AGOA Comments Mostly on Exclusion of Ethiopia, Mauritania, and for Retaining South Africa

Importers of apparel from Africa and exporters of auto parts, apparel, food and metal from South Africa are making the case to renew the African Growth and Opportunity Act ahead of schedule, renew it for at least 10 years, if not 20, and, some are arguing directly, restore Ethiopia's eligibility.

In close to 50 publicly posted comments, however, two human rights groups and a lobbyist argued Ethiopia has not resolved its human rights violations that led to the end of its eligibility; several human rights groups said anti-gay laws proposed by Ghana and Kenya should result in a loss of AGOA eligibility if they pass, or that Uganda should lose eligibility for its anti-gay law.

Some intellectual property interests said AGOA should be restricted if IP protection doesn't improve, though they didn't call for any country's immediate termination, and the National Pork Producers Council said South Africa and Nigeria should not be in the program because of their barriers to U.S. pork exports. India was expelled from the Generalized System of Preferences benefits program in part due to dairy export restrictions.

Four individuals and seven groups in Ohio representing African and particularly Mauritanian immigrants also urged the Office of the U.S. Trade Representative to maintain the ineligible status of Mauritania. "Mauritania is not qualified to receive AGOA trade benefits due to the government’s failure to make progress toward ending forced labor, as well as its continued propagation of apartheid measures against Black citizens," the groups wrote.

Finally, Mauritius and Equatorial Guinea expressed concerns about how USTR determines if countries should graduate from the preferences program, and what process there should be if incomes fall after a country graduates.

The American Apparel and Footwear Association said AGOA has been successful for apparel because of its flexible rules of origin -- such as third-party fabric rules for 21 of the 35 countries covered by the program. Nearly all the garments imported from AGOA countries are covered by this rule, allowing factories in Kenya or Lesotho, for example, to source fabric from Asia.

"U.S. apparel imports under AGOA for calendar year 2022 have surpassed pre-COVID levels in volume and value. In 2021, 93.1% of all apparel from AGOA countries entered under the AGOA program," AAFA said.

"We are hopeful that the Ethiopian Government continues to make progress and meet all of the benchmarks in order to reinstate their AGOA benefits as soon as possible. Our companies are committed to Ethiopia and their workers. However, if Ethiopia cannot regain their benefits, the costs to do business there will eventually become too great for many," AAFA wrote.

The U.S. Fashion Industry Association wrote that AGOA-qualifying apparel imports have almost tripled over the past 23 years, reaching $1.4 billion in 2022, though it noted that number has been relatively flat since 2007. USFIA, too, said the third-country fabric provisions are key to the program's utility.

"Continued interest in reducing 'China exposure' has spurred fashion companies to actively explore new sourcing opportunities, including in Sub-Saharan Africa," USFIA said it found in a 2022 industry study, with 30% of companies saying they increased sourcing from AGOA countries that year.

Before Ethiopia was removed from AGOA, it ranked fourth for apparel exports in the program, with $255 million in 2021, USFIA said. After Ethiopia's removal, 67% of companies that had been buying there either stopped or reduced their purchases, while 50% said Ethiopia's removal reduced their interest in buying from anywhere in Africa.

"If conditions on the ground do not permit a restoration of AGOA benefits for Ethiopia, Ethiopia and the entire region will clearly suffer from a loss [of] stable, sustainable jobs, particularly for women," USFIA wrote.

USFIA urged that AGOA's renewal not wait until 2025 (it expires Oct. 1 that year). "One need only look at the job loss in Africa as a result of the last-minute renewal in 2012 of the third country fabric provision, to see that further delay in a renewal of AGOA will discourage continued sourcing and new investment," USFIA said.

The AGOA Coalition, which includes both importers and exporters in AGOA, asked for an early and lengthy renewal and the restoration of Ethiopia to the program in 2024. It said the administration's restoration of Ethiopia's eligibility for foreign aid by notifying Congress last month that it's no longer engaging in "a pattern of gross violations of human rights" shows that Ethiopia has been working diligently to meet the benchmarks for restoration, which included an "end to all gross violations of international human rights."

