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99–684 2005

HEARING ON TRADE WITH SUB-SAHARAN AFRICA 

AND H.R. 4103, THE ‘‘AGOA ACCELERATION 

ACT OF 2004’’ 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TRADE 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED EIGHTH CONGRESS 

SECOND SESSION 

APRIL 29, 2004 

Serial No. 108–66 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

PHILIP M. CRANE, Illinois 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

AMO HOUGHTON, New York 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

JENNIFER DUNN, Washington 

MAC COLLINS, Georgia 

ROB PORTMAN, Ohio 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

SCOTT MCINNIS, Colorado 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

ROBERT T. MATSUI, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

GERALD D. KLECZKA, Wisconsin 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

MAX SANDLIN, Texas 

STEPHANIE TUBBS JONES, Ohio 

Allison H. Giles, Chief of Staff 

Janice Mays, Minority Chief Counsel 

SUBCOMMITTEE ON TRADE 

PHILIP M. CRANE, Illinois, Chairman 

E. CLAY SHAW, JR., Florida 

AMO HOUGHTON, New York 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JENNIFER DUNN, Washington 

WALLY HERGER, California 

PHIL ENGLISH, Pennsylvania 

JIM NUSSLE, Iowa 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

RICHARD E. NEAL, Massachusetts 

WILLIAM J. JEFFERSON, Louisiana 

XAVIER BECERRA, California 

JOHN S. TANNER, Tennessee 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisories announcing the hearing ........................................................................ 2 

WITNESSES 

Bread for the World, Reverend David Beckmann, on behalf of Partnership 

to Cut Hunger and Poverty in Africa ................................................................. 40 

Corporate Council on Africa, Stephen Hayes ........................................................ 36 

Gap, Inc., Jill Kiley .................................................................................................. 33 

International Trade and Regional Cooperation, Mauritius, African Trade Ministers’ Conference, and African Union, Hon. Jaya Krishna Cuttaree .............. 15 

Lesotho Minister of Trade and Industry, Hon. Mpho Meli Malie ....................... 11 

Mast Industries, Inc., Lucy Soares-Demelo, on behalf of Limited Brands and 

National Retail Federation .................................................................................. 27 

Republic of Kenya, His Excellency Dr. Yusuf Abdulrahman Nzibo .................... 18 

Royce, Hon. Edward R., a Representative in Congress from the State of 

California .............................................................................................................. 9 

Services Group, Robert Kirk ................................................................................... 45 

Unite!, Mark Levinson ............................................................................................ 48 

Vanity Fair Corporation, Jeffrey Streader ............................................................ 31 

SUBMISSIONS FOR THE RECORD 

African Coalition for Trade, Inc., Paul Ryberg, letter .......................................... 62 

AGOA Civil Society Network, statement ............................................................... 63 

American Chamber of Commerce, Port Louis, Mauritius, Aleda Koenig, letter 64 

Aquarelle Clothing, Ltd., Quatre, Mauritius, Eric Eynaud, New Island Clothing, Ltd., Quatre, Mauritius, Elvis Cateaux, Consolidated Fabrics, Ltd., 

Solitude, Mauritius, Eric Thorel, and Socota Textile Mills, Ltd., Solferino, 

Mauritius, Olivier Stekelorom, joint letter ........................................................ 65 

Birkins, Rodney, Jr., J.C. Penney Purchasing Corporation, Plano, TX, statement ...................................................................................................................... 73 

Brink, B., South African Textile Federation, Bruma, South Africa, letter 

and attachment .................................................................................................... 88 

BMD Textiles, Ltd., Cape, Republic of South Africa, Dr. H. Prader, letter ........ 66 

Cateaux, Elvis, New Island Clothing, Ltd., Quatre, Mauritius, joint letter ....... 65 

Consolidated Fabrics, Ltd., Solitude, Mauritius, Eric Thorel, joint letter .......... 65 

Dollar General Corporation, Goodlettsville, TN, statement ................................. 67 

Duro Industries, Fall River, MA, William J. Milowitz, letter .............................. 68 

Eastman Chemical Company, Voridian Division, Kingsport, TN, Richard L. 

Johnson, letter ...................................................................................................... 69 

Eynaud, Eric, Aquarelle Clothing, Ltd., Quatre, Mauritius, joint letter ............ 65 

House of Dreams, Inc., New York, NY, Stanley Lerman, letter .......................... 70 

Jaysix USA, Inc., Fredericksburg, VA, Guy Prudhomme, letter ......................... 72 

J.C. Penney Purchasing Corporation, Plano, TX, Rodney Birkins, Jr., statement ...................................................................................................................... 73 

Johnson, Richard L., Eastman Chemical Company, Voridian Division, Kingsport, TN, letter ..................................................................................................... 69 

Koenig, Aleda, American Chamber of Commerce, Port Louis, Mauritius, letter .......................................................................................................................... 64 

de Latour, Maurice Vigier, Mauritius-U.S. Business Association, Inc., statement ...................................................................................................................... 76 

Lerman, Stanley, House of Dreams, Inc., New York, NY, letter ......................... 69 

Mauritius Export Processing Zone Association, Port Louis, Mauritius, 

Danielle Wong, letter ........................................................................................... 75 

Mauritius-U.S. Business Association, Inc., Maurice Vigier de Latour, statement ...................................................................................................................... 76 

Page

iv 

Milowitz, William J., Duro Industries, Fall River, MA, letter ............................. 68 

New Island Clothing, Ltd., Quatre, Mauritius, Elvis Cateaux, joint letter ........ 65 

New River Industries, Inc., Radford, VA, Paul Poandl, letter ............................. 79 

Nien Hsing Textile Company, Ltd., Taipei, Taiwan, statement .......................... 80 

Nigerian-American Chamber of Commerce, Imo State, Nigeria, Mazi Felix 

Fon Oji, letter ....................................................................................................... 83 

Office of the Special Advisor to the President on AGOA, Abuja, Nigeria, 

G.M. Sasore, letter ............................................................................................... 84 

Oji, Mazi Felix Fon, Nigerian-American Chamber of Commerce, Imo State, 

Nigeria, letter ....................................................................................................... 83 

Poandl, Paul, New River Industries, Inc., Radford, VA, letter ............................ 79 

Posner, Jeff, USI Sportswear, New York, NY, letter ............................................ 90 

Prader, Dr. H., BMD Textiles, Ltd., Cape, Republic of South Africa, letter ....... 66 

Prudhomme, Guy, Jaysix USA, Inc., Fredericksburg, VA, letter ........................ 72 

Retail Industry Leaders Association, Arlington, VA, statement ......................... 85 

Rheeder, Ian, YKK Southern Africa, Ltd., Bryanston, Johannesburg, letter ..... 91 

Ryberg, Paul, African Coalition for Trade, Inc., letter ......................................... 62 

Sasore, G.M., Office of the Special Advisor to the President on AGOA, Abuja, 

Nigeria, letter ....................................................................................................... 84 

ShopKo Stores, Inc., Green Bay, WI, statement ................................................... 87 

Socota Textile Mills, Ltd., Solferino, Mauritius, Olivier Stekelorom, joint letter .......................................................................................................................... 65 

South African Textile Federation, Bruma, South Africa, B. Brink, letter and 

attachment ............................................................................................................ 88 

Stekelorom, Olivier, Socota Textile Mills, Ltd., Solferino, Mauritius, joint 

letter ...................................................................................................................... 65

Thorel, Eric, Consolidated Fabrics, Ltd., Solitude, Mauritius, joint letter ......... 65 

USI Sportswear, New York, NY, Jeff Posner, letter ............................................. 90 

Wong, Danielle, Mauritius Export Processing Zone Association, Port Louis, 

Mauritius, letter ................................................................................................... 75 

YKK Southern Africa, Ltd., Bryanston, Johannesburg, Ian Rheeder, letter ...... 91 

(1) 

HEARING ON TRADE WITH SUB-SAHARAN AFRICA AND H.R. 4103, THE ‘‘AGOA ACCELERATION ACT OF 2004‘‘ 

THURSDAY, APRIL 29, 2004 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON TRADE, Washington, DC. 

The Subcommittee met, pursuant to notice, at 1:35 p.m., in room 

1100, Longworth House Office Building, Hon. Philip M. Crane 

(Chairman of the Subcommittee) presiding. 

[The advisory and revised advisory announcing the hearing follow:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON TRADE 

FOR IMMEDIATE RELEASE CONTACT: 202–225–1721 

April 20, 2004 

TR–4 

Crane Announces Hearing on Trade with 

sub-Saharan Africa and H.R. 4103, the 

‘‘AGOA Acceleration Act of 2004’’ 

Congressman Philip M. Crane (R–IL), Chairman, Subcommittee on Trade of the 

Committee on Ways and Means, today announced that the Subcommittee will hold 

a hearing on trade with sub-Saharan Africa and H.R. 4103, the ‘‘African Growth and 

Opportunity (AGOA) Acceleration Act of 2004.’’ The hearing will take place on 

Thursday, April 29, 2004, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 1:00 p.m. 

Oral testimony at this hearing will be from both invited and public witnesses. Any 

individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

In an effort to address the trade and development needs of sub-Saharan Africa, 

the Committee on Ways and Means in the 105th Congress began moving legislation 

to create a trade preference program specially tailored for that region. The bipartisan Africa Growth and Opportunity Act (P.L. 106–200) was enacted in 2000, creating a landmark trade program that provides extensive preferential duty-free access for eligible African countries and offers tangible incentives for African countries 

to continue their efforts to open their economies, build free markets, and encourage 

investment in the region. Two years later, President Bush signed into law tradeenhancing amendments to AGOA on August 6, 2002, as part of the Trade Act of 

2002 (P.L. 107–210). 

Reports from the Administration, businesses, civil society organizations, and African leaders indicate that AGOA has been a great success. To continue the bipartisan effort to improve trade and development with Africa, Chairman Bill Thomas 

(together with Reps. McDermott (D–WA), Crane (R–IL), Rangel (D–NY), Royce (R– 

CA), Houghton (R–NY), Neal (D–MA), Dunn (R–WA), Jefferson (D–LA), Weller (R– 

IL), Brady (R–TX), Payne (D–NJ), and Levin (D–MI)) introduced the AGOA Acceleration Act, on April 1, 2004. H.R. 4103 would help expedite growth in African trade 

and continue to strengthen the foundation for development in Africa by: (1) providing an overall extension of AGOA until 2015; (2) adding technical assistance provisions that will make it easier for African countries to develop the framework to 

participate in the benefits; (3) fixing interpretation issues encountered with the U.S. 

Department of Commerce; and (4) extending the third country fabric provision, now 

set to expire on September 30, 2004, for three years (subject to a cap) including a 

phase-out, in year three. 

In announcing the hearing, Chairman Crane stated, ‘‘The African Growth and Opportunity Act is an historic piece of legislation that has directly helped several hundred thousand Africans improve their lives, but I feel we have only begun to tap 

into the potential of what trade can do in the region. We hope to build upon the 

success of the current program by passing H.R. 4103. I look forward to this opporVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
3 

tunity to explore further how AGOA can promote mutually beneficial trade and investment opportunities between Africans and Americans.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on the impact of the current AGOA law on trade and development in Africa and ways that Congress can correct interpretive problems in the 

law, encourage infrastructure improvements, and generally accelerate the goals of 

the program. In addition, the hearing will explore H.R. 4103, the AGOA Acceleration Act. 

The Subcommittee expects several issues related to these broad themes to be discussed at the hearing, including: (1) overview of the U.S. and African textile and 

apparel industries and AGOA’s effect on them; (2) the proposed extension of the 

AGOA program to 2015; (3) the proposed three year extension of the third-country 

fabric provision set to expire September 30, 2004; (4) impact of the expiration of 

global quotas on African textiles and apparel developments; (5) U.S. support of infrastructure to increase trade capacity and ecotourism; to support transportation, 

energy, agriculture, and telecommunications infrastructure; and to improve port-toport and airport-to-airport relationships; (6) agricultural technical assistance; and 

(7) other AGOA-related trade issues. 

