By  on August 4, 2014

WASHINGTON — The American Apparel & Footwear Association led the U.S. industry effort on Monday to press the Obama administration and Congress for early renewal of the African Growth & Opportunity Act at the start of a three-day summit with nearly 50 African heads of state.

Juanita Duggan, president and chief executive officer at the AAFA, sent a letter to President Obama on Monday, urging the administration to work closely with Congress on an “expeditious renewal” of AGOA, which expires on Sept. 30, 2015.

“The fate of AGOA is necessarily a core element of the conversations that will take place this week as African heads of state and U.S. and African business leaders meet with you and your team,” Duggan wrote in the letter. “AGOA should be renewed as soon as possible. The legislation expires in less than 13 months. While that may seem like an eternity in the legislative area, it is an instant for executives who must source materials globally.”

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Duggan’s letter underscored the premium that apparel and footwear brands place on sourcing products from sub-Saharan Africa.

In April, several major apparel companies and textile manufacturers joined PVH Corp. on an exploratory trip to the African continent to evaluate new investment and sourcing opportunities in the region, according to William McRaith, chief supply chain officer of PVH Corp., who testified before Congress last week on the importance of renewing AGOA and a provision in the trade preference program that has helped spur investment and sourcing in the region.

“The third-country fabric provision” allows companies producing in 27 least-developed countries that are part of AGOA to use fabric outside of the region and still receive duty-free benefits when shipping to the U.S. Government officials largely attribute sub-Saharan Africa’s developmental success in the sector to that provision. Apparel and textile imports from the 49 eligible sub-Saharan African countries hit $983.8 million for the year ending April.

In her letter, Duggan said: “Every day of delay reinforces the belief that the extension of AGOA and many other trade programs are on life support.”

She also advocated for a minimum 15-year renewal of AGOA, arguing that a short-term renewal “stifles the kind of long-term trade and investment decisions that are key to African economic development.” Duggan said the industry is also seeking the current flexible rule of origin and third-country fabric provision to be renewed for the length of the entire AGOA program and equally to all AGOA beneficiaries.

“Without them, AGOA loses its relevance for our industry,” she said. “Having a [rule of origin] that applies to some countries, but not to all, creates an unnecessary and complicated dynamic that also segments Africa at a time when we are trying to encourage regional integration.”

U.S. Trade Representative Michael Froman, participating in the first day of a trade ministerial between the U.S. and Africa on Monday, said in his opening remarks that it is the administration’s intent to reauthorize AGOA and the third-country fabric provision for a period of time that is “sufficiently long to ensure predictability for producers, consumers and investors.”

Froman said the U.S., which has undergone a yearlong review of AGOA to update it, is also revisiting the list of products covered by duty-free treatment under the program to explore opportunities for adding more products. He said in 2006 AGOA was expanded to include more than 700 additional tariff lines, mostly in the textile and apparel area, “which brought significant new market access opportunities to Africa.” The U.S. is also seeking to streamline AGOA’s rule of origin requirements to make them more flexible, Froman said.

“These requirements are already very generous, including the broad third-country fabric exception for apparel, but some limitations remain,” Froman said. “Removing limitations like…the percentage of U.S. content could provide beneficiary countries greater flexibility and help integrate them into regional and U.S. supply chains.

“Our shared future will be made brighter by an AGOA that is not only renewed but also improved,’ he added. “Seamless renewal will send an important signal to purchasers of AGOA products and investors in AGOA industries who are already making decisions about next year, and in some cases, many years in the future. The sooner we renew our commitment, the more likely they will do the same. Although non-oil exports under AGOA have increased by fourfold since 2001, last year’s total of $5 billion remains small both in absolute terms and as a share of U.S. imports. And while we are seeing countries starting to branch out and use AGOA for more products, there is still much room to grow in non-oil, manufactured and value-added products from AGOA-eligible countries.”

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