Obama signs off AGOA renewal
UNITED States President Barack Obama ( pictured) on Monday signed into law the Trade Preference Extension Act of 2015, to enact a 10-year renewal of the African Growth and Opportunity Act (AGOA).
AGOA is a nonreciprocal trade preference programme that provides duty-free treatment to United States imports of certain products from eligible sub-saharan African countries of which Lesotho is a major beneficiary. The programme, which was set to expire in September this year.
AGOA has played a big role in sustaining Lesotho’s textile industry, which is the single biggest private sector employer.
United Nations figures show that since AGOA’S introduction, Lesotho’s garment industry has grown to contribute 20 percent of gross domestic product –– with 80 percent of the manufacturing for US mega-brands like Gap, Levi’s, and Walmart.
Around 44 000 Basotho earn their living as a result of AGOA.
Lesotho is among the 37 nations benefitting from AGOA through its textile products and the uncertainty surrounding the US’S decision on the legislation had cast a dark shadow over the industry.
Some local textile firms had started rationalising operations and retrenching workers.
However, the new extension gives the US the ability to withdraw, suspend, or limit benefits if designated AGOA countries do not comply with its eligibility criteria.
It provides greater flexibility to the White House to withdraw, suspend, or limit benefits under the scheme if it determines that such action would be more effective than termination.
For example, the bill requires the president to notify and explain to Congress his intention to terminate a country’s designation as a beneficiary at least 60 days before the decision takes effect.
The bill provides for a petition process allowing interested parties to file petitions at any time with the Office of the US Trade Representative regarding compliance of a beneficiary country. Regarding public hearings, the inclusion of public comments will be required during reviews of a country’s AGOA eligibility.
The new AGOA will also allow the US president to conduct out-of-cycle reviews of any beneficiary country to determine whether it is making continued progress towards meeting the scheme’s eligibility criteria.
Since AGOA was put in place, 13 countries have lost their eligibility, although ough seven eventually had it restored.
Six countries – Central Africann Republic, Democratic Republic of Congo, Eritrea, The Gambia, South Sudan, andd Swaziland – lost their eligibility primarilyarily due to political reasons and have not regained it to date.
The general rule of origin underer the new AGOA retains a value-added requirement of 35 percent. This provisionision entails that products may integraterate materials sourced from outside counountries – in other words, NON-AGOAGOAbeneficiaries – provided that the “direct costs of processing” undertakenken in one or more designated AGOAAbeneficiary countries equal at t least 35 percent of the product'ss appraised value.
Under the new text, beneficiary countries will be expected to develop biennial AGOA utilisation strategies in order to “more effectively and strategically utilise benefits available under AGOA,” the bill says, which additionally cites the possibility for Regional Economic Communities to be involved in this exercise. Such strategies would mainly review opportunities and challenges around exports under AGOA, obstacles to regional integration, and establish a plan to increase the utilisation of benefits under the Act. –– Staff Writer
US President Barack Obama