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD: 

Requests to be heard at the hearing must be made by telephone to Peter Sloan 

or Kevin Herms at (202) 225-1721 no later than the close of business on Thursday, 

April 22, 2004. The telephone request should be followed by a formal written request faxed to Allison Giles, Chief of Staff, Committee on Ways and Means, U.S. 

House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 

20515, at (202) 225–2610. The staff of the Subcommittee will notify by telephone 

those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Subcommittee 

staff at (202) 225-6649. 

In view of the limited time available to hear witnesses, the Subcommittee 

may not be able to accommodate all requests to be heard. Those persons and 

organizations not scheduled for an oral appearance are encouraged to submit written statements for the record of the hearing in lieu of a personal appearance. All 

persons requesting to be heard, whether they are scheduled for oral testimony or 

not, will be notified as soon as possible after the filing deadline. 

Witnesses scheduled to present oral testimony are required to summarize briefly 

their written statements in no more than 5 minutes. THE 5-MINUTE RULE 

WILL BE STRICTLY ENFORCED. The full written statement of each witness will be included in the printed record, in accordance with House 

Rules. 

In order to assure the most productive use of the limited amount of time available 

to question witnesses, all witnesses scheduled to appear before the Subcommittee 

are required to submit 200 copies, along with an IBM compatible 3.5-inch diskette 

in WordPerfect or MS Word format, of their prepared statement for review by Members prior to the hearing. Testimony should arrive at the Subcommittee office, 

1104 Longworth House Office Building, no later than Tuesday, April 27, 

2004 at noon. The 200 copies can be delivered to the Subcommittee staff in one 

of two ways: (1) Government agency employees can deliver their copies to 1104 

Longworth House Office Building in an open and searchable box, but must carry 

with them their respective government issued identification to show the U.S. Capitol 

Police, or (2) for non-government officials, the copies must be sent to the new Congressional Courier Acceptance Site at the location of 2nd and D Streets, N.E., at 

least 48 hours prior to the hearing date. Please ensure that you have the 

address of the Subcommittee, 1104 Longworth House Office Building, on 

your package, and contact the staff of the Subcommittee at (202) 225-6649 

of its impending arrival. Due to new House mailing procedures, please avoid 

using mail couriers such as the U.S. Postal Service, UPS, and FedEx. When a 

couriered item arrives at this facility, it will be opened, screened, and then delivered 

to the Subcommittee office, within one of the following two time frames: (1) expected 

4 

or confirmed deliveries will be delivered in approximately 2 to 3 hours, and (2) unexpected items, or items not approved by the Subcommittee office, will be delivered 

the morning of the next business day. The U.S. Capitol Police will refuse all nongovernmental courier deliveries to all House Office Buildings. 

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE: 

Please Note: Any person or organization wishing to submit a written statement 

for the printed record of the hearing must send it electronically to 

hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225– 

2610, by the close of business Tuesday, May 4, 2004. In the immediate future, the 

Committee website will allow for electronic submissions to be included in the printed record. Before submitting your comments, check to see if this function is available. Finally, those filing written statements who wish to have their statements distributed to the press and interested public at the hearing can follow the same procedure listed above for those who are testifying and making an oral presentation. 

Please directly follow these guidelines to ensure that each statement is included in the record. 

FORMATTING REQUIREMENTS: 

Each statement presented for printing to the Committee by a witness, any written statement 

or exhibit submitted for the printed record or any written comments in response to a request 

for written comments must conform to the guidelines listed below. Any statement or exhibit not 

in compliance with these guidelines will not be printed, but will be maintained in the Committee 

files for review and use by the Committee. 

1. All statements and any accompanying exhibits for printing must be submitted electronically 

to hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225–2610, in 

WordPerfect or MS Word format and MUST NOT exceed a total of 10 pages including attachments. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All statements must include a list of all clients, persons, or organizations on whose behalf 

the witness appears. A supplemental sheet must accompany each statement listing the name, 

company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

5 

***NOTICE—CHANGE IN TIME*** 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON TRADE 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–6649 

April 27, 2004 

TR–4–Revised 

Change in Time for Hearing on Trade with subSaharan Africa and H.R. 4103, the ‘‘AGOA Acceleration Act of 2004’’ 

Congressman Philip M. Crane (R–IL), Chairman, Subcommittee on Trade of the 

Committee on Ways and Means, today announced that the Subcommittee hearing 

on trade with sub-Saharan Africa and H.R. 4103, the ‘‘African Growth and Opportunity (AGOA) Acceleration Act of 2004,’’ previously scheduled for Thursday, April 

29, 2004, at 1:00 p.m., in the main Committee hearing room, 1100 Longworth House 

Office Building, will now begin at 1:30 p.m. 

All other details for the hearing remain the same. (See Trade Advisory No. TR– 

4, dated April 20, 2004.) 

f 

Chairman CRANE. I want to welcome all of you folks to this 

hearing of the Committee on Ways and Means Subcommittee on 

Trade to focus on the impact of the African Growth and Opportunity Act (AGOA) (Trade and Development Act of 2000, P.L. 106– 

200) on the trade development in Africa and ways that Congress 

can correct interpretive problems in the law, encourage infrastructure improvements, and generally accelerate the goals of the program. In addition, the hearing will explore the AGOA Acceleration 

Act of 2004 (H.R. 4103) (P.L. 108–274). It is my pleasure to welcome our witnesses and distinguished guests to our hearing, but 

particularly one who will not be testifying but is in our audience, 

the Prime Minister of Swaziland and ministers and ambassadors 

from all over Africa. 

The AGOA, which I authored, was originally enacted in 2000 and 

was the product of nearly 5 years of bipartisan cooperation with my 

colleagues on the Committee, Jim McDermott, Charlie Rangel, William Jefferson and others. The AGOA has proven to be one of the 

most effective means of helping African nations develop and attract 

investment and enhance the standard of living for their citizens. 

The AGOA has also made a strong positive impact on the U.S.-subSaharan African relations by helping to expand our trade relationship. Expanded trade opportunities not only help those countries 

develop a sustainable economic base, but also foster efficient government practices, political stability, and a well-grounded rule of 

law. 

6 

More importantly, AGOA has helped develop a more stable Africa, a step which strengthens security for America and the world. 

Africa has benefited greatly from the ex-trade preferences with the 

United States. United States imports under AGOA, excluding the 

generalized system of preferences, have almost doubled from their 

2001 level of $7.6 billion to their 2003 level of $13.2 billion. At the 

same time, 150,000 AGOA-related jobs have been created, along 

with $34 million in foreign investment in the 5 leading AGOA 

countries. The AGOA has also begun to have a positive effect on 

other areas by improving business practices in Africa and encouraging regional integration. However, despite these positive developments, many countries have not yet been able to benefit fully from 

AGOA, just as a key provision is set to expire. 

House Resolution 4103, the bipartisan AGOA Acceleration Act, 

provides the means for African countries to develop a more prosperous economic environment, a well-grounded rule of law, and efficient and acceptable government practices. By building on early 

successes, this bill will attempt to distribute more widely AGOA’s 

benefits. The new legislation concentrates on four items: first, an 

overall extension of AGOA until 2015; second, technical assistance, 

encouragement of activities to support infrastructure development, 

and capacity-building studies to enable Africa to utilize the program fully; third, language fixing several implementation problems 

which have arisen since the program’s enactment to encourage further integration among the region’s economy; four, an extension of 

the expiring provision which allows use of third-country fabric that 

is non-U.S. and non-African fabric in garment manufacturing for 

African lesser developed countries (LDCs). I realize a strong regional economy needs to be based on more than just the textile and 

apparel industries. Modernizing infrastructure, diversification into 

other industries like agriculture, and building on natural strengths 

like ecotourism will help Africa secure a more stable future. 

The AGOA Acceleration Act includes several provisions aimed at 

just that, encouraging activities in support of infrastructure to increase ecotourism and trade capacity; encouraging activities in support of transportation, energy, agriculture, and telecommunications 

infrastructure; and identifying eligible sub-Saharan Africa countries that have the greatest potential to increase marketable exports of agricultural products to the United States, but also the 

greatest need for technical assistance. I believe helping Africa 

through trade will contribute to more fundamental improvements 

and governance and overall quality of life in Africa. Critical benefits for our African partners will expire soon if Congress does not 

take immediate action. I strongly support the AGOA Acceleration 

Act, and I look forward to its positive consideration by Congress in 

the coming weeks based on its strong bipartisan support. Now I 

yield to the Ranking Member on our Subcommittee, Mr. Levin. 

[The opening statement of Chairman Crane follows:] 

Opening Statement of The Honorable Philip M. Crane, Chairman, and a 

Representative in Congress from the State of Illinois 

Welcome to this hearing of the Ways and Means Trade Subcommittee to focus on 

the impact of AGOA on trade and development in Africa and ways that Congress 

can correct interpretive problems in the law, encourage infrastructure improvements, and generally accelerate the goals of the program. In addition, the hearing 

7 

will explore H.R. 4103, the AGOA Acceleration Act. It is my pleasure to welcome 

our witnesses and distinguished guests to our hearing, particularly the Prime Minister of Swaziland and Ministers and Ambassadors from all over Africa. 

The Africa Growth and Opportunity Act, originally enacted in 2000, has proven 

to be one of the most effective means of helping African nations develop and attract 

investment and enhance the standard of living for its citizens. AGOA has also made 

a strong positive impact on U.S.-sub-Saharan African relations by helping to expand 

our trade relationship. Expanded trade opportunities not only help these countries 

develop a sustainable economic base but also foster efficient government practices, 

political stability, and a well-grounded rule of law. More importantly, AGOA has 

helped develop a more stable Africa—a step which strengthens security for America 

and the world. 

Africa has benefited greatly from the Act’s trade preferences with the United 

States. U.S. imports under AGOA (excluding the Generalized System of Preferences) 

have almost doubled from their 2001 level of $7.6 billion to their 2003 level of $13.2 

billion. At the same time, 150,000 AGOA-related jobs have been created along with 

$340 million in foreign investment in the five leading AGOA countries. AGOA has 

also begun to have a positive affect on other areas, by improving business practices 

in Africa and encouraging regional integration. However, despite these positive developments, many countries have not yet been able to benefit fully from AGOA just 

as a key provision is set to expire. 

H.R. 4103, the bipartisan AGOA Acceleration Act, provides the means for African 

countries to develop a more prosperous economic environment, a well-grounded rule 

of law, and efficient and acceptable government practices. By building on early successes, this bill will attempt to distribute more widely AGOA’s benefits. 

The new legislation concentrates on four key items: (1) an overall extension of 

AGOA until 2015; (2) technical assistance, encouragement of activities to support infrastructure development, and capacity building studies to enable Africa to utilize 

the program fully; (3) language fixing several implementation problems that have 

arisen since the program’s enactment and encourage further integration among the 

region’s economies; and (4) an extension of the expiring provision that allows use 

of third-country fabric (i.e., non-U.S. and non-African fabric) in garment manufacturing for lesser-developed African countries. 

I realize that a strong regional economy needs to be based on more than just the 

textile and apparel industries. Modernizing infrastructure, diversification into other 

industries like agriculture, and building on natural strengths like ecotourism, will 

help Africa secure a more stable future. The AGOA Acceleration Act includes several provisions aimed at just that: encouraging activities in support of infrastructure 

to increase ecotourism and trade capacity; encouraging activities in support of transportation, energy, agriculture, and telecommunications infrastructure; and identifying eligible sub-Saharan African countries as having the greatest potential to increase marketable exports of agricultural products to the United States and the 

greatest need for technical assistance. 