"U.S. policy has directed companies to find alternatives to China. Other countries are more difficult to navigate, have inadequate energy, water, logistics, trained workers, and governance hurdles that need to be overcome," the coalition wrote. Given that importing from countries other than China costs more, that additional cost "needs to be offset by providing duty benefits for the finished goods provided they meet the rules of origin. AGOA provides the benefits on the back end of production that makes it feasible to produce in more challenging countries," the coalition said.

The coalition said Ethiopia now does yarn spinning and fabric weaving, not just cut-and-sew work, and its removal from AGOA led to layoffs. The coalition said the State Department told its representatives that Ethiopia is "making continual progress" toward establishing the rule of law, political pluralism, combating corruption, protecting worker rights, and eliminating barriers to U.S. trade and investment.

Children's Place, an apparel retailer with $1.7 billion in revenues, told USTR that more than 25% of its apparel in 2021 came from Africa, and that it sources from factories in seven African countries: Benin, Ethiopia, Egypt, Kenya, Madagascar, Togo and Tanzania. The company said AGOA benefits are a "key driver" of its decision to buy from African countries. It is pushing for renewal in 2023, for 10 years.

"The enactment of AGOA and the related development of textile and apparel manufacturing facilities in Africa also has allowed The Children’s Place to progressively reduce sourcing from China, from approximately 40% in 2011 down to approximately 8% in 2022," the firm said. It did not explicitly ask for Ethiopia's return to the program.

San Mar, an apparel wholesaler with 5,000 employees, said it began buying from Ethiopia in 2015 because of AGOA, and said its contracts support almost 9,000 jobs in Africa, with women holding about 75% of those jobs.

"Our partner in the region provides safe and hygienic working conditions which lead to increased worker morale, health, and productivity. We wish to continue that progress and our commitment to our sourcing partner and workers in Ethiopia but it will be a challenge to do so unless Ethiopia’s AGOA benefits are reinstated. Since Ethiopia’s suspension from AGOA, we have worked to absorb the resulting increased costs but these efforts are only sustainable for so long. Without reinstatement of AGOA benefits, our Ethiopia production will likely transition to Asia by the end of 2024," the company wrote.

Tigray Action Committee said Ethiopia has not adhered to its peace agreement, has not granted access in Tigray to human rights investigators or journalists, and should release jailed journalists and cooperate with investigations into the theft of humanitarian aid before its status is restored.

"We do not wish to minimize potential economic impacts that come from AGOA delisting. However, we believe the only factors that should influence the decision of including a country in AGOA are whether the country meets the eligibility requirements as outlined in the program guidelines," the group wrote.

The Advocacy Network for Africa called premature the administration's assessment that Ethiopia is no longer engaging in “a pattern of gross violations of human rights.”

"Since the signing of the Cessation of Hostilities Agreement (peace agreement) in November 2022, there is no doubt that the direct hostilities in the Tigray region have been significantly reduced. Essential services have been restored, humanitarian aid is beginning to flow, political prisoners released, and efforts have been made towards a transitional process. AdNA, however, remains deeply concerned with reports of ongoing human rights violations not only in the western Tigray region, but in other regions including Oromia and Amhara, as well as the capital Addis Ababa."

Lobbyist Karl Von Batten said evidence shows the government is still committing human rights violations against its civilian population, and it is not cooperating with investigations into rights violations in Tigray, so it should remain out of the program.

Advocates for South Africa in AGOA include the minority party in Parliament, the South African Chamber of Commerce in the United States of America, Agbiz, the agricultural business chamber of South Africa, Fruit South Africa, the Citrus Growers of Southern Africa, the National Association of Automotive Component and Allied Manufacturers of South Africa, Manganese Metal Company and the Western Cape Province Government.

South Africa's shadow finance minister, Dion George, suggested U.S. officials might remove South Africa from the program over "South Africa's perceived reticence and unwillingness to condemn Russia's unlawful invasion of Ukraine."

"The Democratic Alliance, as South Africa's main political opposition, categorically and unequivocally condemns the illegitimate invasion of Ukraine by Russia. Our stance on this matter diverges markedly from that of the ruling party and is indicative of the political diversity that thrives within our borders. Therefore, it is prudent to assess South Africa's eligibility for AGOA not solely based on the position of the government, but by taking into account the multiplicity of voices in our political sphere," he wrote.

