The three-day event beginning Tuesday will address economic development opportunities and the potential renewal of the African Growth and Opportunity Act (AGOA). The 22-year-old legislation currently provides 36 sub-Saharan countries including Angola, Benin, Botswana, Burkina Faso, Chad, the Democratic Republic of Congo, Ghana, Madagascar, Nigeria, Rwanda, Senegal and Sierra Leone with duty-free access to the U.S. market on more than 1,800 products including apparel, yarns and fabrics.
As of now, AGOA will expire in 2025, to the dismay of companies looking to the region as an alternative to China sourcing amid continued tariff pressure. Suppliers that invested in African sourcing aren’t likely to continue without the assurance partner nations can retain their duty-free privileges, according to Steve Lamar, CEO and president of the American Apparel and Footwear Association (AAFA).
“There is this broad diversification out of China, and there are a lot of companies trying to build up their presence in Africa,” Lamar said. Companies want to see a verticalized and self-sustaining region where brands and retailers can locally source not just finished goods, but the fabrics, yarns and trims needed to produce them, rather than one that’s “reliant on supply chains stretched throughout the globe.”
Without assurance that AGOA will continue beyond 2025, Lamar is concerned that the momentum that has supported sourcing growth in Africa will peter out. If Congress vacillates on renewing AGOA, “it doesn’t necessarily mean all the investment will bypass Africa, but we’ve now lost an opportunity” to build out the region’s capacity through meaningful investment in the coming years, he said.
Even pushing out the renewal to the legislative end-date could have consequences. “Investment windows for textiles and garments are longer than just a couple of years—you need a long-term agreement to give people the certainty, the predictability,” Lamar said. Companies need to know that their investments in new infrastructure and worker training will bear fruit in the long-term. “That’s why Congress needs to act now,” he said.
“It’s hard to build and sustain a demand signal from Africa if the duty-free environment goes away,” he continued. “The program is intact for another three years or so, but that three years isn’t going to encourage more investment.”
Lamar believes this week’s summit could be good for AGOA, though some still want to improve the trade agreement. There are also questions about the future eligibility status of Ethiopia, Mali and Guinea, which lost their AGOA status in January over humanitarian issues. Last month, the Ethiopian government announced a cease-fire with rebel militias in Tigray after a year-long civil war. “Once the U.S. government believes that that is moving in the right direction, then the process will start up to allow Ethiopia back in,” said Lamar, who admits that could take “a number of months, even in the best of circumstances.”
In a Thursday press call about the U.S.-Africa Leaders Summit, an unnamed senior administration official said that “Ambassador Tai will be hosting a ministerial-level discussion on AGOA and looking at really providing this opportunity to address some of the issues that our partners have and that they have raised, but really also to reaffirm the partnership with the continent.”
“It will also be a platform to discuss AGOA implementation,” the official said, citing utilization rates, strengthening economic cooperation, expanding to a trade and investment, and regional economic integration as related issues.
Calling AGOA “the bedrock of our trade relations since the legislation was passed in 2000,” another senior official said that the administration can do more “to optimize the use of this legislation between the United States and many African countries.”
“I also think that it’s really important at the summit to hear from Africans about where they think the future of this landmark legislation should go,” they added.
According to Lamar, AAFA members and non-members alike don’t want to see AGOA go the way of the Generalized System of Preferences (GSP), which lapsed two years ago and has been stuck in renewal purgatory ever since. The oldest, widest-reaching U.S. trade preference program eliminates duties on thousands of products imported from more than 100 countries and territories across the globe. The USTR has cited a desire to review and make changes to the program’s eligibility criteria before its reinstatement, despite widespread bipartisan support. The U.S. Chamber of Commerce in November estimated that U.S. companies have paid $2 billion in extra tariffs since GSP lapsed.
AGOA’s renewal remains “an open question,” Lamar said. “As you’re trying to explain your business models to your investment partners, it’s hard to say with any degree of certainty that what GSP has gone through is going to be avoided by Congress. I think for sure, the anxiety is there. I think there are a lot of people [in government] interested in AGOA—but does that translate to, ‘Let’s get it done now’? Or does that translate to, ‘It needs some tweaks and refinements and it needs to be reformed’?”
Fashion is hoping for the former scenario. According to Lamar, AGOA needs to be treated “as an urgent priority if we want to give Africa the game-change it so desperately needs.”