Contents:

Summary The African Growth and Opportunity Act Introduction Main provisions of AGOA Apparel provision Special apparel provision Eligibility GSP criteria New AGOA criteria Certificates of origin Apparel export visa requirements Enforcement mechanisms Eligible Countries Experiences of beneficiaries Eligibility for the apparel and special apparel provisions Limitations on Textile Products Eligible for Benefits Products covered by AGOA Cap on imports of groupings 4 and 5 Suspension of duty-free treatment in the event of import surges Impact on African Trade Trading pattern Performance by country Impact of AGOA on Investment in Sub-Saharan Africa Improved investment incentives Grouping 4 benefits: a bigger incentive over the longer term The end of MFA-type quotas The AGOA safeguard clause: a sting in the tail? Investment climate in sub-Saharan Africa Disincentives to investment The impact of AGOA on investment in eligible countries AGOA in the Medium and Longer Term Short term prospects The longer term conundrum List of tables Table 1: Countries eligible for preferential treatment under AGOA, March 31, 2002 Table 2: USA: imports of textiles and apparel from Sub-Saharan Africa, 1998-2001 Table 3: USA: imports of textiles and apparel from major sources in Sub-Saharan Africa, 1999-2001 Table 4: USA: imports under AGOA from all beneficiary countries, 2000-01 Table 5: USA: imports under AGOA from Lesotho, 2000-01 Table 6: USA: imports under AGOA from Madagascar, 2000-01 Table 7: USA: imports under AGOA from Kenya, 2000-01 Table 8: USA: imports under AGOA from Swaziland, 2000-01 Table 9: USA: imports under AGOA from Malawi, 2000-01 Table 10: USA: imports under AGOA from Ethiopia, 2000-01 Table 11: USA: imports under AGOA from South Africa, 2000-01 Table 12: USA: imports under AGOA from Mauritius, 2000-01 Table 13: Usage of capped AGOA categories, Oct 2000-Sep 2001

Summary:

The US African Growth and Opportunity Act, implemented in October 2000, provides for duty-free and quota-free access to the US market for textiles and apparel made in Sub-Saharan Africa. To qualify for AGOA benefits, apparel must be made in an eligible Sub-Saharan African country and, normally, be produced from materials formed within the region or in the USA. For a limited period, however, the Special Apparel Provision permits apparel makers in lesser developed countries to source materials globally without losing AGOA benefits. Shipments to the US market under AGOA are likely to rise while the provision remains in force. But if it is withdrawn as planned in late 2004, African suppliers will have difficulty in competing against those in China—especially once global quotas are eliminated at the end of 2004 and the quota-free access currently enjoyed by AGOA beneficiary countries ceases to be a competitive advantage. Madagascar could prove to be the major exception to this rule as long as it can overcome its current political difficulties. AGOA could also encourage investment in textile mills to improve local fabric supplies. In this respect, AGOA is likely to provide long-term benefits to the textile industries in South Africa, Mauritius and Namibia.