Page 1 GAO-14-722R AGOA Trade Expansion

441 G St. N.W.

Washington, DC 20548

July 21, 2014

Congressional Requesters

African Growth and Opportunity Act: Observations on Competitiveness and 

Diversification of U.S. Imports from Beneficiary Countries

The African Growth and Opportunity Act (AGOA), signed into law in 2000,

1 is a U.S. trade 

preference program intended to stimulate economic development through export-led growth and 

help integrate Africa into the global economy.2 AGOA allows eligible Sub-Saharan African (SSA) 

countries to export qualifying goods to the United States without import duties.

3 Prior U.S. 

government reports have indicated that integrating SSA countries into the global economy will 

require greater competitiveness of their exports. In addition, as we reported in 2008, an 

important goal of trade preferences is to help developing countries diversify the range of 

products that they export, and preferences are of little use in countries lacking the ability to 

produce goods desired by importers.

We were requested to examine a number of issues relating to AGOA countries’ trade expansion 

and economic development, and factors affecting their trade with the United States and other 

countries. This report is the first in a series responding to the request and provides our 

observations on AGOA countries’ trade expansion as shown by import competitiveness and 

diversification. This report also formally transmits the information we provided to congressional 

staff on July 14, 2014 (see encl. I).

 1

AGOA was originally enacted as Pub. L. No. 106-200, May 18, 2000. Since its enactment, AGOA has been 

amended three times, by Pub. L. No. 107-210, August 6, 2002; Pub. L. No. 108-274, July 12, 2004; and Pub. L. No. 

109-432, December 20, 2006.

2

Trade preference programs offer unilateral tariff reductions to eligible developing countries for the import of specified 

products into the United States. AGOA authorizes the President to designate countries as eligible to receive AGOA 

program benefits if they are determined to have established, or are making continual progress toward establishing, 

the following: market-based economies; the rule of law and political pluralism; elimination of barriers to U.S. trade and 

investment; protection of intellectual property; efforts to combat corruption; policies to reduce poverty and increase 

availability of health care and educational opportunities; protection of human rights and worker rights; and elimination 

of certain child labor practices.

3

We defined AGOA countries as the group of 40 countries that were eligible for the AGOA trade preference program 

as of January 2014. The 40 AGOA countries included in this report are Angola, Benin, Botswana, Burkina Faso, 

Burundi, Cameroon, Cape Verde, Chad, Comoros, Cote d’Ivoire, Republic of Congo, Djibouti, Ethiopia, Gabon, The 

Gambia, Ghana, Guinea, Kenya, Lesotho, Liberia, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, 

Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, South Africa, South Sudan, 

Swaziland, Tanzania, Togo, Uganda, and Zambia.
Page 2 GAO-14-722R AGOA Trade Expansion

To estimate competitiveness and diversification of U.S. imports from AGOA countries, we used 

U.S. Census data on U.S. imports from 40 countries in Sub-Saharan Africa that were 

participating in the AGOA program as of January 2014.

4 We analyzed these data for calendar 

years 2001 to 2013. To estimate competitiveness, we calculated the share of total amount of

U.S. imports from AGOA countries in 2013. In addition, we analyzed total U.S. imports from 

AGOA countries, including both imports under AGOA (i.e., imports that received duty-free 

access claiming AGOA preference benefits) and other imports (i.e., imports that received dutyfree access under other preference programs and international trade agreements, and imports 

with tariffs).5 For our analysis of diversification of total U.S. imports of products from AGOA

countries, we constructed an index using a measure of trade and commodity concentration to 

chart the level of diversification from 2001 to 2013. We used U.S. census trade statistics for 

both the competitiveness and diversification analysis. We assessed the reliability of the data by 

checking for internal consistency and reviewed documents related to data collection and 

revision processes. We determined the data were sufficiently reliable for our purposes. 

Enclosure II has more details on our scope and methodology.

We conducted this performance audit from March 2014 to July 2014 in accordance with 

generally accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit objectives.