Critical benefits for our African partners will expire soon if Congress does not 

take immediate action. I strongly support the AGOA Acceleration Act and I look forward to its positive consideration by Congress in the coming weeks based on its 

strong bipartisan support. I believe helping Africa through trade will contribute to 

more fundamental improvements in governance and overall quality of life in Africa. 

f 

Mr. LEVIN. Thank you, Mr. Chairman. I am going to have the 

rare privilege of yielding to Mr. Rangel, the Ranking Member. He 

usually yields to me. I want to say just a few words before I do 

that. I am pleased to join my colleagues here for the consideration 

of this bill. I regret that I am going to have to leave to depart 

Washington and catch a plane. I am going to take this testimony 

with me and read it on the plane. This is vital, this legislation, in 

many respects. We simply cannot allow expiration of AGOA. There 

has to be its renewal, point one. 

Point two, I would hope its continuation will spark all of us to 

take a look at one of the critical areas, textile and apparel, and to 

do so in a broader way and not only in terms of one continent or 

8 

one region. Some of us have been urging that that be done, and it 

really has not been. 

The last point I wanted to make is I am glad there is the addition of our distinguished colleague Mr. Royce and the distinguished 

representatives of several countries testifying here, and that we are 

going to have another panel, and that it will be diverse in its backgrounds and to some extent diverse in its points of view. Expansion 

of international trade is not a simple matter. It has complexities, 

and if we are going to come up with the right answers, we need 

to dip into a diverse group, a diverse set of views about how we 

expand and shape international trade. So, this is an important 

hearing. It is now, as I said, my privilege to yield to the distinguished Ranking Member of the entire Committee, Mr. Rangel of 

New York. 

Mr. RANGEL. Thank you very much. I want to thank the Chairman of the Subcommittee, Mr. Crane for holding this hearing. I 

cannot think of anything in the last few years that have brought 

Bill Thomas and I together except the AGOA bill. Quite frankly, 

most trade bills this time of the election cycle are dead on arrival, 

but the enthusiastic support of expanding and not allowing the success of AGOA to expire is due in a large part to the sophistication 

and the diligence of the African diplomatic corps. Some of them are 

in the audience from Swaziland, Kenya, Mauritius, Lesotho, and 

the other diplomatic corps have learned a lot from the manner and 

the cooperation and the knowledge that you have managed to share 

with legislators who want to do the right thing, but needed the sophistication of how we can do it best. 

I want to thank the members of the apparel industry who are 

here from Vanity Fair (VF), Gap and mass industries because they, 

like my late and dear friend Ron Brown, realize that business and 

democracies need more than just a flag and a gun. You need jobs, 

dreams; you need hopes; you need to care for people. If we are 

going to be the beneficiary of free trade, we have to deal with countries that respect their workers, that give them an opportunity to 

get disposable income so they can continue to buy America’s goods 

and services. 

So, tremendous progress that has been made not only in the creation of jobs, but living by the rule of law, providing assistance to 

trade unions, and removing tariffs is really what Democrats and 

Republicans should be all about rather than the politics of today. 

This legislation and the cooperation of this Committee, from the 

House and Senate, from the private sector and the diplomatic 

corps, shows that bipartisanship works. Mr. Chairman, I want to 

thank you for constantly reaching out to find areas of cooperation. 

I do hope we can speedily get this bill to the President. 

Chairman CRANE. I thank you, Mr. Rangel, and I thank all of 

our colleagues that are able to be here today. Our first witness is 

the Chair of the Africa Subcommittee of the Committee on International Relations, the Honorable Ed Royce from California. Mr. 

Royce, I yield to you for your presentation. 

9 

STATEMENT OF THE HONORABLE EDWARD R. ROYCE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. ROYCE. Thank you, Mr. Chairman. I thank you very much 

for inviting me to testify before you on the AGOA Acceleration Act 

of 2004. As one of its original cosponsors, I have enjoyed working 

with your Committee on this bipartisan legislation. I would like to 

take this moment to commend our Ranking Member, Charlie Rangel, and to commend our Chairman, Bill Thomas, and certainly you 

for your involvement in this process, and also Ranking Member 

Levin. We have several original cosponsors on the dais with you. 

One is Mr. Jefferson; another is Ms. Dunn, and we thank them for 

their important work on this legislation as well. I will approach my 

support for H.R. 4103 from the position of chairing the Africa Subcommittee since 1997. Since taking the Chairmanship, I have 

worked with you and others on your Committee to see that Africa 

does not fall off the world economic map, where, in my view, it is 

teetering. 

Today, 3 years into the program, we know that AGOA has 

worked. While many of us wish that more African countries and 

more African industries, particularly agricultural industries, were 

taking advantage of AGOA, we do know it has managed to draw 

hundreds of millions of dollars of foreign investment to the continent, creating hundreds of thousands of desperately needed jobs 

across Africa. Several Members, in fact, have had the opportunity 

to visit apparel plants in Africa and see this encouraging development firsthand. We have also seen AGOA spark very difficult economic reforms across Africa. We have seen this happen as African 

countries have strived to maintain their AGOA eligibility. The 

AGOA, in just a few short years, has given many Africans experience with the export-led economic growth that has lifted hundreds 

of millions of people out of poverty worldwide. This makes AGOA 

the most effective development aid program for Africa that I am 

aware of. 

The AGOA also has bolstered our political relations with many 

African governments. Few African officials with whom I’ve met 

haven’t taken the opportunity to express their support and their 

appreciation for AGOA. I think this is important diplomatic capital 

that we have gained. In considering this legislation, I would like 

to underscore that the African continent is at a crossroads. The vision many of us have been working on for years is one of an increasingly stable and democratic Africa, one that is combating 

Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome (HIV/AIDS) and exporting and importing more goods and 

services. The AGOA has been central to our joint effort with Africans to see that this vision is their future. The other very different 

path Africa could get caught on leads to even greater poverty, hunger, conflict, disease and environmental degradation. 

To my mind, it is unclear which way Africa is headed. Its challenges are immense. What is quite clear is that our Nation would 

suffer considerably, our growing security and economic interests on 

the continent would suffer, as would our humanitarian character, 

should Africa find itself on this downward path. If Congress fails 

to pass this legislation before the third-country fabric provision exVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\A684.XXX A684
10 

pires in September, we will be undoing much of the good that 

AGOA has done. 

Intensified competition from China and other countries is coming 

soon as apparel trading rules are set to change. Unless we act, this 

will surely wipe out much of Africa’s emerging apparel industry 

and many African jobs that have been created, and much hope will 

be wiped out as well. Already I am told apparel orders for Africa 

are being put on hold, or in some cases are being canceled due to 

the uncertainty over Congress’ action. Our credibility as a nation 

that takes an interest in the plight of the world’s poorest continent 

is on the line. So, the stakes of this seemingly modest legislation 

are high. Today, Mr. Chairman, I am pulling an alarm for Africa 

and for America. Let us act and do our part to direct Africa away 

from the hopeless path. 

Finally, I will mention that this legislation has trade capacitybuilding provisions that the Africa Subcommittee will soon review 

with a hearing. We have long recognized that African countries can 

use some help to take advantage of AGOA’s preferential market access. This is an important part of H.R. 4103. Thank you, Mr. Chairman. I know that you and Chairman Thomas are committed to 

quick action to help Africa and to help along our many interests 

on the continent. I would also like to thank the other Subcommittee Members here today, and mention Mr. Amo Houghton, 

who is an original cosponsor of this bill as well. 

[The prepared statement of Mr. Royce follows:] 

Statement of The Honorable Edward R. Royce, a Representative in 

Congress from the State of California 

Thank you Chairman Crane for inviting me to testify before your Subcommittee 

on H.R. 4103, the ‘‘AGOA Acceleration Act of 2004.’’ As one of its original co-sponsors, I’ve enjoyed working with your Committee on this bipartisan legislation. I’d 

like to commend Chairman Thomas, Ranking Member Rangel, and you, Mr. Chairman, who has been involved since the beginning of the AGOA process, as well as 

Ranking Member Levin. 

I’ll approach my support for H.R. 4103 from the position of chairing the Africa 

Subcommittee (of the International Relations Committee) since 1997. Since taking 

the chairmanship, I’ve worked with you and others to see that Africa doesn’t fall 

off the world economic map, where it’s teetering. 

Today, three years into the program, we know that AGOA has worked. While 

many of us wish that more African countries and more African industries, particularly agricultural industries, were taking advantage of AGOA, it has managed to 

draw hundreds of millions of dollars of foreign investment to the continent, creating 

hundreds of thousands of desperately needed jobs. Several Members, in fact, have 

had the opportunity to visit apparel plants in Africa and see this encouraging development first hand. We’ve also seen AGOA spark difficult economic reforms, as African countries have strived to maintain their AGOA eligibility. AGOA, in just a few 

short years, has given many Africans experience with the export-led economic 

growth that has lifted hundreds of millions of people out of poverty worldwide. This 

makes AGOA the most effective development aid program for Africa that I’m aware 

of. 

AGOA also has bolstered our political relations with many African governments. 

Few African officials I’ve met with haven’t expressed their support and appreciation 

for AGOA. This is important diplomatic capital that we’ve gained. 

In considering this legislation, I’d like to underscore that the African continent 

is at a crossroads. The vision many of us have been working for is an increasingly 

stable and democratic Africa, one that is combating HIV/AIDS and exporting and 

importing more goods and services. AGOA has been central to our joint effort with 

Africans to see that this vision is their future. The other, very different path Africa 

could get caught on leads to even greater poverty, hunger, conflict, disease and environmental degradation. To my mind, it’s unclear which way Africa is headed. Its 

challenges are immense. What is quite clear though is that our nation would suffer 

11 

considerably—our growing security and economic interests on the continent would 

suffer, as would our humanitarian character—should Africa find itself on this downward path. 

If the U.S. Congress fails to pass this legislation before the third country fabric 

provision expires in September, we’ll be undoing much of the good that AGOA has 

done. Intensified competition from China and other countries is coming soon as apparel trading rules are set to change. Unless we act, this will surely wipe out much 

of Africa’s emerging apparel industry, the many African jobs it has created, and 

much hope. Already, I’m told, apparel orders for Africa are being cancelled due to 

the uncertainty over Congress’ action. Our credibility as a nation that takes an interest in the plight of the world’s poorest continent is on the line. 

The stakes for this seemingly modest legislation are high. Today, Mr. Chairman, 

I’m pulling an alarm for Africa—and for America. Let’s act, and do our part to direct 

Africa away from the hopeless path. 

Finally, I’ll mention that this legislation has trade capacity building provisions 

that the Africa Subcommittee will soon review with a hearing. We’ve long recognized that African countries can use some help to take advantage of AGOA’s preferential market access. This is an important part of H.R. 4103. 

Thank you again Mr. Chairman. I know that you and Chairman Thomas are committed to quick action to help Africa, and to help along our many interests on the 

continent. I’d also like to thank the Subcommittee Members here today for their 

focus on this key issue. 

f 

Chairman CRANE. Thank you, Mr. Royce. Are there any questions for Mr. Royce? If not, I express appreciation to you for being 

here, and we hope you catch your flight. We now welcome our first 

panel, which includes the Honorable Mpho Malie, Minister For 

Trade and Industry in the Kingdom of Lesotho; the Honorable 

Jayakrishna Cuttaree, Minister of Foreign Affairs from Mauritius; 

and His Excellency, Dr. Yusuf Nzibo, Ambassador, the Republic of 

Kenya. 

Gentlemen, let me welcome you to the Committee and let you 

know how much we appreciate you coming and testifying and how 

important your input is to the legislation that will address some of 

the problems you may be facing. If you would try and keep your 

presentations to approximately 5 minutes, then we will open it up 

to questions and answers after all of you have testified. With that, 

we will start with the Honorable Mpho Malie from Lesotho. He will 

be followed in turn by Mr. Cuttaree and then Dr. Nzibo. 