He said AGOA has been a cornerstone of South Africa's economic development, and with AGOA covering more than 21% of South African exports to the U.S., a loss of exports to the U.S. "would have a devastating impact on the local economic environment," he wrote.

The Western Cape Province, where much of the exported fruit is grown, wrote that the province "desperately needs AGOA to support its floundering economy, help showcase the merits of an open market economy approach and overcome its deep socio-economic challenges of unemployment and poverty."

The National Association of Automotive Component and Allied Manufacturers of South Africa called for a 20-year term for renewal, and an early renewal.

The trade group said its exports to the U.S. were $1.6 billion in 2022, and that its automotive industry uses AGOA more heavily than any other sector in the AGOA region. George, the South African shadow finance minister, noted that the automotive parts avoid tariffs of approximately 10%, and that the savings are worth about $168 million a year.

Agbiz said 4% of South Africa's close to $13 billion in ag and beverage exports go to the U.S., and that 9% of South Africa's labor force is supported by the sector. Citrus, wine and macadamia nuts are top beneficiaries, it said.

Citrus Growers of Southern Africa said that without AGOA, South African exporters would not be able to compete with Peru, Argentina and Uruguay, which have lower shipping costs and duty-free access. Job losses would follow, and "would happen within the context of a 32.9% national official unemployment rate."

Manganese Metal Company said 95% of manganese metal headed for the U.S. comes from South Africa or China, and there is no U.S. production. Electrolytic manganese metal is used to produce steel and aluminum and specialty alloys, and to make electric vehicle batteries. The company noted that, to qualify for EV tax credits, automakers will have to source EMM from South Africa rather than China once the "foreign party of concern" clause takes effect. "South Africa’s AGOA eligibility thus has significant implications for EVs and the U.S. manufacturers required to meet IRA criteria," the company wrote. It said 19% of U.S. EMM consumption comes from its firm.

The National Pork Producers Council said South Africa should be removed from AGOA because it bans the import of pigs' internal organs from the U.S., and that barrier is unjustified. The council said if it could sell that sort of meat there, it would bring tens of millions in revenue.

"In 2015, U.S. beef gained greater access to the South African variety meat market and expanded exports to $11.6 million in five years. NPPC hopes to gain similar benefits if it is provided equitable treatment. Expanding access to variety meat markets also reduces rendering and landfill disposal," the group wrote. It said South Africa's exports covered by AGOA are more than $2.7 billion, and it is the largest participant besides oil exporters.

Nigeria, an oil exporter, is the second-biggest beneficiary, NPPC said, and while Nigeria opened up its market to U.S. pork sausages in 2022, "it has maintained an express prohibition against the importation of raw pork (all tariff lines under HTS 0206 and 210.10), as well as beef, poultry, and associated products." The council said the restrictions are not science based, and therefore, Nigeria should lose AGOA eligibility.

The Health Global Access Project, which advocates for HIV-positive people, said Uganda should leave AGOA due to its punitive Anti-Homosexuality Act.

The Council for Global Equality, which advocates for gay rights in foreign policy, said Kenya and Ghana should lose eligibility if their legislatures pass similarly punitive bills, because these bills are "gross violations of internationally recognized human rights.”

Mauritius said AGOA graduation should not be based on a national income threshold but rather AGOA should eliminate eligibility for "sectors which have reached a certain level of competitiveness on the US market relative to US imports from the world."

If it is going to continue to use an income threshold, Mauritius is asking that countries about to graduate be offered free trade negotiations "so as to ensure the continuity of trade."

The ambassador from Equatorial Guinea, which graduated in 2011, noted its per capita GDP has fallen from $18,659 in 2011 to $7,507 in 2021. The ambassador argued that South Africa has a more advanced economy than his country, and it is still in AGOA. He asked for reentry, and said his country is committed to fighting corruption and improving transparency, and has a firm commitment to human rights.

The virtual public hearing on countries' eligibility for AGOA will be held July 24 at 10 a.m. EDT.