quantity of imports that can receive GSP benefits for eligible sub-Saharan African countries.
Economic Forum: AGOA directs the President to create a United States-sub-Saharan Africa Trade and Economic Cooperation Forum to hold annual high-level meetings with African Ministers to discuss expanding trade and investment relations.
Other Provisions: AGOA directs the President to develop a plan for engaging in free-trade-agreement negotiations, where feasible, with sub-Saharan African countries and supports comprehensive debt relief and increased involvement by OPIC, Ex-Im and the U.S. Foreign and Commercial Service in Africa.

As part of the Trade Act of 2002, Congress amended AGOA to:

Clarify that knit-to-shape products are covered by the duty-free, quota-free benefits of AGOA (contrary to Customs’ interim ruling);
Clarify that hybrid products (cut in the United States and SSA beneficiary countries) are eligible for the duty-free, quota-free benefits (contrary to Customs’ interim ruling);
Expand the eligibility of products from the least-developed countries to include apparel made from non-U.S. and non-regional yarn;
Raise the cap on duty-free, quota-free apparel imports made from regional fabric and regional yarn to seven percent over the next eight years;
Grant Namibia and Botswana the ability to use non-African fabric in apparel production as a “lesser developed beneficiary sub-Saharan African country,” and
Make a technical correction to allow merino sweaters to be eligible for the duty-free, quota-free benefits.

The President has determined that 38 countries are currently eligible for AGOA benefits in 2006. They are Angola, Benin, Botswana, Burkina Faso, Burundi, 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, and Zambia. These countries are eligible for the non-apparel trade benefits under AGOA.

The Administration must make a separate determination that a country has adopted an effective visa system and enforcement mechanism to prevent illegal transshipment in order to be eligible for the duty-free apparel benefits. The following countries are currently designated as eligible for the apparel benefits: Benin, Botswana, Burkina Faso, Cameroon, Cape Verdi, Chad, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mali, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Swaziland, Tanzania, Uganda and Zambia.

AGOA Acceleration Act of 2004

The U.S. Congress approved the AGOA Acceleration Act of 2004, which:

Extended the AGOA program from 2008 until 2015;
Extended third-country fabric provision from September 2004 until September 2007 with a phased decline of benefits;
Modified the AGOA rule-of-origin for textiles and apparel to allow limited non-AGOA collars and cuffs;
Expanded folklore definition for printed fabric;
Provided assistance to develop sustainable infrastructure and increase trade capacity, including through the promotion of eco-tourism;
Assigned additional personnel to the region to provide technical agricultural assistance; and
Facilitated customs coordination at ports and airports.

Africa Investment Incentive Act of 2006

The U.S. Congress approved the Africa Investment Incentive Act of 2006, as part of the Tax Relief and Health Care Act of 2006 in December, which:

Extends AGOA third-country fabric provision, which provides duty-free access to garments made with fabrics originating in countries outside the AGOA area, through September 30, 2012, with a 3.5 percent cap.
Stipulates that garments using non-AGOA fabric or yarn, when that fabric or yarn is in abundant supply from countries within the AGOA area, will disqualify these garments from the above benefits.
Allows duty-free treatment for lesser-developed countries for certain non-apparel textiles made wholly from African fabric.
Extends the effective date for AGOA through September 30, 2015.

Implementation and Impact of AGOA

Since its enactment, AGOA has helped to promote progress on several of its major policy objectives. AGOA has helped spur an expansion of U.S.-African trade and trade capacity-building assistance to support regional integration and development. The United States is currently negotiating the first-ever free trade area agreement with sub-Saharan African countries. As well, by offering trade benefits to those countries undertaking sometimes difficult economic and political reforms, AGOA has provided a powerful incentive and reinforcement for African efforts to improve governance, open markets, and reduce poverty. In addition to promoting these goals, the annual AGOA forum has also provided a platform for high-level dialogue on ways to improve U.S.-African trade and economic cooperation. Though AGOA has had a positive impact on African reforms, there is much progress that needs to be made, and there are significant barriers to this progress.

Overall imports from AGOA countries have increased since 1999 (the year before AGOA was enacted), from $13.8 billion in 1999 to $64.9 billion in 2007. Most of the increase in U.S. imports was in energy products, which were not significantly affected by the AGOA legislation. Nevertheless, non-energy U.S. imports from AGOA countries, particularly apparel products that receive substantial AGOA preferences, increased by over 150 percent, from $4.7 billion in 1999 to $11.8 billion in 2007. U.S. exports to AGOA countries grew from $5 million in 1999 to $13.5 billion in 2007.