STATEMENT OF THE HONORABLE MPHO MELI MALIE, 

MINISTER OF TRADE AND INDUSTRY, LESOTHO 

Mr. MALIE. Thank you. It is a great honor and privilege for me 

to appear and testify before the Subcommittee on the AGOA Acceleration Act. Allow me on behalf of the government of Lesotho to 

register our sincere appreciation, gratitude and a sense of hope for 

the introduction of the legislation to accelerate AGOA. We were 

very much delighted to witness the continued bipartisan initiative 

to improve trade and development with Africa on April 1, 2004, 

when the Honorable Bill Thomas, the Chairman of the Committee 

on Ways and Means, accompanied inter alia by you, Mr. Chairman, 

Representatives McDermott, Rangel, Royce, Houghton, Payne, 

Brady and others, introduced the AGOA Acceleration Act. 

We are talking about an act that is affecting over 700 million 

people living in the poorest part of the world with over 80 percent 

of the world’s LDCs within that region. We are talking about a region that has the highest unemployment rate in the world, and also 

12 

the world’s highest HIV infection and AIDS cases, and certainly we 

are hoping that what this initiative is doing will help us a lot. 

The AGOA is an initiative by the American government to give 

a helping hand that will allow sub-Saharan African states to pull 

themselves up by the bootstrap. It is a bootstrap initiative, and I 

would proudly like to indicate is working and has been extremely 

successful. In my country since our certification in April 2001, we 

have been able to increase employment in the textile and clothing 

sector from 19,000 in the year 2000 to currently just over 50,000. 

We have also increased our exports into the United States from 

$140 million in 2000 to just over $400 million in the year 2003. All 

of this is directly attributable to AGOA. 

The U.S. Administration has been sensitive to implementation 

problems; hence, AGOA II to address the need to shape and the inclusion of Botswana on the list of lesser developed economies for 

our session on third-country fabric benefits. Serious problems have 

arisen, the major one being the end of the third-country fabric 

sourcing window which comes to an end September 30. Because of 

the lack of vertical integration within our textile industries, this 

window has been responsible for foreign direct investment flows in 

our countries throughout the CMTs. Closure of that window ends 

the competitiveness we have had with respect to China, which is 

going to come to an end. Thence, uncertainty of the extension of 

this facility has resulted in cancelation and suspension of orders. 

Lesotho, currently we have 40 million U.S. dollars of suspended 

and canceled orders which has affected 23 factories and 37,000 jobs 

within those factories. Consequences of nonextension or delays of 

the extension would be too ghastly to contemplate. Layoffs already 

loom, job losses, shutdowns, the economy slowdowns are inevitable. 

The above scenario would exacerbated by the expiring of the 

multifiber arrangement come January 2005. 

Mr. Chairman, this bill will, to a large extent, ameliorate the impact of the above phenomenon. This bill injects hope into the muscles of our countries. It is a bill of hope. The hope of integrating 

80 percent of the world’s lesser developed countries (LDC) onto the 

mainstream of world trade, the hope of fighting HIV and AIDS in 

the world’s most infected countries, the hope of eradicating poverty 

and joblessness in those countries lies in the passage of this bill 

into law. One could not agree more with Section 2 of the bill on 

findings. Those findings within the bill are nothing else but the 

truth. The policy statement gives courage and hope to all of us, and 

Congress’ support of the many aims and efforts are really encouraging. 

Inclusion of expansion of social services, education and health 

with priorities to addressing HIV/AIDS, malaria and tuberculosis 

are to be commended, as is addressing agriculture, sanitary standards and capacity building. This is at long last development targeted to the masses, seeing as most of the sub-Saharan Africa 

economies are centered on agriculture, with my own country, Lesotho, having 85 percent of its population rural. 

Mr. Chairman, as indicated, the bill is a bill of hope. One cannot 

overemphasize the urgency of having this bill in the statute books 

by June 2004. We would also like to record our appreciation of development dimensions of the sections of the bill in reaction to the 

13 

technical assistance provisions that will make it easier for sub-Saharan Africa to develop the framework to participate in the benefits and take full advantage of the proposed extension by 3 years 

of the third-country fabric provision. 

In conclusion, I would like to reiterate that AGOA has facilitated 

new investment, created jobs and helped form commercial linkages 

which continue to foster new investment opportunities and increased prosperity in sub-Saharan Africa over the long term. We 

have seen in Lesotho $140 million investment in a denim mill 

which is now bringing about international trade with over 50,000 

metric tons of cotton per month from the region. Mr. Chairman, we 

remain confident that our hopes will turn into reality and that this 

bill of hope will be treated with the urgency it deserves and move 

through both houses by June this year, allowing even those subSaharan African states that are still to be certified and benefit of 

this great initiative to come on board. I thank you, Mr. Chairman. 

[The prepared statement of Mr. Malie follows:] 

Statement of The Honorable Mpho ’Meli Malie, Minister of Trade and 

Industry, Cooperatives and Marketing, The Kingdom of Lesotho 

Mr. Chairman, Congressman Philip M. Crane, Members of the Committee, members of the diplomatic corps, distinguished guests, ladies and gentlemen. 

It is a great honour and privilege for me to appear and testify before this Honourable Subcommittee on the AGOA Acceleration Act. 

Allow me on behalf of the Government of Lesotho to register our sincere appreciation, gratitude and a sense of hope for the introduction of the legislation to accelerate the African Growth and Opportunity Act. We were very much delighted to witness the continued bipartisan initiative to improve trade and development with Africa on April 1, 2004 when Honourable Bill Thomas, the Chairman of the House Committee on Ways and Means, accompanied, inter alia, by you, Mr. Chairman, Representatives McDermott, Rangel, Royce, Houghton, Payne, Brady and others, introduced the AGOA Acceleration Act. 

I have carefully studied the AGOA III text and am deeply encouraged, and believe 

that my colleagues in the sub-Saharan African (SSA) countries share the same 

views. I share the same sentiments that this bold step would help expedite growth 

in African trade and continue to strengthen the foundation for development in Africa. 

Mr. Chairman, the fact that the bill aims to legislate, amongst others, that the 

textiles and apparel provisions under AGOA should be interpreted in a broad and 

trade-expanding manner is encouraging. Also, modification of the rules of origin on 

third country produced cuffs and collars is most welcome. In addition, we heartily 

welcome the new initiatives in the bill on promotion of investment in infrastructure, 

an impediment that has curbed the dynamism of AGOA I and II. 

The involvement in the agricultural sector through provision of technical assistance and capacity building in sanitary and phytosanitary standards issues to help 

us to meet the U.S. requirements, will contribute towards the development of this 

important sector that affects the lives of millions of our rural communities. In Lesotho, about 85% of the population lives in the rural areas and is dependent on agriculture for its livelihood. 

Chair, the bill is a bill of hope. Our hopes for the acceleration of the development 

of most of our economies in the SSA countries are pinned on this bill. 

I am here to provide testimony on the urgent need for action on AGOA III. It is 

important that we send proper signals to both investors and retailers as the implications of the uncertainty clouding the extension of AGOA and the third country fabric 

benefits are already being translated into unpalatable consequences of cancelled and 

suspended orders. To be specific, Mr. Chairman, in the case of Lesotho alone, as we 

speak orders to the value of about U.S. $40 million have been affected. Clearly, the 

prospects are not encouraging as job losses, lay-offs and economic slow-down is 

looming and AGOA’s potential to expand and encourage economic growth in the certified AGOA beneficiary countries is at stake. 

AGOA’s purpose is to help spur prosperity and development in sub-Saharan African countries and integrate our economies fully in the global economy by giving us 

greater access to the U.S. market. Most of us in the sub-Saharan Africa bear testiVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
14 

mony today that AGOA is working. In particular, Lesotho has seen, since the inception of AGOA in 2000, and certification on 21 April in 2001, dramatically positive 

changes in her economic landscape. Today, there are about 50,000 jobs in the apparel industrial sector as against 20,000 jobs in the year 2000, making the private 

sector the number one employer, exceeding government employment for the first 

time since our independence in 1966. The value of Lesotho’s exports to the United States was U.S. $140 million in 2000, U.S. $215 million in 2001, U.S. $320 million in 2002 and increased to U.S. $400 million in 2003. Thus, the increase of Lesotho’s exports to the U.S. for the years 2001 

to 2003 is directly attributable to the AGOA initiative. 

The AGOA trade directly contributed to 34% of Lesotho’s GDP in 2003 and with 

multiplier effect it was around 40%. AGOA trade enabled us to improve our trade 

balance by approximately U.S. $100 million. As a result, Lesotho’s balance of payments firmly remained above 5 months of imports cover. The AGOA initiative contributed to 13% of our total revenue in 2003 and thereby improved our fiscal balance. The sustained growth experienced in Lesotho in the last 3 years, driven mainly 

by the AGOA trade, provides the basis for poverty reduction on a sustainable basis 

in the country. Clearly, Lesotho as a least developed country bears testimony to the 

important role that AGOA can play in turning around the economies of the poor 

sub-Saharan African countries, if given adequate time and an enabling environment. 

Mr. Chairman, distinguished ladies and gentlemen, the government of Lesotho 

and indeed most of the sub-Saharan African countries that are classified as least 

developed countries and as such beneficiaries of the AGOA and the current third 

country fabric benefits, surely, have reason to rejoice at the news of the impending 

and bipartisan initiative to introduce the AGOA Acceleration Act of 2004. We welcome this timely intervention for which the House Committee on Ways and Means, 

under the able leadership of Congressman Thomas, deserves commendation. Passing 

this legislation will profoundly and positively impact on the socio-economic development programmes of job creation and poverty eradication, which are our primary 

national goals. 

In December 2003, my colleagues and I (Trade Ministers from AGOA-eligible 

countries) met with President Bush and senior U.S. administration officials in 

Washington, D.C., during the AGOA Forum (third U.S.-sub-Saharan African Trade 

and Economic Cooperation Forum). We were particularly pleased and encouraged by 

President Bush’s personal, visionary and unwavering support, and commitment to 

AGOA and his personal assurance to work closely with Congress in ensuring extension of AGOA thereby encouraging African support for open markets and multilateral trade liberalization. 

Mr. Chairman, to reiterate, AGOA has facilitated new investment, created jobs, 

and helped form commercial linkages that continue to foster new investment opportunities and increase prosperity in sub-Saharan Africa over the long term. In the 

case of Lesotho, we have witnessed foreign direct investment in the textiles and 

clothing sector to the value of U.S. $140 million for production of denim fabric and 

yarn, we have started importing cotton from SSA cotton producers for this mill 

which will be producing around 2 MSME of denim fabric per month and importing 

around 50,000 tons of cotton per month at full production. The prospects are bright 

and we cannot let AGOA fail. 

The consequences of non-extension in general, and the third country fabric benefits in particular, would be too ghastly to contemplate as our nascent textile and 

clothing industry is struggling to position itself for the stiff global competition it has 

to contend with after the expiry of the AGOA benefits, and the removal of quotas 

under the WTO agreement on textiles and clothing in January, 2005. 

Mr. Chairman, AGOA is a growth and development initiative designed to meet 

the needs of the region in a sustainable manner by fostering regional integration. 

In this regard, the extension of AGOA to 2015 would provide eligible sub-Saharan 

Africa countries to fully integrate, particularly their textile and apparel industries. 

We wish to record our appreciation of development dimension of the sections of 

the bill in relation to the technical assistance provision that will make it easier for 

African countries to develop the framework to participate in the benefits and take 

full advantage of the proposed extension by three years, of the third country fabric 

provision which is set to expire on 30 September, 2004. 