In summary, since 2001, U.S. imports from AGOA countries have increased, although AGOA 

countries’ share of overall U.S. imports remained small and experienced declines in recent 

years. From 2001 to 2008, total U.S. imports both under AGOA and other imports from these 

countries grew from $20 billion to $82 billion, an increase of 300 percent. However, since 2008, 

total imports have decreased by 53 percent. With regard to U.S. imports under AGOA, since 

2008, they have also declined, from $56 billion to $25 billion, a decrease of 56 percent. We also 

found that AGOA countries’ share of U.S. imports remains small and in 2013, this market share 

was 2 percent.

6

U.S. imports from AGOA countries are dominated by petroleum; however, the share of nonpetroleum imports has increased, leading to higher diversification in recent years. From 2001 to 

2013, petroleum products accounted for over 80 percent of U.S. imports under AGOA. The 

share of non-petroleum products during the same period increased from 9 to 14 percent. In 

2013, the top three non-petroleum products imported under AGOA were machinery and 

transportation equipment (59 percent), textiles and apparel (25 percent), and minerals and 

resources (8 percent). Imports of machinery and transportation equipment products increased 

from 37 percent of non-petroleum products imported under AGOA in 2001 to 59 percent in 

2013. In addition, imports of textiles and apparel have declined from 40 percent of nonpetroleum products imported under AGOA in 2001 to 25 percent in 2013. We also found that a 

few countries represent most of the products imported under AGOA. For example, in 2013, 90 

 4

We did not include imports from countries which were eligible for AGOA in the past but were no longer eligible as of 

January 2014 or imports from countries which have never been eligible for AGOA.

5

The AGOA program provides duty-free access to products in addition to those products covered under Generalized 

System of Preferences (GSP), another trade preference program. AGOA countries continue to have duty-free 

access to the commodities covered under the GSP after the program expired in 2013.

6

Over the 2001 to 2013 period, the market share of AGOA countries ranged from 1.8 to 3.9 percent and averaged at 

2.7 percent.
Page 3 GAO-14-722R AGOA Trade Expansion

percent of the petroleum products were imported from three countries—Nigeria (51 percent), 

Angola (28 percent), and Chad (11 percent); all machinery and transportation equipment

products were imported from one country—South Africa; and 91 percent of the textile and 

apparel products were imported from three countries—Lesotho (36 percent), Kenya (34 

percent), and Mauritius (21 percent).

Diversification of U.S. imports from AGOA countries, as measured by the index that we 

constructed,7 has increased since 2001, but there were declines in the earlier years. From 2002

to 2011, the diversification of these imports declined from 24 percent to a low of 8 percent, grew 

to 10 percent in 2009, then declined to 9 percent in 2011. However, since 2011, the 

diversification of imports of products under the AGOA preference program has increased from 9 

to 21 percent as measured by our index of commodity concentration.

Enclosure I provides more details on our observations along with graphical representations of 

the results of our data analyses. We are not making any recommendations in this report.

Agency Comments

We provided a draft of this report to the Departments of Commerce, State, and the Treasury; 

the U.S. Agency for International Development; the U.S. International Trade Commission; the 

U.S. Trade Representative; and the Millennium Challenge Corporation. We received technical 

comments from U.S. Trade Representative and incorporated them as appropriate into this 

report.

_________________________________

We are sending copies of this report to appropriate congressional committees, to the Secretary 

of Commerce, the Secretary of State, and the Secretary of the Treasury, the Administrator of 

the U.S. Agency for International Development, the Chairman of the U.S. International Trade 

Commission, the U.S. Trade Representative, and the Chief Executive Officer of the Millennium 

Challenge Corporation. In addition, the report will be available at no charge on the GAO website

at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me at (202) 512-8612 or 

gianopoulosk@gao.gov. Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. GAO staff who made key contributions to 

 7

An important goal of trade preferences is to help developing countries diversify the range of products that they 

produce and export. Our analysis of diversification of total U.S. imports from AGOA countries uses a measure of 

trade and commodity concentration. We constructed an index to show a value of 0 percent when products are 

extremely concentrated and a value of 100 percent when products are most diversified. We conducted the analysis at 

a fairly high level of product aggregation—that is, at the four-digit level of product classification in the U.S. 

Harmonized Tariff System.
Page 4 GAO-14-722R AGOA Trade Expansion

this report are Ming Chen (Assistant Director), Farahnaaz Khakoo-Mausel, Gezahegne Bekele,

Kenneth Bombara, John O’Trakoun, Fang He, Leah DeWolf, Jill Lacey, Ernie Jackson, David

Dayton, Etana Finkler, Ozzie Trevino, and Jena Sinkfield.

