A top legislative priority of the Clinton administration is passage by the U.S. Congress of the African Growth and Opportunity Act (AGOA).
The bill's most outstanding provision is to extend U.S. duty-free access for certain products imported from 48 sub-Saharan African countries that have been excluded under the Generalized System of Preferences (GSP) law. The bill would also establish a framework for closer U.S.-Africa trade and investment relations and direct U.S. agencies charged with promoting exports and foreign investment to intensify their efforts in Africa.
In the 1997-98 session of Congress, the House of Representatives passed an Africa trade bill supported by the administration; the Senate Finance Committee approved a somewhat different bill, but opponents blocked consideration of it by the full Senate, and the legislation died.
The current session of Congress has largely repeated the work of 1997-98. In June, the Senate Finance Committee approved its version of the Africa trade bill. In July, the full House passed its more-generous version by a vote of 234-163.
The Republican leadership has not yet scheduled consideration of the Finance Committee bill by the full Senate. If the Senate passes an Africa trade bill, then members of the House and Senate would have to reconcile any differences in the two bills, either in a conference or some other way. For the bill to become a law, the House and Senate would have to pass the reconciled version of the legislation, and President Clinton would have to sign it.
In both the House and Senate, the Africa trade bill is meeting with opposition from members who represent textile-manufacturing districts, which already face stiff competition from inexpensive imports. These opponents argue that providing duty-free access for sub-Saharan African textiles will lead to illegal transshipments through Africa of Chinese and other third-country textiles to evade U.S. import quotas.
African governments strongly support the bill, but it divides African-American members of the House. Some, like Representative Charles Rangel of New York, the senior Democrat on the committee that has primary jurisdiction over the legislation, embrace the bill. Others, led by Representative Jesse Jackson, Jr., of Illinois, a Democrat and son of the well-known civil rights leader, oppose the bill as providing too few benefits. A rival bill introduced by Jackson would have provided for Africa debt forgiveness, development assistance, and money to combat AIDS, but it failed to win much support.
DIFFERENCES IN HOUSE, SENATE FINANCE BILLS
The African Growth and Opportunity Act bills passed by the House and approved by the Senate Finance Committee differ somewhat.
The House bill would extend AGOA benefits through June 2009; the Senate Finance bill, through September 2006.
The House bill would extend GSP duty-free treatment to imports of all sub-Saharan Africa-produced goods that the U.S. International Trade Commission determines do not compete with U.S. industries producing the same or similar products. The Senate Finance bill would extend GSP treatment to this category of goods, with the exception of most textiles and apparel. Certain narrowly defined categories of textiles and apparel would be eligible for GSP:
Apparel assembled in sub-Saharan Africa made from U.S. fabric with U.S. yarn.
Apparel cut or assembled in sub-Saharan Africa made from U.S. fabric with U.S. yarn and sewn together with U.S. thread.
Hand-loomed, handmade, and folklore apparel produced in sub-Saharan Africa.
GSP rules of origin require that some proportion of the product's value must originate in the exporting country claiming GSP treatment. Both the House and Senate Finance bills would allow up to 15 percent U.S. content of a good to count toward the 35 percent local-content requirement. The House bill would also give GSP treatment to any articles if 35 percent of the value were added in any eligible sub-Saharan African country.
Both bills would waive GSP competitive need limits for sub-Saharan African countries. Those limits require the president to halt GSP treatment for imports of a product from a country that in any year exceed 50 percent of total U.S. imports of that product or surpass $85 million in value.
The House bill would eliminate existing quotas on textiles and apparel from sub-Saharan Africa; the Senate Finance bill, only quotas on the restricted number of eligible products. Both bills impose safeguards against illegal transshipments.
Both bills would set conditions for beneficiary countries to qualify for the expanded GSP treatment, including continued movement toward market-based economic policies and enforcement of basic human rights.
For AGOA's nontariff provisions, the House and Senate Finance bills direct the president to meet with leaders of the sub-Saharan African countries to discuss expanding trade and investment relations. The House bill calls for the president to "convene" annual high-level meetings. The Senate Finance bill directs the president to meet with the heads of government of sub-Saharan African countries to discuss expanding trade and investment, but does not specify more than one meeting. Both bills call for the establishment of a United States-Sub-Saharan Africa Trade and Economic Cooperation Forum. This forum, according to the House version, "shall, among other things, encourage joint ventures between small and large businesses." Both bills call for the study of the creation of a United States-Sub-Saharan Africa free trade area.
The House bill also directs the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank of the United States to increase financial assistance in sub-Saharan Africa, and it directs the Department of Commerce to station at least 20 U.S. and Foreign Commercial Service officers in the region. The House bill also calls for OPIC to create an equity infrastructure fund to support projects, particularly those that help women entrepreneurs and the poor. Such provisions were not included in the bill reported by the Senate Finance Committee.
GSP EXPIRATION
The Generalized System of Preferences program, launched in 1975, grants duty-free treatment to more than 4,400 products and product categories imported from more than 140 designated developing countries and territories.
The program, however, must be reauthorized periodically by the Congress. The AGOA's extension of GSP to sub-Saharan Africa to 2006 or 2009 would eliminate, at least for those eligible African countries, a persistent problem in recent years of Congress allowing the program to lapse. GSP has lapsed five times in six years: September 30, 1994; July 31, 1995; May 31, 1997; June 30, 1998; and, most recently, June 30, 1999. Each of the first four times, Congress reauthorized the program after a delay and applied it retroactively to the expiration date.
The Senate Finance Committee on June 22 approved a bill to deal with the latest lapse by reauthorizing GSP for five years, through June 30, 2004, at a cost to U.S. tariff revenue estimated at $1,877 million. Like the Africa trade bill, the GSP bill has not yet come before the full Senate for consideration.
While the full House has passed the Africa trade bill, GSP reauthorization has not yet cleared any House committee.
Only 3 percent of imports getting GSP duty-free treatment have been coming from sub-Saharan Africa. In 1996 those imports amounted to $588 million, with imports from South Africa accounting for $429 million of that amount.
Economic Perspectives
USIA Electronic Journal, Vol. 4, No. 3 August 1999