We are gratified once more that the bill will be introduced in the House of Representatives shortly and hope that it will quickly go through to the floor of the Senate. Therefore, it is our fervent hope that the Senate will also recognize the critical 

importance of AGOA and challenges thereon. On this note, I urge both the House 

of Representatives and the Senate to use their best endeavours to fast-track the taVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
15 

bling of the bill through Congress in such a manner that AGOA Acceleration Act 

of 2004 will be in the U.S. statute-book by June 2004. 

Mr. Chairman, we remain confident that, once again, our friends at the Capitol 

Hill will resolutely and decisively respond to our clarion call at this hour of need. 

I thank you all for your attention. 

f 

Chairman CRANE. I thank you, Minister Malie. Now Minister 

Cuttaree. 

STATEMENT OF THE HONORABLE JAYA KRISHNA CUTTAREE, 

MINISTER OF FOREIGN AFFAIRS, INTERNATIONAL TRADE 

AND REGIONAL COOPERATION, MAURITIUS, CHAIRPERSON, 

AFRICAN TRADE MINISTERS’ CONFERENCE, AND SPOKESPERSON, AFRICAN UNION 

Mr. CUTTAREE. Thank you, Mr. Chairman and Members of the 

Committee, for giving me an opportunity to talk to you this afternoon. The enactment of the AGOA in May 2000 was a bold new 

step in the economic relations between the United States and subSaharan Africa. Until then, these relations had been based solely 

on aid and a rather condescending attitude toward Africa, which 

could be summed up as benign neglect. In fact very few, if any, departments of the U.S. Administration had Africa desks, and those 

that existed were of minor interest. Indeed until the passage of the 

AGOA, there was no Africa desk at the U.S. Trade Representative’s 

Office, which reflected this unwillingness to consider Africa, and 

sub-Saharan Africa in particular, as a serious economic partner to 

the United States. 

The AGOA introduced a new concept that through trade and 

commercial development, there could be created sustainable economic development in Africa. Through the development of trade between the United States and Africa, genuine jobs could be created, 

a manufacturing basis could develop, women could play a greater 

role in the economic development of their country, and African 

countries could participate in the global economy. The spinoff from 

this development would be greater investment in infrastructure, 

the higher demand for education to have skilled workers, and the 

growth of both political and economic democracy. 

The success of AGOA has gone beyond the hopes of its promoters. Hundreds of thousands of jobs have been created in Lesotho, Kenya, Botswana, Mozambique, Madagascar, Senegal and 

Mali. New opportunities have been created from automobile production by Bavarian Motor Works in South Africa to information 

technology development in Senegal and Ghana. Africa has ensured 

an effective presence in Washington, D.C., through the African Ambassador’s Group in the U.S. Capitol, which allows to increase the 

flow of money and interest into Africa in such sectors as the fight 

against HIV/AIDS and the combat against poverty. 

While AGOA I was enacted in May 2000, there has now been an 

AGOA II also enacted, and an AGOA III which is presently making 

its way through Congress. This reflects the dynamic relationship 

between the United States and Africa and the extension and the 

expansion of economic partnership between the two continents. We 

certainly hope that this dynamism will continue and extend AGOA 

to the most important area of African concern, agriculture, so that 

16 

our continent can change from being a net food importer to again 

being a major food exporter to the world. Certainly textile and apparel have helped African countries to develop their economies, but 

until the fundamental issue of agricultural production and export 

is faced and achieved, Africa will remain the poor relative to the 

global economy. 

At the present time, however, African countries are faced with a 

serious dilemma. Almost all sub-Saharan Africa countries are allowed to use fabric from anywhere in the world to start up their 

clothing industry. This provision stops on September 30, 2004. 

Hundreds of thousands of jobs referred to above are now in serious 

jeopardy if this provision is not renewed. That will not only create 

serious economic hardship for the infant industries in sub-Saharan 

Africa, but will also certainly create political and social disruption 

for those countries that have begun their manufacturing development. With the end of the multifiber agreement on January 1, 

2005, these African countries will be faced with direct competition 

from traditional major exporters such as China, India and Pakistan, which all have integrated industries, producing their own cotton, spinning and weaving, and then making the clothing. Unless 

urgent action is taken to pass the AGOA III, there will be serious 

effects on African textile and clothing production. 

The AGOA has been a catalyst for new thinking in Africa. Its 

provisions not only require that African countries take concrete 

steps toward political and economic democracy, but they encourage 

an essential element in the African Renaissance, which is a steady 

movement toward regional integration. The drive by regional trading blocs such as Southern African Development Community, Common Market for Eastern and Southern Africa, and Economic Community of West African States to lower tariffs among member 

states has resulted in an increased total intra-African trade volume, and an increase in the proportion of recorded trade. This 

means that the African governments are gaining an increased revenue from legitimate trade between our countries. 

The AGOA is the keystone of the economic partnership between 

the United States and Africa. It has encouraged a sea change in 

these relations by forcing the U.S. Administration to take Africa seriously and to create Africa-specific departments in the executive. 

It has managed to create a bipartisan coalition in Congress, and 

ensured that help for poorer countries can transcend political divides in the United States. It has empowered African countries in 

the reality of new business and investment, but also in the ability 

of Africa to be heard on Capitol Hill and within the U.S. Administration. Indeed, with AGOA, we certainly believe that a new dawn 

has opened in U.S.-Africa economic relations. 

[The prepared statement of Mr. Cuttaree follows:] 

Statement of The Honorable Jaya Krishna Cuttaree, Minister of Foreign Affairs, International Trade and Regional Cooperation, Mauritius, in his capacity as Chairperson, African Trade Ministers’ Conference and Spokesperson for the African Union 

The enactment of the Africa Growth and Opportunity Act (AGOA) in May 2000 

was a bold new step in the economic relations between the United States and Sub 

Saharan Africa. Until then these relations had been based solely on ‘‘aid’’ and a 

rather condescending attitude towards Africa, which could be summed up as ‘‘benign 

neglect’’. In fact very few, if any, Departments of the U.S. Administration had Africa 

17 

desks and those that existed were of minor interest. In fact, until the passage of 

the AGOA, there was no Africa desk at the U.S. Trade Representative’s Office which 

reflected this unwillingness to consider Africa and Sub Saharan Africa in particular 

as a serious economic partner to the USA. 

AGOA introduced a new concept that through trade and commercial development, 

there could be created sustainable economic development in Africa. Through the development of trade between the USA and Africa, genuine jobs could be created, a 

manufacturing basis could develop, women could play a greater role in the economic 

development of their country and African countries could participate in the global 

economy. The spin off from this development would be greater investment in infrastructure, the higher demand for education to have skilled workers, and the growth 

of both political and economic democracy. 

The success of AGOA has gone beyond the hopes of its promoters. Hundreds of 

thousands of jobs have been created in Lesotho, Kenya, Botswana, Mozambique, 

Madagascar, Senegal and Mali. New opportunities have been created from automobile production by BMW in South Africa to information technology development 

in Senegal and Ghana. Africa has ensured an effective presence in Washington DC 

through the African Ambassadors’ Group in the U.S. capital which allows to increase the flow of money and interest into Africa in such sectors as the fight against 

HIV/AIDS and the combat against poverty. 

While AGOA I was enacted in May 2000, there has now been an AGOA II also 

enacted and an AGOA III which is presently making its way through the U.S. Congress. This reflects the dynamic relationship between the USA and Africa and the 

extension and expansion of the economic partnership between the two continents. 

We certainly hope that this dynamism will continue and extend AGOA to the most 

important area of African concern, agriculture, so that our continent can change 

from being a net food importer to again being a major food exporter to the world. 

Certainly, textile and apparel have helped African countries to develop their countries but until the fundamental issue of agricultural production and export is faced 

and achieved, Africa will remain the poor relative of the global economy. 

At the present time, however, African countries are faced with a serious dilemma. 

Almost all Sub Saharan African countries are allowed to use fabric from anywhere 

in the world to start up their clothing industry. This provision stops on 30th September 2004. The hundreds of thousands of jobs referred to above are now in serious 

jeopardy if this provision is not renewed. That will not only create serious economic 

hardship for the infant industries in Sub Saharan Africa, but will also certainly create political and social disruption for those countries that have begun their manufacturing development. With the end of the Multi Fibre Agreement (MFA) on 1st 

January 2005, these African countries will be faced with direct competition from the 

traditional major exporters such as China, India and Pakistan, which all have integrated industries, producing their own cotton, spinning and weaving and then making clothing. Unless urgent action is taken to pass the AGOA III, there will be serious effects on African textile and clothing production. 

AGOA has been a catalyst for new thinking in Africa. Its provisions not only require that African countries take concrete steps towards political and economic democracy but they encourage an essential element in the ‘‘African Renaissance’’, 

which is the steady movement toward regional integration. The drive by regional 

trading blocs such as SADC, COMESA and ECOWAS to lower tariffs among member states has resulted in an increased total intra-African trade volume, and in an 

increase in the proportion of recorded trade. This means that African Governments 

are gaining an increased revenue from legitimate trade between our countries. 

AGOA is the keystone of the economic partnership between the USA and Africa. 

It has encouraged a sea-change in these relations by forcing the U.S. Administration 

to take Africa seriously and to create Africa specific departments in the Executive. 

It has managed to create a bi-partisan coalition in Congress, and ensured that help 

for poorer countries can transcend political divides in the USA. It has empowered 

African countries in the reality of new businesses and investment but also in the 

ability of Africa to be heard on Capitol Hill and with the U.S. Administration. With 

AGOA, we certainly believe that a new dawn has opened in U.S.-Africa economic 

relations. 

f 

Chairman CRANE. Thank you very much, Minister Cuttaree. 

Now we will hear from Ambassador Nzibo. 

18 

STATEMENT OF HIS EXCELLENCY DR. YUSUF ABDULRAHMAN 

NZIBO, AMBASSADOR, THE REPUBLIC OF KENYA 

Ambassador NZIBO. Mr. Chairman, Members of the Committee 

on Ways and Means, on behalf of the Africa diplomatic corps, the 

people of Africa and the governments, I thank you for giving me 

this opportunity to speak on behalf of millions of people, of Africans, whose lives depend on this particular bill, the extension of 

AGOA. I am here to speak on behalf of millions of women and children in Africa whose lives and expectations and hopes lie on the 

extension of AGOA. By empowering our women and children, you 

are giving us not only hope, but you are giving us an opportunity 

to sustain those values of democracy and good governance that we 

so much love. 

You, Members of this Committee, you have been the champion 

of our causes in Africa. You know best how much AGOA has done 

for us, and especially our women. By empowering our women, you 

are empowering a continent. From the shores of Senegal to the 

mountains of South Africa, AGOA has brought not only hope, but 

tremendous change in our lives. Therefore, our hopes lie with you 

to give us this opportunity. Many countries in Africa today are 

going through democratic changes, peaceful transition of powers 

have taken place, and are looking for trade and investment opportunities. As you have heard, regional integrations are bringing new 

hope to our people. Kenya has been a good example of the current 

democratic change that has taken place empowering our people to 

fight corruption and terrorism. The AGOA has brought new life 

and new expectations, created more jobs across the whole continent, created better livelihoods, and given our people an opportunity to acquire education and a means of survival. The women 

are the backbone of change, and AGOA has given them an opportunity, for if you empower them, you empower a continent of the 

future. 

Mr. Chairman, we cannot talk of U.S.-African relations without 

talking about AGOA. The AGOA for us is more than just a trade 

bill. It has become a credible source of hope, an effective tool to 

fight hunger, poverty, and diseases which affect over 700 million 

people. If you are to fight HIV/AIDS effectively, malaria, tuberculosis and other infectious diseases, it is only through AGOA that 

we can bring hope to millions of Africans. The changes that have 

taken place in Africa in the last 3 years have been incredible. We 

have seen foundations being laid in relationships between the 

United States and Africa. This partnership brings hope and expectation because it has transformed millions of lives of Africans and 

created opportunities and better relationships between governments and their people. 

