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AGOA Extension Lauded at Forum

PORT LOUIS, Mauritius — Government and business officials attending a trade forum here reacted warmly to President Bush’s statement that he would ask Congress to extend the African Growth & Opportunity Act past its current expiration date...

PORT LOUIS, Mauritius — Government and business officials attending a trade forum here reacted warmly to President Bush’s statement that he would ask Congress to extend the African Growth & Opportunity Act past its current expiration date in 2008.

With the clock ticking down to 2005, when World Trade Organization nations will drop quotas on textiles and apparel, African attendees at the AGOA Forum said their nations need more time to develop the experience and economies of scale necessary to compete with manufacturers in Asia and elsewhere in the world.

Most African representatives suggested extending the benefits through 2015.

“Extension is crucial for us to achieve the capacity we’d like to see,” said Erastus J.O. Mwencha, secretary general of the Common Market for Eastern & South Africa, which includes 20 nations. “We would like to see modern and efficient industries set up in Africa.”

While Bush’s words, made here in a Wednesday evening taped message, were well received, it is not up to him to extend the benefits. That decision lies with Congress, and several congressmen attending the event said they would support an AGOA extension, which would mark the second revision of the law.

“‘AGOA III’ is undoubtedly going to happen,” said Rep. Jim McDermott (D., Wash). “We created the Asian Tigers with our trading policy in Asia. My view is the same thing is possible with Africa.”

Attendees were divided on what the third AGOA bill should look like. A key bone of contention is whether to extend the third-country fabric provisions, which allow lesser-developed nations to use fabrics made outside Africa or the U.S in apparel that can still qualify for duty- and quota-free treatment.

Margaret Chemenigiela, permanent secretary at the Ministry of Trade & Industry for Kenya, said her country is trying to develop textile capacity, but needs more time to do so.

“Besides our existing capacity, we have added $60 million in direct investment here in textiles,” she said. Still, she does not believe there is enough fabric made in the region to develop a strong industry. “That is why we want to be sure that the window is extended,” she added.

Meanwhile in Washington, a broad contingent of Republicans and Democrats on Capitol Hill have long planned to push legislation extending AGOA beyond its 2005 expiration date. They view the sunset provision as more of a bookkeeping measure for projecting tariff revenue losses for federal budget purposes than a trigger for potential expiration of AGOA benefits.

AGOA backers, like House Ways & Means Chairman Bill Thomas (R., Calif.) and Rep. Charles Rangel (D., N.Y.), have long talked about proposing new AGOA legislation expanding trade breaks in sub-Saharan Africa while extending the life of the agreement.

After learning Bush’s call for an extension, Rangel fired off a statement saying he’s ready to launch new AGOA legislation.

“Extending the AGOA alone will mean little if we do not help the African nations to remain competitive with more established textile and apparel exporting nations after 2005″ when global quotas on apparel and textiles are eliminated, Rangel said. “Other improvements must be made to ensure the U.S.-Africa trade relationship does not stagnate, but moves forward.”

However, it’s unclear whether Congress this year will take up an AGOA extension or revision, and it will be up to Republicans, the majority party, to move a bill, which could be put off until next year. So far, lawmakers have said the only trade-liberalizing measures they expect to vote on this year are the long-pending free-trade pacts for Chile and Singapore.

A spokeswoman for Thomas, whose committee is where all trade legislation by law must originate, said he is weighing what to do next for Africa. Thomas is in Africa with a delegation of three other lawmakers studying the impact of AGOA and a free-trade zone proposed by the Bush administration for the five-nation Southern Africa Customs Union.