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Week Ending June 18, 2004

HR 4103 to extend and modify the trade benefits under the African Growth and Opportunity Act.

BRIEF

    Congress is strong on trade with sub-Saharan Africa (SSA) countries because it has generally gone well with increasing trade between the US and those countries. The centerpiece for this international trade success story is the African Growth and Opportunity Act (AGOA) that defines many things including what it takes to qualify as a country and participate in AGOA and sets specific rule regarding textile manufacturing and exports from the participating countries.

  AGOA is due to expire in 2008 and special rule regarding some of the SSA countries will expire in September 2004. In the mean time some competition in the textile manufacturing business in other countries may have the effect of challenging the AGOA countries manufacturing and exporting successes.

   The bill would extend the special treatment that certain lesser-developed Sub-Saharan countries (LDC) may receive under AGOA that allows them to import duty-free to the US any apparel that is assembled in the LDC regardless of the origin of the fabric or yarn. The AGOA would allow LDCs to receive the special treatment through September 30, 2007. This bill would extend that date to 2008.

   The bill would also allow for a refund of certain duties already paid on imports from AGOA countries that did not receive duty-free treatment at the time of entry.

   The bill is specific in describing elements of garments that would no longer make the garment ineligible for special treatment. Drawstrings, shoulder pads and other elements are examples of the items considered.

   The bill also would direct the President to develop and implement certain policies to promote trade between the countries of Africa and the United States. The CBO notes that ‘U.S. agencies are currently undertaking most of these activities under more general authority. Based on information from the U.S. Department of Agriculture and the U.S. Agency for International Development, however, CBO estimates that implementing the bill would require hiring additional personnel and would increase spending by about $2 million each year, assuming the appropriation of the necessary funds.’

Sponsor: Representative William M. Thomas (R-CA)

Vote: Passed Senate by unanimous consent.

Cost to the taxpayers:  The CBO sees the bill as costing money largely because of a loss of revenue rather than an increase in spending. The trade benefits in AGOA and the special rules extended to 2008 would reduce revenues by an estimated $3 million in 2004, $140 million for 2004 through 2009 and by $365 million for 2004 through 2014. Spending authorization of $2 million per year through 2009 is not expected to change.## All Rights Reserved. No reproduction or distribution without written permission from TheWeekInCongress.com.