Mr. Chairman, success stories in Africa cut across all sectors. In 

our country, Kenya, for example, since becoming AGOA-eligible in 

2001, we have created over 150,000 jobs, textile exports have more 

than tripled, we have seen investments increase by over 23 percent, and this story can be told across the continent. 

More importantly, thousands of people across the continent have 

become healthier, happier, productive, and are able to acquire basic 

means of survival. Women are able to find better jobs and invest 

their incomes, and their families’ lives have improved. These stoVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 E:\HR\OC\A684.XXX A684
19 

ries can be told across the continent. With greater technical assistance, and I am thankful that this is receiving positive support, 

women across the country have acquired a means of trade. Capacity building has been improved, and we hope that by extending 

AGOA, these opportunities will be given to us. However, if this bill 

is not passed, and changes are abruptly halted, all of the positive 

things I have talked about will end. It will bring a lot of frustrations and make it more difficult to sustain democracy, to fight terrorism and give opportunity to our people. The AGOA, therefore, 

brings real sustainable change for Africa. It is my humble opinion, 

Mr. Chairman, as I take my new job as Ambassador to Saudi Arabia and Iraq next week, that you give us this job for changing and 

bringing a better life for Africa, this is a win/win situation for both 

Africa and the United States. 

[The prepared statement of Ambassador Nzibo follows:] 

Statement of His Excellency Dr. Yusuf Abdulrahman Nzibo, Ambassador, 

The Republic of Kenya 

Mr. Chairman and Members of the House Ways and Means Trade Subcommittee, 

on behalf of the Africa Diplomatic Corps and the governments and people of Africa, 

I thank you for the opportunity to testify before this Committee and for all your 

support for Africa over the years. 

Let me start by acknowledging that this Committee has made great efforts to promote trade and investments between the United States and Africa, of which AGOA 

is a central part. Today, one can hardly talk about U.S.-Africa relations without 

talking about the role, the impact and the importance of AGOA. 

We live today, at a time when incredible opportunities are opening up to reverse 

persistent hunger and poverty in Africa. Many countries in Africa are embracing 

democratic ideals, peaceful transitions of power and aggressively seeking regional 

and trade opportunities to grow their economies and improve the lives of their people. My own country, Kenya, is a great example of these new opportunities and has 

become a symbol of hope for many other African countries. But in order to sustain 

these democratic changes, we must be able to translate this goodwill into more jobs, 

more income and better livelihoods for our people. 

This is why, to Africa, AGOA is more than a trade bill. It has become to us an 

incredible source of hope and an effective tool to fight hunger, poverty and diseases 

afflicting our 700 million people. Africa is proud of AGOA and believes that it is 

one of the best U.S. policies towards Africa. Since its inception 3–4 years ago, AGOA 

has laid a good foundation for partnership between the U.S. and Africa, and helped 

to transform hundreds of thousands of lives in Africa through job creation, stable 

incomes and greater relationships between our governments and businesses. 

Mr. Chairman, there are many success stories all across Africa that are attributed 

to AGOA. The statistics clearly demonstrate its track record and success. My country Kenya is one example of these AGOA successes. Since becoming AGOA-eligible 

in 2001, Kenya has gained over 150,000 new jobs; textile exports have more than 

tripled from $45 million in 2000 to $150 million by late 2003; and total investments 

in AGOA-related industries infrastructure increased by 23 % from $16 million to 

U.S. $21 million between 2002–03. 

Most importantly, hundreds of thousands of people have been transformed into 

happier, healthier and more productive people in society. Families are now able to 

take their children to school and afford basic health care. Women are able to find 

better jobs and invest their incomes to better their families’ nutrition. And these stories are repeated over and over in many AGOA-eligible African countries. With 

greater technical assistance and capacity building for agriculture, markets and 

trade, many more lives can be changed for the better, because Africa is largely an 

agrarian economy, with over three-quarters of the people dependent on agriculture! 

However, these positive changes could abruptly end and instead of hope we might 

have incredible frustration if AGOA is not extended now! Mr Chairman, when 

AGOA was first enacted many people dismissed it as a hopeless bill that could not 

pass in an election year! Today, we face the same challenge! But I am here to say 

that AGOA is not a hopeless bill. It is a symbol of hope and a symbol of what the 

U.S. stands for—freedom, enterprise and equal opportunities for all! Mr. Chairman, 

20 

I appeal to your Committee and this Congress to pass AGOA III. Lives in Africa 

literally depend on it! 

Time is of essence. Current delays are causing cancellation of orders and job layoffs, rolling back the gains we have made so far. Africa needs AGOA III. It is good 

for Africa and the U.S. and we call on both the House and Senate to expedite the 

passage of this incredibly important Bill, without attaching other trade-related 

amendments that could bog it down. 

Thank you. 

f 

Chairman CRANE. Thank you, Mr. Ambassador. Mr. Malie, Lesotho has been very successful under AGOA, and is achieving the 

results Congress intended, namely, attracting new investment, establishing manufacturing facilities, and, in textiles, being able to 

create a vertically integrated industry. What challenges did you 

face in taking advantage of the AGOA program, and how did you 

overcome them? Also, what advice would you give to other African 

countries that have not been as successful as you have? 

Mr. MALIE. Mr. Chairman, first of all, I would like to indicate 

that we addressed ourselves as the government to issues of stability and good governance. We came up with anticorruption laws 

and made sure that we created a conducive climate for investment 

within the country. We have made efforts to come up with correct 

infrastructure to enable the investors to move in, and also to come 

up with correctly the framework in terms of investment, in terms 

of competition and security of investment to try and attract investments. The core issue really is peace and stability and the rule of 

law. I think that has been one of the major contributing factors to 

us seeing investors coming into the country. 

We have certainly experienced a lot of serious problems indeed 

in terms of the infrastructure. We have not been able to provide 

the kind of infrastructure that is needed in terms of utilities, in 

terms of the roads, in terms of the factory shells that investors are 

looking for, and we have a lot of investors that are there in the 

pipeline. We have experienced growth on paper and on the ground, 

but there is more potential. The fact that the bill addresses infrastructure issues is going to be of great assistance to all of us. I 

would like to say to everybody within the region that stability and 

rule of law are major issues in terms of the ingredients that we 

need to be able to attract investment. 

Chairman CRANE. Minister Nzibo, I know that Mauritius benefits from the European Union (EU) sugar program, but how are EU 

and U.S. agricultural subsidies impacting the rest of Africa, and 

isn’t it in Africa’s interest to cut those subsidies? 

Mr. CUTTAREE. Indeed, sir. Since you mentioned the sugar industry of Mauritius, you know that historically Mauritius was, in 

fact, colonized for its sugar, and the people who came lived off the 

sugar industry. For years we have been selling our sugar to the 

United Kingdom, and when the United Kingdom joined the EU, the 

access of the Commonwealth countries, essentially Mauritius and 

some Caribbean islands, was guaranteed. This is how we benefit 

from the same prices and a quota which the European farmers get. 

Obviously, we are living today in a very dynamic situation. We 

all know that pressure within Europe under prices and the various 

subsidies paid to the European farmers are actually very strong. 

21 

We know that inevitably there will be reductions in domestic support and subsidies, both in the United States and in Europe. This 

is why in Mauritius today we are reforming our industry. We are 

making it more competitive. We are making it leaner and a more 

technology-driven industry. We are going into other production, 

like to produce energy. We are going into ethanol. We are going 

from a sugar industry to a sugarcane industry. The end product is 

no longer sugar now. We think in a few years time we will be able 

to wean away from our dependence on the European market, and 

be more of a global player, but this demands resources, energy and 

vision. We are trying to do it this way. 

As a spokesperson for Africa, as I said in my statement this 

afternoon, the key export of Africa will be agriculture. This is why 

we support the bipartisan approach which has been developed, as 

we see it developing now, between the EU and the United States. 

Why we don’t go much beyond that. I think it is because we feel 

there are certain dangers at the same time, because in Africa we 

need infrastructure. We need the capital to produce not only for our 

market, but we need to be able to export competitively, and this 

demands infrastructure, roads, skills, sanitary systems and a military. All these problems take time. This is why we welcome a program like AGOA to build this capacity building. 

The fear is if you have a very quick liberalization of agricultural 

trade, we might find ourselves in a situation where, before we can 

actually prepare ourselves to export in the world market, we find 

larger developing countries like Brazil or others taking the market, 

which is being opened essentially for us. Thank you. 

Chairman CRANE. Thank you. Ambassador Nzibo, Kenya has 

been playing a very constructive role in the World Trade Organization (WTO) recently. Can you comment on how your country hopes 

to benefit from negotiations in the WTO and from liberalization of 

trade worldwide? 

Ambassador NZIBO. Mr. Chairman, as you are aware, Kenya, 

like other African countries in the last few years, has made a tremendous change in reaching out not only to the region, but also to 

try to export to the rest of the world. We have been very active in 

WTO negotiations, and also very active in negotiations with U.S. 

authorities. Our hope lies in diversification. We are an agricultural 

country, like most African countries, and we want to diversify. Our 

textile industry was almost collapsing. It is AGOA that has brought 

hopes, created millions of jobs, and the spirit and effect of AGOA 

has been tremendous. 

We depend very heavily on tourism. Unfortunately, because of 

the threats of terrorism, our tourism has been badly affected. We 

are now trying to diversify. We believe it is only through trade and 

negotiating effectively with African factors in the world trade, and 

through fair means of trade, that hopes can begin to flow not only 

to Kenya, but the rest of the continent. 

Chairman CRANE. Thank you. Mr. Rangel. 

Mr. RANGEL. Thank you, Mr. Chairman. I thank all of you for 

your exciting testimony. It just makes us feel good to see democracy spreading, the rule of law improving, the quality of life improving, and the hope and the opportunities that are there. One of 

the major political problems we have with most trade agreements 

22 

is the failure to include basic labor standards in these bills, and the 

countries that don’t have laws or don’t enforce their laws, and the 

conditions surrounding the work. Workers sometimes have an inability to organize and to strike and to get time to get off to be with 

their families and enjoy the profits of their work. Would each of 

you share with me briefly the conditions at the workplace, whether 

there is a minimum wage or health benefits or mandatory overtime, if there is overtime? How have you improved the conditions 

of work for your workers? Minister Malie, we can start with you. 

Mr. MALIE. Thank you, Congressman Rangel. I would like to indicate that what we are doing in Lesotho started some time back 

now. It is an arrangement whereby government, employers and 

labor come together to thrash out labor issues inclusive of minimum wages, conditions within the factories, and all of the conditions and the compliance with International Labor Organization 

pacts. 

In fact, what we have done now, in my delegation I have a member of the trade unions, a representative of the trade unions, who 

has come along with us because we make sure that in all of our 

endeavors in terms of industrialization, labor is carried along. The 

trade unions are free to move into factories, and in my delegation 

we have the chairperson of the Lesotho Textile Exporters Association. There is a close working relationship between labor and employers and government in making sure that we respect the rights 

of our people who are working within those factories. One thing 

that has helped us a lot is the visa situation within AGOA where 

you are free to move in and check on these issues of labor and environment to make sure that we are complying and that we are doing 

the right things within our economies. 

Mr. RANGEL. Thank you. Minister Cuttaree. 

Mr. CUTTAREE. Thank you, sir. In Mauritius we have had a 

very long tradition of democracy and freedom of association. In 

fact, freedom of association is enshrined in our constitution. Therefore, trade unions have been a part of the political landscape of 

Mauritius for decades. Today, in fact, the trade union movement is 

considered as a partner with the government and also with the private sector. There are full tripartite meetings, for example, to decide on wages compensation. They are done regularly before any 

budget is presented. 

