The U.S. Congress has renewed a 15-year-old law that allows made-in-Africa goods to sail into the U.S. duty-free.
That makes Africa the latest continent wrapped up in a spree of trade legislation clearing through Congress.
The African Growth and Opportunity Act (AGOA), which had been due to expire at the end of September, gives sub-Saharan African nations duty-free access to U.S. markets for certain goods such as textiles. It was packaged with another bill to extend a program of assistance to American workers who are shown to be hurt by overseas competition.
Congress cleared the legislation a day after it gave President Barack Obama “fast-track” trade authority to put trade deals, such as the impending Trans-Pacific Partnership, before Congress for an up-or-down vote.
While the fight over the workers-aid program, Trade Adjustment Assistance, stole the spotlight, the measure is also designed to help another set of factory workers hard-hit by Asia’s rise: Africans.
AGOA has had a considerable impact on sub-Saharan Africa’s clothing industry and is a key part of the reason that textile plants have popped up across the region. It also explains why the trousers Americans buy at Walmart WMT +0.36% are increasingly from countries such as Ghana.
Lately, though, the law hasn’t encouraged much investment. African industrialists like Chid Liberty, who owns a T-shirt factory in Liberia, have had to worry that a gridlocked Congress would let the bill expire this September. (Recently, Liberty has also had to deal with unfounded fears that Ebola could spread through clothing shipments.)
Instead, Congress renewed the law for another 10 years. The final step is for President Obama to sign it.
Liberty also worries that the Trans Pacific Partnership is likely to extend many of the same benefits to Africa’s competitors in Asia, where the cost of electricity, shipping, and business are generally much less.
“It’s absolutely a threat… that some Asian countries will get the same preferences,” said Liberty, who owns Liberia’s Liberty and Justice. “It was designed to say, let’s make it a little more even for an African country to compete with an Asian country… We need to give them a chance to stand up on their feet, before we cut their advantages from under their feet.”
AGOA’s renewal is as good as certain: President Obama promised on Thursday afternoon to sign it into law it as soon as it reaches his desk.
Write to Drew Hinshaw at [email protected]
Source: WSJ
