Africa’s export performance has been poor due to market access obstacles, among other reasons. Efforts to improve the continent’s market access have been undertaken by providing preferential access to developed countries’ markets. One such effort is the United State’s African Growth and Opportunity Act: AGOA.
AGOA provides qualifying African countries duty-free and quota-free access to the United States market. The act came to effect in October 2000. It covers 6000 items previously eligible for preferential market access under the Generalized System of Preferences, together with approximately 1800 product tariff lines that were specifically added by AGOA. The list of qualifying items includes footwear, luggage, handbags, watches, certain automotive components, clothing and textiles.
Ethiopia qualified for AGOA on the second of October 2000. It is currently exporting apparel, foliage, cut flowers, nuts, beans, spices, and footwear. Though it has been slow in reaping the benefits of AGOA, its exports under the act are picking up in recent years, rising from 8.9 million USD in 2007 to around 18 million USD in 2008. Nevertheless, considering the size of the U.S. market, it is evident that the potential benefits have not been exploited to any significant degree.
The Ethiopian government has been providing technical assistance to companies that engage in export to the US market. The assistance ranges from human resource training to granting the companies tax holidays. The USAID-funded VEGA Ethiopia AGOA+ program is also currently working to improve and promote Ethiopia’s exports to the United States and other international markets.
The first step for any firm to benefit from AGOA is to make sure that its products are AGOA eligible. This can be done by visiting the website www.agoa.info.
After product eligibility is confirmed, it is advisable to conduct internal company assessment. Accordingly firms attempting to export under AGOA should have:· adequate and qualified staff to handle export related communications and monitor the process;
· Sufficient of production capacity;
· Adequate working capital to make quick purchase of raw material, accessories and investment capital;
· Good marketing strategy and sufficient marketing budget;
· Cost effectiveness in production and competitive labor productivity to overcome international price competition and ;
· Acceptable level of product quality by international market standards.
Special customs provision to be considered includes filling out declaration form of the Ethiopian Customs, accessing AGOA Visa, and understanding entry regulations and procedures of the US Customs.
Officials and most buyers would like to know social and fair trade compliances such as prohibition of forced labor and abuse, health and safety standards as well as security.
For more information or assistance on the matter, please visit www.vegaethiopia.org. For general AGOA information and legislation please visit: www.agoa.info and www.agoa.gov.