At the same time, we have a national Economic and Social Council which is a forum for tripartite dialog on matters of economic interest where government, private sector and the trade union movement meet regularly to discuss economic orientations for the country. We also have a Trade Union Trust Fund which gets grants 

from government, but which is run by the trade union movement 

for the training of trade unions, because we believe that the trade 

union movement should be a movement to fight for better conditions of workers, but it should also be a partner in the development 

of the country. 

Also we have remuneration orders, which is legislation which 

governs every economic sector of the country, for the private sector, 

not for the government, for the private sector, where the conditions 

of work, wages, minimum wages are laid down; overtime work is 

controlled; holidays, meal allowance and clothing allowance, everyVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\A684.XXX A684
23 

thing is in the law, and we have a very strong labor department 

which ensures that the law is respected. We also have a labor court 

which deals expeditiously with matters concerning violations of 

labor laws. The irony of it all is that today we are being told that 

if you want to progress further on the part of economic development and to go more into the global system, we need to have more 

flexibility in our labor situation. Thank you. 

Mr. RANGEL. Thank you. Mr. Nzibo. 

Ambassador NZIBO. Honorable Mr. Rangel, let me first acknowledge your leadership as a champion for the common man, and your 

interest in the plight of the common person in Africa. As you know, 

Kenya has had a very strong tradition of trade unions. In fact, before we were allowed to form political parties, we were allowed to 

form trade unions. We have had several in the country. Changes 

that we have gone through have brought in a democratically elected government, a peacefully elected government. 

Kibaki was elected overwhelmingly on the hope for change, and 

part of it was to bring change for the thousands of employees in 

industry and the private sector. We had a problem with the export 

processing zones where workers were not allowed, but people 

worked very hard 2 years ago to allow that change, to allow workers to form trade unions, to join trade unions, and we have a very 

strong textile trade union which has worked in all of the sectors. 

So we do not have labor problems in Kenya. The non-governmental 

organizations community also has been a very strong watchdog in 

terms of the rights of the workers. The workers themselves are 

fighting very hard for their rights. We have a very skilled labor 

force, well-educated labor force, and they are free to form and join 

any union. Thank you. 

Mr. RANGEL. Last, do you know of mandatory 7-day-a-week 

work in your countries in certain factories, where the workers have 

to work 7 days, 9, 10, 11 hours a day? Do you know of any circumstances where employees are forced to work 7 days a week? 

Ambassador NZIBO. No, sir. The only thing I know is that the 

workers are free to accept overtime. 

Mr. RANGEL. Thank you, Mr. Chairman. 

Chairman CRANE. Ms. Dunn. 

Ms. DUNN. Thank you, Mr. Chairman; and thank you, gentlemen, for being with us today. It is a great honor to be an original 

cosponsor of AGOA III. Ambassador Nzibo, you articulated something to me I have heard in testimony on AGOA, and that is your 

comments that by empowering our women, you empowered our continent, and that is a very important perspective. I liked hearing 

that, and I like the fact that you are focused on that. I think that 

is very important. 

I have a couple of questions. I would like to focus on the fact that 

AGOA III does not make the third-nation fabric benefit retroactive. 

I would like to hear each of you state what the pros and cons of 

making this benefit retroactive are, particularly if we are not able 

to get this trade agreement passed before September 30 of this 

year. Could you go over some of the pluses and minus for us, 

please? Minister Malie, would you like to start? 

Mr. MALIE. Thanks. Thank you very much. I think our most important thing is to send out the right signals to the buyers. We alVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HR\OC\A684.XXX A684
24 

ready are experiencing a lot of problems because of the uncertainty 

of the extension of the third-country public sourcing arrangement. 

As I indicated, we have cancelations and orders that have been put 

in abeyance to the tune of $40 million, which affects about 23 factories and about 37,000 jobs in those factories. What the major program is currently is the bias. There is that fear from the part that 

if we go ahead and there is no retroactive clause to this or the— 

there is no extension, what is going to happen to those orders that 

we are going to be placing and are going to be arriving in the 

United States after September 30? 

So, I think the major issue is sending out the right signals to the 

American buyers. The bill—they are hanging on the bill becoming 

law before September, in fact, before August, because, by then, 

some of these orders would have been shifted on to Asian manufacturers. So, really, for us, there is a great urgency to see that the 

bill comes into law by—circumstances allowing—by the end of 

June. That would assist in alleviating the problems that are there 

on the ground. The buyers are highly sensitive to the process. 

Mr. CUTTAREE. As you know, I am the Minister of Foreign Affairs and International Trade of Mauritius. We don’t benefit from 

the third country—third-country fabric provision. Nevertheless, I 

think it is an important issue you raise because the whole question 

is the psychology of the buyer. When a buyer is trying to place an 

order, he wants to know, at the end of the day, what is the price 

he is going to pay. If he doesn’t know that the third country fabric 

is going to be renewed and that he is going to be able to buy duty 

free, it will be difficult for him to decide to place an order. 

Theoretically, the proposal concerning the retroactive effect can 

help. I don’t live in the United States, but I understand that the 

legislative process in the United States is very complicated. There 

is no certainty, although there can be lots of support for a measure, 

but there is no certainty until that measure is passed. If I were a 

buyer, I wouldn’t bank on the retroactive effect actually being 

voted. In a situation like that, the orders might go elsewhere. 

Ambassador NZIBO. I would like to echo the sentiment of my 

honorable ministers here. As you are aware, one of the problems 

for AGOA has been capacity building—lack of funding particularly, 

Ambassador Zoellick and his able staff—for giving women the opportunity for training, the capacity. As you know, many of us depend on third-country fabrics. We don’t have that capacity yet. If 

this acceleration bill is not passed by then, it will mean rolling 

back all the positive effects of what AGOA has done for many countries. My opinion, it should be in fact passed immediately to enable 

the good work that the United States has enabled Africa to do to 

continue, especially in empowering our people and opening up 

democratic change. 

Ms. DUNN. Thank you. Mr. Chairman, I certainly would urge 

that we put our shoulders to the wheel and together, with your 

strong sponsorship and the championship of Mr. Rangel and others 

on this Committee, that we get this important trade agreement 

passed as soon as possible. 

Chairman CRANE. I couldn’t agree with you more. Mr. Jefferson. 

Mr. JEFFERSON. Thank you, Mr. Chairman. Honorable ministers, your Excellency, Mr. Ambassador, you have been wonderVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HR\OC\A684.XXX A684
25 

fully brilliant and articulate to advocate for the extension of AGOA 

and for the good work that AGOA has already accomplished in 

your countries. So, thank you very much for your testimony. 

I notice that under the experience we have had so far, a great 

deal of the AGOA exports have been in energy and energy-related 

areas and the rest after that has been in the apparel industry. If 

you look at what is allowed in, footwear, luggage, watches, electronic products, very important products, my question is if this bill 

is extended—and I believe it will be—what do you see as what we 

need to do to get Africa engaged in bringing in some of these other 

highly favorable products in the marketplace? Mr. Malie or whomever? 

Mr. MALIE. Thank you very much, Congressman Jefferson. I 

think in the case of Lesotho, because of the lack of supplies on the 

ground and issues of supply chains, what we decided to focus on 

is deliberately and consciously on textiles, because of the nature of 

their being labor intensive, and creation. The volumes that we are 

able to create in terms of employment on the ground are fairly substantial. 

We have an unemployment rate of 45 percent within the country, 

and we had to target an area and put our efforts in an area where 

we think we would be able to reap benefits and get results out of. 

What we are also doing, we are trying to diversify on the ground. 

One area we think we should be—through the extensions, both the 

third country fabric sourcing and also extension of AGOA—be on 

2008 is to move into the area of agriculture and develop AGOA industries within the country. We had been exporting asparagus to 

Europe and canned peaches and beans within the region. We would 

like to go out and stabilize that area. 

Another area that we have been doing fairly well recently is in 

electronics. We have a factory that has opened up in television 

manufacturing, but we are selling those within the region, within 

South Africa. I think we would like to take full advantage of the 

extensions and try and make sure that in terms of agriculture and 

in terms of electronics, we explore the U.S. market as well and that 

capacity building within AGOA. 

Mr. CUTTAREE. I think there are two issues which are responsible for the situation we find ourselves in in Africa. First of all, 

direct foreign investment and the level of skills, and the two are 

interlinked. If you look at the stabilization of my own country, in 

the late seventies, when the tensions started to come within earshot—China, Hong Kong, Taiwan—and at the same time, when the 

Hong Kong companies couldn’t get further market access in Europe 

and in the United States because of the General Agreement on Tariffs and Trade system, these people came to Mauritius because of 

the stability we had. There was also lots of labor available at cheap 

rates and labor which was educated. 

These people that came in, they brought in their market and 

their know-how, and they used people there. Gradually, the local 

Mauritians, the local people in the industry who had funds available, they invested in the textile sector and ultimately tourism sector. In Mauritius, we generated our own investment funds from the 

proceeds of the industry. Now today, if you want to go into some 

other area, it is very difficult for an entrepreneur from one of our 

26 

countries to understand the markets like the United States. So, if 

it is a foreign investor who comes, he comes with the knowledge 

of markets, which is extremely important. He also knows about the 

technology. He comes with that and uses the people and the resources available. 

Unfortunately, the problem of that certification of production in 

Africa today is due to a large extent to the fact that there is no 

investment going into production of goods in Africa today. As you 

know, if you look at the figures, most of the investment going into 

Africa is going in constructive industries. This is why, under 

AGOA, we have been trying to get more investment coming from 

the United States into our continent. 

Ambassador NZIBO. Congressman Jefferson, let me first acknowledge your leadership in bringing investments to Africa. Last 

4 years I have been here, we have interacted with you, and I know 

the good work you are doing. What Africa needs is American investments for us to diversify. The AGOA has given us that opportunity, but we see a lack of American investments. I know Colin 

Powell says, ‘‘capital-shy.’’ Where we are creating all the conducive 

conditions to attract American investments, the rate of returns on 

investments in Africa is very high. Many of our countries are very 

heavily dependent on agriculture, including Kenya. 

Unfortunately, our markets are European. We have not been 

able to penetrate this market because of lack of good communications, direct links between the United States and Africa. I know 

you are working in this area, but we need to do more of that. We 

have very good horticultural products covered by AGOA, flowers 

and all that. We would like to see whatever is provided in AGOA 

that Africa takes advantage. The biggest problem really has been 

the capacity, especially to meet the conditions, the high standards 

of the United States, I am happy that Africa is receiving that technical support and ask for more. 

Mr. CRANE. Well, let me express my appreciation to all of you 

for your presence here today and your testimony, and ask you if 

you will, to please consider, depending upon the time permitted to 

you, to communicate to other colleagues, Members of Congress, the 

importance of this legislation. We look forward to getting this bill 

passed as quickly as possible. I thank you for your presence here 

today. Mr. Rangel? 

Mr. RANGEL. Thank you. It would be helpful if you could ask 

your embassies to forward to us any literature you have as to the 

working conditions and the opportunity for people to have free association, because that is the biggest obstacle that we have to overcome, how you treat your workers, okay. Thank you. 

Mr. CRANE. Thank you so much. Now I would like to call our 

next panel Lucy Soares-Demelo, Jeff Streader, Jill Kiley, Stephen 

Hayes, Reverend David Beckmann, Robert Kirk and Mark 

Levinson. If our witnesses will please come forward and take their 

seats. If you will proceed in the order that you took your seats and 

in your prepared statements. If you will try and keep them to 5 

minutes, we would appreciate that. Any more remarks you have in 

printed form will be made a part of the permanent record. With 

that, then, we start out with Ms. Soares-Demelo. 

