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Ministry of Investment, Trade and Industry (MITI)
AGOA extension
04/09/12

Extension of the Third Country Fabric - African Growth and Opportunity Act (AGOA)

The African Growth and Opportunity Act was signed into law on 18th May, 2000 by the then President of the United States of America, Bill Clinton, to promote economic development and expedite the integration of economies of Africa into the world trading system. AGOA provides duty-free and quota-free treatment for apparel articles made in eligible sub-Saharan African countries.  AGOA also provides a framework for USA-Africa cooperation among government, private sector and civil society to work together to build trade capacity and to expand business linkages.

Products from developing countries had always been uncompetitive due to scarcity and quality inputs in their respective countries. Through the Third-Country Fabric (TCF) Provision under AGOA, beneficiary countries are allowed to source inputs from other countries other than AGOA beneficiaries, especially the textile industry.  In this manner, textile exports become more competitive in the USA market due to inputs sourced from the most cost effective firms around the world.  This Provision was set to expire in September 2012 and as such, its renewal was one of the key issues of focus at this year’s eleventh African Growth and Opportunity (AGOA) Forum held in Washington, DC.

To this end, the U.S. Congress passed legislation on 2nd August, 2012 extending the TCF for a period of 3 years to 30th September, 2015.  Subsequently, President Barack Obama signed the Legislation into law on 10th  August, 2012. With this law now in place, Sub-Saharan Africa apparel producers and U.S. buyers can now continue their partnership and compete in the growing global economy. In passing this law, the US Administration stressed their commitment towards assisting Developing Countries to fully realize AGOA’s potential; strengthen U.S.-African trade and investment; and continue working with the U.S. Congress to request for a seamless renewal of AGOA beyond 2015.


 

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