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Practice Areas

AGOA Impact on Trade and Investment Limited to Specific Sectors, ITC Finds

Monday, April 28, 2014
Sandler, Travis & Rosenberg Trade Report

The International Trade Commission released April 25 a report concluding that the impact of the African Growth and Opportunity Act on trade and investment with beneficiary countries has been largely limited to the automobile, petroleum and apparel sectors. This report describes, reviews and analyzes the trade and investment performance of beneficiary countries under AGOA from 2000 to 2013; identifies products that have the potential to be exported to the U.S. under AGOA or to be integrated into regional and global supply chains; and examines changes in the business and investment climate in sub-Saharan Africa. Highlights of the report include the following.

- The majority of U.S. imports from AGOA countries (70%) entered under AGOA from 2008 to 2013. On average, crude petroleum accounted for almost 90% of these imports, while transportation equipment (primarily passenger motor vehicles from South Africa), refined petroleum products and apparel accounted for 89% of the rest in 2013.

- The products that experienced major export growth between 2000 and 2013 were limited to key sectors, with the top 10 products (excluding crude petroleum) accounting for over 90% of the growth in value over this period. The leading product group - motor vehicles - supplied about one-third of the growth and totaled $2.1 billion in 2013. Refined petroleum products followed, accounting for one-quarter of the growth and totaling $1.3 billion. Other major growth products were apparel; ferroalloys; aluminum mill products; cocoa, chocolate and confectionery; miscellaneous inorganic chemicals; certain organic chemicals; edible nuts; and citrus fruit.

- Despite generally low rates of participation in the downstream activities of global and regional supply chains, SSA sectors with the greatest potential to further integrate into GSCs and RSCs are agricultural products and foodstuffs, leather and leather products, textiles and apparel, and extractive natural resource products. Products with the greatest potential for export to the United States are agricultural products, handcrafts and woodcrafts, and leather and leather products.

- AGOA has had a positive impact on foreign direct investment inflows, particularly in the textile and apparel sector in Kenya, Lesotho, Mauritius, Swaziland and Botswana but also in South Africa's automotive industry. Overall, the program's trade benefits and eligibility criteria appear to have motivated beneficiary countries to improve their business and investment climates.

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