The increased trade in textiles and apparel and other areas promoted by AGOA has had a positive impact on African economic, political and social reforms. The ongoing review of a country’s eligibility status has proven an effective tool in motivating countries to create and maintain conditions that will promote economic growth, although many of the difficulties facing sub-Saharan Africa, such as inadequate infrastructure and a lack of technical capacity, remain. AGOA and other growth-assistance measures are working to overcome these barriers to expanded trade and economic growth. With the help of the AGOA framework, the United States remains committed to helping sub-Saharan Africa address the challenges of debt relief, poverty reduction, infrastructure development, and HIV/AIDS and other infectious diseases.

The economic forums mandated by AGOA have also been important events to spur progress in the U.S.-SSA relationship. At the fourth annual AGOA Forum held in July 2005 in Senegal, President Bush announced the African Global Competitiveness Initiative (AGCI). In addition to allocating $200 million over a five-year period, the initiative greatly expands the trade capacity-building efforts underway as part of AGOA. The initiative seeks to enable African economies to become better integrated into regional and global markets and to take full advantage of the trade opportunities afforded by AGOA. The goals of the AGCI are to expand sub-Saharan Africa’s trade under AGOA and to improve the region’s external competitiveness. The initiative emphasizes trade-capacity building in the following areas:

Improve the climate for private investment in Africa;
Expand AGOA trade and intra-African trade;
Strengthen the emphasis on information and communication technology in facilitating investment and trade-related efforts in Africa;
Stimulate private-sector development;
Encourage and promote export diversification;
Reduce time-to-market and transport costs by facilitating trade at borders and along transport corridors;
Strengthen the financial sector;
Facilitate investment in infrastructure and address general barriers to competitiveness; and
Improve the capacity of African countries to meet international quality standards and United States animal and plant health-inspection requirements.

Following the expiration of the Multi-Fiber Agreement on January 1, 2005, and, its quotas on textile and apparel products from most countries, SSA countries have experienced substantial competition in the U.S. market in a sector that AGOA was intended to help expand. It is expected that the SSA countries will face increasing competition in this sector in coming years, undermining to some degree the economic growth that can be fostered by the current AGOA framework.

Several technical implementation issues have also arisen with respect to AGOA, which have undermined the benefits it provides. On October 5, 2000, the U.S. Customs Service published interim rules to implement the benefits of AGOA (and the Caribbean Basin Trade Partnership Act discussed in section IV.3). Over five years later, these rules have yet to be finalized, which has limited the full benefits available under AGOA. In addition, interpretations by U.S. Customs and Border Protection (formerly called the U.S. Customs Service) severely limit the ability to use U.S. components. Another problem is the requirement that every importer provide sourcing and supply-chain details on AGOA goods. This information is extremely confidential and if disclosed to a competitor could be very harmful.

Economic growth continues in the countries of sub-Saharan Africa, but much higher growth is needed to decrease poverty overall. Average per-capita income remains lower now than at the end of the 1960s. Civil conflict, problems in governance, extensive state control of the economy, the HIV/AIDS epidemic, trade barriers and other economic problems continue to plague many of the countries of the region. Outdated and inadequate infrastructure, including ports, roads, and schools, also continues to slow growth and development. These issues need to be addressed.

In countries, such as Ghana, however, that have undergone economic reform and promoted liberalized trade and domestic markets, growth has been the strongest and poverty has declined. To continue to realize the potential benefits of AGOA and promote economic growth more broadly, therefore, eligible SSA countries need to diversify greatly their export base, develop intra-regional trade linkages, and enhance their external competitiveness. The United States views trade capacity-building and technical assistance programs as essential components of its trade and investment policy. As discussed in section II.2, in 2003, the United States began negotiations with the five countries that make up the Southern African Customs Union (SACU) (Botswana, Lesotho, Namibia, South Africa and Swaziland) to create a U.S.-SACU Free Trade Agreement. In 2008, the United States and Rwanda signed a bilateral investment treaty, as discussed in section III.1.

ECAT Position: ECAT supports full implementation of the African Growth and Opportunity Act, as extended, in a manner that fosters greater trade and investment between the United States and the countries of sub-Saharan Africa and supports greater economic growth and opportunities for sub-Saharan Africa.