The Foreign Service Journal, May 2004

R-Calif., and former Ways and Means Chairman Bill Archer. With their help, the AGOA bill moved quickly through the House to adop- tion on a close vote and received resounding support in the Senate. Throughout the process, the African ambassadors and trade ministers in home capitals and the U.S. private sector played an active role in rallying support for AGOA from all quarters, including the faith-based community. Unlike the previous round, President Clinton decided to spend real political capital on AGOA’s passage and in May 2000, he signed the bill in front of thousands of support- ers on the south lawn of the White House. In 2002, an amended version of the act (known infor- mally as “AGOA 2”) was passed with equally broad bipar- tisan support. This legislation corrected some of the tech- nical problems in the original incarnation and added Namibia and Botswana to the list of countries eligible for the “special rule” allowing for export to the U.S. of African textiles woven from Asian fabric. There is an “AGOA 3” now working its way through Congress that would extend the general market access provision until 2015 and the special rule on third-country fabrics for another two to four years. Winners and Losers In a recent visit to the United States, Ugandan President Yoweri Museveni praised AGOA as the most important single development in African relations with the developed world since independence. Indeed, as Amb. Zoellick testified, there is much to be happy about. In terms of apparel imports alone, Africa has experienced a threefold increase, all thanks to AGOA. Yet while Pres. Museveni and Amb. Zoellick are cer- tainly not alone in effusively praising AGOA, the legisla- tion has not been totally successful. First, AGOA is not as inclusive as it should be. The original design of the bill included market access prefer- ences for African agricultural goods as well as textiles. Both categories of goods are produced in most African countries. However, vested U.S. interests in this area and the executive branch’s traditional desire to address agri- cultural market access at the WTO level, precluded any preferences for such crops as sugar, cotton and rice. In a 2003 report, the World Bank predicted that AGOA imports would dramatically increase if these other items were included. Second, in part due to these product exclusions, only a handful of African countries have been able to take significant advantage of AGOA. Over 75 percent of the increase of non-petroleum exports to the U.S. under its terms are enjoyed by just six countries: Lesotho, South Africa, Madagascar, Swaziland, Kenya and Mauritius. A case in point is Nigeria, which is America’s fifth- largest supplier of oil and the largest oil producer, by far, in Africa. It is also potentially the largest beneficiary of AGOA in terms of total monetary benefit, although 93 percent of these benefits derive from hydrocarbons or hydrocarbon-related products. Yet while Nigeria has been deemed eligible for AGOA, it has yet to qualify for its AGOA visa—nearly four years after the bill was signed into law. Part of the problem has been structural, insofar as Nigeria’s competitive advantage lies in large-scale fabric production, a category denied benefits under AGOA. However, much of this delay is also due to sheer adminis- trative recalcitrance, legislative in-fighting and weak pri- vate sector organizations with limited engagement with government decision-makers. Although a new economic reform team and an energized private sector are now in place, observers are awaiting whether renewed commit- ments to change are rhetorical or real. Third, those countries that have benefited from AGOA, with the possible exception of Madagascar, already enjoy a far higher standard of infrastructure (e.g., roads, ports, power, water supply and telephone service) than other African countries. This is equally true when it comes to the quality of the labor force, which is not only a function of educational level but is also related to the exis- tence of a formal economy. For example, while Ethiopia is eager to benefit from the act, its labor force is at a very rudimentary skill level. Moreover, the scourge of HIV/AIDS has decimated the limited supply of skilled labor in Southern and East Africa. South Africa is perhaps the best example of a country able to take advantage of AGOA. It has enjoyed the greatest economic “bounce” from AGOA, with manufac- turing imports to the United States up several hundred percent in four years. Not only has the volume of imports F O C U S 46 F O R E I G N S E R V I C E J O U R N A L / M A Y 2 0 0 4 Despite AGOA, Africa still remains mired on the fringes of the global economy.