Kimberly Gianopoulos

Acting Director, International Affairs and Trade

Enclosures – 2
Page 5 GAO-14-722R AGOA Trade Expansion

List of Requesters

The Honorable Ron Wyden

Chairman

The Honorable Orrin G. Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Robert Menendez

Chairman

The Honorable Bob Corker

Ranking Member

Committee on Foreign Relations

United States Senate

The Honorable Chris Coons

Chairman 

Subcommittee on African Affairs

The Honorable Jeff Flake

Ranking Member

Subcommittee on African Affairs

Committee on Foreign Relations

United States Senate

The Honorable Johnny Isakson

Ranking Member

Subcommittee on International Trade, Customs, and Global Competitiveness

Committee on Finance

United States Senate

The Honorable Edward R. Royce

Chairman 

The Honorable Eliot L. Engel

Ranking Member

Committee on Foreign Affairs

House of Representatives

The Honorable Dave Camp

Chairman 

The Honorable Sander M. Levin 

Ranking Member

Committee on Ways and Means

House of Representatives
Page 6 GAO-14-722R AGOA Trade Expansion

The Honorable Christopher H. Smith

Chairman 

The Honorable Karen Bass

Ranking Member

Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations

Committee on Foreign Affairs

House of Representatives

The Honorable Devin Nunes

Chairman 

The Honorable Charles B. Rangel

Ranking Member

Subcommittee on Trade

Committee on Ways and Means

House of Representatives
Page 7 GAO-14-722R AGOA Trade Expansion

Enclosure I: Briefing Slides Presentation to Congressional Requesters’ Staff

African Growth and Opportunity Act: 

Observations on Competitiveness and 

Diversification of U.S. Imports from 

Beneficiary Countries

Briefing to Congressional Requesters’ Staff

July 2014
Page 8 GAO-14-722R AGOA Trade Expansion

Contents

• Background

• Briefing Objective

• Observations

Page 2
Page 9 GAO-14-722R AGOA Trade Expansion

Background

• In 2000, the African Growth and Opportunity Act 

(AGOA) was signed into law. 

• AGOA provides duty-free access to a range of 

commodities, including agriculture, textiles and 

apparel, and petroleum. 

• 40 countries in Sub-Saharan Africa (SSA) are 

beneficiaries of AGOA, as of January 2014.

• The program expires after September 30, 2015.

Page 3 Notes: Eligibility for textiles and apparel benefits is only available to select AGOA countries.
Page 10 GAO-14-722R AGOA Trade Expansion

Background (continued)

• SSA countries are vulnerable to economic shocks, partly 

due to their dependence on few commodities.

• SSA countries’ integration into the global economy 

requires greater competitiveness of their exports.

• A goal of U.S. trade preferences is to help developing 

countries diversify and increase competitiveness.

Page 4
Page 11 GAO-14-722R AGOA Trade Expansion

GAO Objective and Key Observations

Since AGOA was enacted in 2000, how have AGOA countries 

improved the competitiveness and diversification of their imports to the 

United States?

• U.S. imports from AGOA countries declined recently, after increasing in earlier years.

• AGOA countries’ share of U.S. imports remains small.

• Petroleum imports dominate; however, the share of non-petroleum imports has increased.

• U.S. imports under AGOA are dominated by a small number of countries.

• Diversification of U.S. imports under AGOA increased recently, after declining in earlier years. 

5
Page 12 GAO-14-722R AGOA Trade Expansion

U.S. Imports from AGOA Countries Declined Recently, 

after Increasing in Earlier Years

Page 6

Notes. We defined AGOA countries as the group of 40 countries that were eligible for the AGOA trade preference program as of January 

2014. We did not include imports from countries which were eligible for AGOA in the past but were no longer eligible as of January 2014 or 

imports from countries which have never been eligible for AGOA. Totals are in nominal dollars, unadjusted for inflation. Other imports include 

imports that received duty-free access under other preference programs (e.g., Generalized System of Preferences (GSP)) and international 

trade agreements (e.g., Most Favored Nation status) and imports with tariffs. The AGOA program provides duty-free access to products in 

addition to those products covered under GSP, another trade preference program. AGOA countries continue to have duty-free access to the 

commodities covered under the GSP after the program expired in 2013. 
Page 13 GAO-14-722R AGOA Trade Expansion

