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Ask the Ambassador: African Growth and Opportunity Act

We recently received a question about the African Growth and Opportunity Act (AGOA).  Frank from Texas asks:

"Ambassador Kirk, I just found out the AGOA benefits will be over starting January 1, 2010. Why? This has been a great benefit for countries such as Madagascar. Are there any plans in the future to reverse this? Has this been implemented already?"

Ambassador Kirk responds:

"Thank you for the question, Frank.  The African Growth and Opportunity Act (AGOA) will not expire until 2015.  However, AGOA requires the President to annually designate countries as eligible to receive the benefits of the Act, if they meet the Act's eligibility criteria.  These criteria include, among other things, progress on rule of law and political pluralism.  The March 2009 undemocratic transfer of power in Madagascar, and the subsequent failure to establish concrete steps toward re-establishing a constitutional democratic government and rule of law led to the termination of Madagascar's AGOA benefits in January 2010.  The United States joined the international community, including the African Union and the southern African Development Community in condemning the March 2009 coup.  According to the AGOA legislation, all nations will once again be up for review at the end of 2010.

For the 38 countries that meet the eligibility criteria, the combination of most favored nation rates (MFN), Generalized System of Preferences (GSP), and AGOA means that almost all their goods enter the United States duty-free.  Africa accounts for only two percent of global trade and it is an initiative like AGOA that can bolster Africa's capacity to trade internationally, while also opening new business opportunities for American workers and firms.  Two-way trade between the United States and AGOA nations has more than doubled since the AGOA legislation was signed in 2000.  AGOA increases trade opportunities on both sides of the Atlantic, like the molded fiber-glass home manufacturer from Mississippi shipping their low-maintenance and energy-efficient structures to Nigeria and other AGOA members.  AGOA has also played an important part in generating dialogue and brokering partnerships between American and African entrepreneurs- expanding opportunities for both trade and investment.  We look forward to a year of growth and recovery with our African trading partners, as American businesses expand into new markets, and bring the benefits of trade back home to our workers and families."

Thank you for continuing our dialogue on trade. Please keep submitting your questions and comments for the Ambassador.