Coons Proposes AGOA Renewal to 2041, Less Frequent Eligibility Reviews

Sen. Chris Coons, D-Del., who earlier said the priority should be renewing the African Growth and Opportunity Act "as soon as possible and for a lengthy period," rather than making reforms to the trade preference program, has now put out a "discussion draft" that lays out some reform proposals.

Coons doesn't serve on the Senate Finance Committee, which has joint jurisdiction for AGOA with the House Ways and Means Committee. Ways and Means didn't respond to a request for comment, and Senate Finance didn't comment on the specifics of the proposal.

He is suggesting that the program be extended through 2041, and that eligibility reviews for AGOA countries be done every three years, as under the Generalized System of Preferences benefits program, rather than annually. However, the draft also instructs the administration to begin an out-of-cycle review for South Africa immediately. Sen. Todd Young, R-Ind., had argued to the U.S. trade representative in March that South Africa should be removed from AGOA because of its refusal to condemn Russia's invasion of Ukraine (see 2303230030). At the time, he said, "Look, there have to be consequences for not being a good friend and partner, and South Africans have not been. Something has to give."

The administration disagreed, as South Africa didn't lose any access to AGOA for 2024.

Nicole Bivens Collinson, leader of the Sandler Travis international trade practice, said the AGOA Coalition is pleased with the draft. "The extension for 16 years combined with the shift to moving eligibility reviews to every three years are especially desired outcomes. These changes will encourage investors to look at Africa and know that they will have time to recoup their investment and that such investment is not subject to potential revocation every year," she wrote.

Coons would keep the third-party fabric rule for apparel makers, and also would allow inputs from North African countries that are in the African Continental Free Trade Agreement to count toward the 35% rule of origin, as long as those countries meet AGOA rules on governance, human rights and foreign policy. He noted that the AGOA statute now requires that CBP send verification teams to at least four AGOA beneficiaries annually to monitor rule of origin compliance. "This requires CBP to devote disproportionate enforcement resources to sub-Saharan Africa. The bill would modify the requirement to require CBP to send production verification teams to sub-Saharan African countries 'as necessary to verify compliance' with AGOA, freeing CBP to devote enforcement resources where they are needed most," Coons wrote in a summary of his draft.

The AGOA Coalition hailed the AfCFTA cumulation provision, which it said could "provide viable alternatives to more traditional input suppliers," and also praised giving CBP the authority to decide how to enforce rules of origin through visits.

Bivens Collinson wrote that the coalition will argue that the statute should increase its third-country fabric quota -- overall apparel imports from AGOA countries are limited, and within that quota, only about half may use the third-country fabric. "As trade shifts from other regions to Africa, we need to have a built-in mechanism to increase the limit commensurate with the size of the continent and of the US apparel market," she wrote.

Mauritius has been lobbying the U.S. government for changes in the statute so that it doesn't graduate due to per capita income. In comments submitted (see 2307120041), it wrote that graduation should be sector-by-sector, when those goods are competitive compared with exports from other countries outside Africa.

But, if graduation would still be pegged to income, it asked that countries about to graduate be offered free trade negotiations "so as to ensure the continuity of trade."

The AGOA Coalition's Bivens Collinson wrote, "The graduation provision is long overdue, and will help to prevent a 'yo-yo' effect that we have witnessed in industries removed from GSP eligibility due to the competitive needs limitation, when they have been successful only to see trade drop again and have to seek redesignation within a year due to trade shifting away from the supplier."

Coons recommended that the income threshold be calculated over five years, as he noted that developing countries could be above the threshold one year, below the next. "What is more, the shock of losing access to AGOA can cause economic contraction -- not just in the directly affected economy, but among regional trading partners, as well," he wrote.

Coons asked those with input on his draft to contact Sam_duPont@coons.senate.gov.