AGOA Countries' Share of U.S. Imports 

Remains Small

Page 7

Notes: We defined AGOA countries as the group of 40 countries that were eligible for the AGOA trade preference program as of January 2014. We did 

not include imports from countries which were eligible for AGOA in the past but were no longer eligible as of January 2014 or imports from countries 

which have never been eligible for AGOA. 
Page 14 GAO-14-722R AGOA Trade Expansion
Page 15 GAO-14-722R AGOA Trade Expansion

U.S. Imports under AGOA Are Dominated 

by a Small Number of Countries

Page 9
Page 16 GAO-14-722R AGOA Trade Expansion

Diversification of U.S. Imports under AGOA Increased 

Recently, after Declining in Earlier Years

Page 10

Note: Our analysis of diversification of total U.S. imports from AGOA countries uses a measure of trade and commodity concentration. We constructed an index to 

show a value of 0 percent when products are extremely concentrated and a value of 100 percent when products are most diversified. We conducted the analysis at 

a fairly high level of product aggregation—that is, at the four-digit level of product classification in the U.S. Harmonized Tariff System.
Page 17 GAO-14-722R AGOA Trade Expansion

Enclosure II: Objective, Scope, and Methodology

In this report, we reviewed the competitiveness and diversification of U.S. imports from the 

African Growth and Opportunity Act (AGOA). We mainly relied on U.S. Census trade data for 

imports by trading partners and by products from 2001, the first year after the enactment of 

AGOA, to 2013, the most recent year for which annual trade data are available. To examine 

competitiveness, we calculated the share of total U.S. imports from AGOA countries in 2013. 

We defined AGOA countries as the group of 40 countries that were eligible for the AGOA trade 

preference program as of January 2014.

8 In addition, we analyzed total U.S. imports from AGOA 

countries, including both imports under AGOA (i.e., imports that received duty-free access 

claiming AGOA preference benefits) and other imports (i.e., imports that received duty-free 

access under other preference programs and international trade agreements, and imports with 

tariffs).

Our analysis of diversification examines the distribution of total U.S. imports from AGOA 

countries at the four-digit level of product classification. We calculated a measure of 

diversification based on a normalization of a commonly used indicator of industry concentration 

known as the Herfindahl-Hirschman Index.9 For purposes of exposition and intuitive appeal, we 

re-based the index by subtracting it from one to show lower values as indicating lower 

diversification (more concentration). Specifically, the formula used to calculate the index is:

where xi represents the import/export value of the ith commodity, X is United States’ total 

imports from the AGOA countries in a particular year, and where N is the number of products. 

The index value (H*) ranges from 0 to 100 percent. If the products are evenly distributed, the 

value of the index would be 100 percent, and the more concentrated the product distribution, the 

closer the value is to 0 percent. For diversification, in addition to constructing the HerfindahlHirschman Index, we also examined the product composition of U.S. imports from AGOA 

countries. We consolidated the import products into six groups: agricultural and food, machinery

and transportation equipment, minerals and resources, petroleum, textiles and apparel, and 

other products. We calculated the share of each product group in 2001, 2008, and 2013. We 

used U.S. Census trade statistics for both the competitiveness and diversification analysis. We 

assessed the reliability of the data by checking for internal consistency and reviewed documents 

related to data collection and revision processes. We determined the data were sufficiently 

reliable for our purposes.

 8

We did not include imports from countries which were eligible for AGOA in the past but were no longer eligible as of 

January 2014 or imports from countries which have never been eligible for AGOA.

9

According to Hirschman (1964), the index is designed as a measure when concentration is a function of both 

unequal distribution and skewness. Albert O. Hirschman, “The Paternity of an Index,” The American Economic 

Review, vol. 54, no. 5, Sept. 1964, 761.
Page 18 GAO-14-722R AGOA Trade Expansion

We conducted this performance audit from March 2014 to July 2014 in accordance with 

generally accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit objectives.

(321029)
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