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AGOA: Successes and Challenges: 

AGOA: Successes and Challenges Erastus J.O. Mwencha Secretary General COMESA 14 Jan 2003 – Mauritius

Introduction: 

Introduction Market Access is critical for Africa’s sustainable economic growth and development AGOA has provided the required Market Access- Q-free and Duty free for 1800 pd 70% (or 14) of COMESA Countries are AGOA eligible out of 37 African Countries 9 COMESA countries qualified for special textile provision

AGOA WORKS : 

AGOA WORKS Africa’s exports to the US under AGOA grew by 10.7% in 2001 (this excludes oil, metals). US imported $7.6 billion of duty free goods under AGOA in 2001 Africa’s imports from the US grew by 17.5 % in 2001 to US$7 billion

AGOA WORKS: 

AGOA WORKS AGOA has contributed to new Jobs, new investment and increased exports Kenya estimates that AGOA will contribute to the creation of over 150,000 new jobs New and planned investment in Namibia is estimated at US$250 million Exports of apparel from Madagascar grew by over 700% to $155 million in 2001 70% of apparel workforce are women

AGOA WORKS: 

AGOA WORKS US-Africa AGOA Forum provides a framework to identify and resolve challenges AGOA II is a clear manifestation of importance of Forum

AGOA CHALLENGES: 

AGOA CHALLENGES Eligibility Textiles Capacity Agriculture Investment Transportation Legal Framework Predictability

AGOA Challenges: Eligibility: 

AGOA Challenges: Eligibility AGOA Eligibility Criteria should be Inclusive AGOA should aim to bring on board other countries

AGOA CHALLENGES: Expiry of Textile special Provision 2004: 

AGOA CHALLENGES: Expiry of Textile special Provision 2004 Too much focus on textiles Effort needed to support export of the more than 6000 products Expiry of textile provision would affect LDCs negatively There has been insignificant investment in textile plants since AGOA was effected Thousands of people especially women will lose jobs as companies close down All the gains of AGOA will be lost.

AGOA CHALLENGES; Expiry of Textile special Provision 2004: 

AGOA CHALLENGES; Expiry of Textile special Provision 2004 Expiry of 2005 Multi Fiber Agreement under WTO The 2008 expiry of AGOA is of concern to investors as return on investment is not guaranteed for long-term investments

AGOA CHALLENGES; Expiry of Textile special Provision 2004: 

AGOA CHALLENGES; Expiry of Textile special Provision 2004 Countries need time to increase efficiency in supply chain; Countries need to agreed on regional approach to have share production Countries have already started expanding cotton production and textile plants are undergoing rehabilitation EXTENSION IS VERY CRITICAL

AGOA CHALLENGES Capacity Building : 

AGOA CHALLENGES Capacity Building Capacity in textile technology especially human resource Capacity in agriculture particularly in SPS and in Biotechnology Building capacity of Entrepreneurs on doing business in USA Capacity building to enhance supply response

AGOA CHALLENGES, Agriculture and SPS: 

AGOA CHALLENGES, Agriculture and SPS Africa has comparative Advantage in Agriculture and yet sector has not benefited from AGOA Africa’s share of agriculture exports to USA fell from 6% to 4% during past 3 yrs Countries that have tried to export have met barriers because of long procedural requirements.

AGOA CHALLENGES; Agriculture and SPS: 

AGOA CHALLENGES; Agriculture and SPS USDA has approved only 45 products for export to USA from 53 African countries COMESA has only 4 approved products (Onions, pineapples, snow peas and Yams) Some key products excluded (Tobacco, sugar Peanuts Cotton) In Africa, capacity to ensure that fresh foods meet US standards is inadequate

AGOA CHALLENGES: 

AGOA CHALLENGES AGRICULTURE AND THE SPS Key The placement of APHIS officer as of Jan 2003 in Botswana is commendable URGENT NEED FOR FAST-TRACK APPROVAL SYSTEM

AGOA CHALLENGES: Investment: 

AGOA CHALLENGES: Investment Exports to USA have expanded but Investment still lagging behind; Encourage USA Investment into Africa by providing incentives; Expedite operationalization of equity funds Access by African Enterprises to USA funds

AGOA CHALLENGES: Transportation : 

AGOA CHALLENGES: Transportation Transport costs up to 40% of final cost of product; Several African and COMESA countries landlocked Insufficient air transport linkages Need to expedite Infrastructure fund

AGOA: OTHER KEYCHALLENGES: 

AGOA: OTHER KEY CHALLENGES High cost of doing business in African countries affecting competitiveness (Infrastructure, energy, efficiency of ports, exchange rate, taxation, etc) Capacity to comply with various requirements Political Stability HIV Aids, Malaria

AGOA Challenges. Legal Framework and Predictability: 

AGOA Challenges. Legal Framework and Predictability Non-contractual; Need to move to contractual for post 2008 Unpredictable business environment (In case of country slippage), risk should not be on investors

AGOA and Way Forward: 

AGOA and Way Forward Special Textile Provision USA to consider extending up to 2006 Agriculture and SPS USDA should establish a fast track approval system for selected products and aim at reducing PRA from 24 months to 6 months Africa through RECs (e.g. COMESA) to support improvements to regional testing laboratories

AGOA and Way Forward: 

AGOA and Way Forward Multi Fiber Agreement MFA should be extended to ensure that Africa remains competitive. Extension of 2008 Deadline To consider a negotiated extension that is WTO compatible US Investment in Africa US should consider tax breaks for USA companies investing in Africa and exporting back into the USA under AGOA.

CONCLUSION: 

CONCLUSION AGOA WORKS AND IT CAN ONLY BE BETTER IF! WE WORK TOGETHER I THANK YOU FOR YOUR ATTENTION Web page: www.comesa.int