27 

STATEMENT OF LUCY SOARES-DEMELO, SENIOR MARKETING 

DIRECTOR, MAST INDUSTRIES, INC., COLUMBUS, OHIO, ON 

BEHALF OF LIMITED BRANDS AND NATIONAL RETAIL FEDERATION 

Ms. SOARES-DEMELO. Chairman Crane, Mr. Rangel, Mr. Jefferson, I am honored to be in the presence of you, the three Founding Fathers of AGOA. My name is Lucy Soares-Demelo, and I am 

Senior Marketing Director for Mast Industries. I am here to testify 

in strong support of H.R. 4103 on behalf of Limited Brands and our 

trade association, the National Retail Federation (NRF). As an African-born naturalized American citizen, I am proud that Limited 

Brands, Mast Industries and the NRF played a leading role in the 

effort to pass the first AGOA. We had the opportunity to host 

Chairman Thomas, Mr. McDermott and his delegation last year in 

South Africa, and we showed them a few of the hundreds of new 

factories built from the ground up, in some cases, where fiber is 

grown by local farmers went in one end and come out as high-quality finished garments for the U.S. market on the other end. So, literally, we went from ground to a garment. As we showed you, this 

particular factory would literally never have existed without 

AGOA, without the efforts of all of you. The AGOA opportunities 

in garment manufacturing have literally put food on the table for 

hundreds of thousands of poor Africans. 

As you know, with all of the success we have seen, AGOA is in 

big trouble. Many African producers will not survive without this 

bill. It is that simple. Many U.S. retailers are canceling orders 

right now because the incentives that drove U.S. customers to Africa may soon vanish. The AGOA has met billions of dollars in new 

orders, thousands of new jobs and far-reaching investment and 

training. America has created what I would argue is the most effective, efficient assistance program ever extended by the United 

States to Africa. As a working mother, I see that one of the most 

compelling lessons learned from the AGOA experience is that the 

development of the garment industry in Africa has disproportionately benefited women and the children that depend on their wages 

for their very survival. 

I want to say something on what I think is the biggest disappointment related to AGOA. Unfortunately, unelected officials in 

U.S. Customs Service’s Office of Regulations and Rulings (ORR) 

took away many of the benefits Congress intended to grant Africa. 

Here is one example. This man’s jacket, made in South Africa in 

a factory in downtown Johannesburg where almost all the workers 

were hardworking Zulu women, we developed sophisticated African 

fabric to compete with Asian producers, in other words, moving 

business from a rich country, in this case Korea, to a black, South 

African neighborhood devastated by AIDS where the unemployment rates approached 50 percent. This required a certain type of 

lining not available in Africa at the time, but we found an American supplier in Fall River, Massachusetts, called Duro. Africa wins 

and America wins, right? Wrong. Customs decided both should 

lose. Isn’t a win-win what the Committee on Ways and Means 

wanted? Well, not according to ORR. They said no. This wasn’t an 

AGOA qualifying garment because they read the bill to restrict the 

28 

use of African and U.S. fabrics together in a garment. That order, 

this order went back to Asia. What a shame. 

Does this make sense to any Member here? Another reason why 

we need this bill now, my plea to this Committee, is that as you 

fine tune this legislation, you remove any ambiguity in the language of the bill that would allow the situation like this to happen 

again. In other words, specifying explicitly that all apparel products would be eligible for trade preferences except those products 

specifically excluded by the legislation. Finally, we think that it is 

vital that H.R. 4103 restore retroactively and refund any duty in 

cases where benefits were taken away by Customs’ interpretations 

or a time lapse if this bill isn’t passed soon. Companies that lost 

millions because they believed the Committee on Ways and Means 

interpretation of the bill when they placed orders in Africa 

shouldn’t suffer because unelected officials decided to change Congress’ intent. Now this Committee has the opportunity to continue 

that work, to do good by being good, to right a historic wrong, to 

make a difference in the poorest African countries. This is a rare 

chance to make an immediate and positive difference sitting here 

in Washington. Let’s not let this moment pass. American retailers 

and our company pledge to work tirelessly with you to enact this 

bill as soon as possible. 

[The prepared statement of Ms. Soares-Demelo follows:] 

Statement of Lucy Soares-Demelo, Senior Marketing Director, Mast 

Industries, Inc., Columbus, Ohio 

Mr. Chairman, Members of the Committee, thank you for the opportunity to appear before the Trade Subcommittee to discuss the AGOA Acceleration Act of 2004. 

My name is Lucy Soares-DeMelo. I am Senior Marketing Director for MAST Industries, a global contract manufacturing division of Limited Brands. I am here to 

testify in strong support of H.R. 4103—the ‘‘AGOA Acceleration Act of 2004’’—on behalf of Limited Brands and our trade association, The National Retail Federation. 

First, let me congratulate you Mr. Chairman, Mr. Rangel, Mr. Levin and Chairman Thomas for your collective leadership in crafting this bipartisan legislation. We 

also pay special tribute to the original AGOA sponsor, Mr. McDermott—and also to 

Mr. Jefferson, who has always worked hard to advance the cause of African trade. 

I know that this AGOA 3 bill is a bipartisan effort, much like AGOA 1 and AGOA 

2 that went before it. It is wonderful to see that when it comes to helping the poorest people in Africa through trade, there is no Democrat or Republican position; 

there is only an American position. Congratulations to the Ways and Means Committee. 

As an African-born naturalized American citizen, I am proud that Limited 

Brands, MAST Industries, and the National Retail Federation played a leading role 

in the effort to pass the first Africa Growth and Opportunity Act (AGOA). MAST 

Industries testified before this Committee on AGOA on February 3, 1999. Other 

American retailers such as our friends at GAP Inc., Liz Claiborne, and many other 

National Retail Federation members were strong and early supporters of AGOA. 

As many of you know, I moved to the region with my family to open MAST operations in Africa—in Cape Town, South Africa; Antananarivo, Madagascar; and Port 

Louis, Mauritius. Until recently, I had been working in Africa, helping African producers take advantage of the trade opportunities that Congress created. Hundreds 

of new factories were built, skills were learned and technology was shared, and indeed, thousands of lives were transformed. AGOA opportunities in garment manufacturing have literally put food on the table for hundreds of thousands of poor Africans. 

My only regret is that we couldn’t have done AGOA much earlier. But now, one 

of the key AGOA benefits is expiring. Some U.S. retailers are canceling orders in 

African factories, because the incentives that drove U.S. customers to Africa may 

soon vanish. Africa needs more time, not because Africa didn’t move fast enough, 

but because in most cases, the U.S. didn’t deliver on its promises in time. Indeed, 

final AGOA regulations (which would help U.S. retail customers plan orders in 

29 

AGOA countries) were held hostage by one Senator (since retired) for nearly one 

year beyond the original deadline. Customs changed rules several times, creating 

more uncertainty in the minds of AGOA customers. That uncertainty created hesitation and doubt about doing business in Africa—consequences that greatly undermined the promise of AGOA to the countries in the region. So I would ask the Members of the Committee to look at the extension of certain AGOA benefits not as a 

grant of new benefits—but as an effort to make good on previous promises to help 

the poorest countries in Africa. 

One thing is certain. Without leadership on Africa trade issues by members of this 

Committee, MAST Industries and many other retailers would not have a presence 

in Africa. MAST and Limited Brands didn’t have a single order in South Africa, 

Swaziland, Kenya or Lesotho prior to AGOA’s passage in the House. As we pointed 

out in our earlier testimonies, incentives matter. AGOA has meant billions of dollars 

in new orders, thousands of new jobs, and far-reaching investment and training. By 

suspending import taxes on clothing produced in the poorest African countries 

(treatment equivalent to countries like Mexico)—America has created what I would 

argue is the most effective and efficient assistance program ever extended by the 

United States to Africa. 

One of the most compelling lessons learned from the AGOA experience is that the 

development of the garment industry in Africa has disproportionately benefited 

women—and the children that depend on wages earned by those women for their 

survival. 

But let’s remember the predictions of the opponents of AGOA. The emergence of 

an apparel industry in AGOA countries hasn’t cost a single job in the United States. 

The textile lobby and other groups said that Africa would turn into a ‘‘transshipment superhighway’’. Not so. Or that factories would move from Charlotte, 

North Carolina to Cape Town, South Africa. Wrong. Other groups even said that 

‘‘bad countries’’ would benefit most. Wrong again. The biggest winners have been 

countries that are democracies—with good labor standards for the developing world. 

AGOA is a success. And to quote Chairman Thomas, ‘‘What the U.S. was doing 

before wasn’t working. AGOA isn’t perfect by any means, but in the short time it 

has been in effect, it has been working. The AGOA Acceleration Act will help it 

work even better.’’ 

And remember those who argued for a ‘‘U.S. fabric only’’ rule of origin? The 

amount of garments wholly made with U.S. materials in Africa is basically zero, because, as we know, this argument was merely a ploy to undermine the initiative. 

But one thing is for certain: as African economies grow, those countries purchase 

U.S.-made high technology and transportation equipment, software, machinery, 

services, high value agricultural products and many other inputs. Africa and America both win. 

As a working mother, like many of my colleagues at Limited Brands, I know that 

trade with Africa holds special meaning. We are particularly aware of the limited 

choices facing many women in the poorest countries in Africa. The alternative for 

them to training and working in a clean, safe factory, earning a decent wage, and 

receiving access to health care is often working in the fields (with their children) 

or the rice paddies. 

I can tell you from first hand experience that it breaks your heart to see children, 

with their young mothers, working in the rice paddies in a country like Madagascar. 

For these young women, a job in a garment factory holds the promise of breaking 

the cycle of illiteracy, of infant mortality, of malnutrition. A job in a garment factory 

means that young women have a chance to educate their daughters—the key determining factor in economic empowerment. Most of all, for women, a job really means 

having a choice—choices previously unavailable to women in that part of the world. 

The biggest choice is a chance for a better life. AGOA has meant a better life for 

millions of people—especially women and girls. No wonder groups like OXFAM and 

Bread for the World support increased trade with the poorest African countries. You 

can’t be pro-Africa without being pro-trade with Africa. 

Having worked with so many factories in Malawi, Swaziland, Lesotho and South 

Africa, where the plague of HIV/AIDS is devastating entire communities, I can 

share an interesting observation: I’ve seen first hand that women who can feed their 

families do not make dangerous choices that could end their lives. I find it fascinating how South African women working in garment factories—women whose 

neighbors suffer rates of infection of nearly 40 percent—seem relatively free from 

HIV. Could it be that an important key to preventing HIV/AIDS among young 

women in Africa is providing them with a source of income to buy food and pay 

modest tuition and book fees to gain an education? Could it be that factories allow 

us to reach women through health education that we could not reach before? I think 

that the answer to both questions is yes. 

30 

Drugs won’t solve the AIDS crisis in Africa. I am convinced that creating jobs and 

opportunity may be the best way to combat the spread of this horrible killer among 

women. I want to say something on what I think is the biggest disappointment related 

to AGOA. Our elected representatives in Congress and two Presidents—one a Republican and one a Democrat—supported expansive trade benefits for the poorest 

African countries. Unfortunately, unelected officials in the Office of Regulations and 

Rulings (now housed in the Bureau of Customs and Border Protection in the Department of Homeland Security) took away many of the benefits that Congress intended to grant to Africa. 

Allow me to review the record. Notwithstanding strongly-worded correspondence 

from this Committee, the Office of Regulations and Rulings interpreted AGOA rules 

in a way that rendered knit-to-shape garments ineligible in 2001 and then later decided that so-called ‘‘hybrid’’ garments (those that were made of African fabric but 

had U.S.-made linings) also did not qualify for duty-free benefits. In another restrictive move, the Office of Regulations and Rulings ruled that fabric on rolls could not 

be used for collars and cuffs in polo shirts. In each of these cases, legal experts 

agreed that the Office of Regulations and Rulings could have gone either way on 

these interpretations. 

The Bureau of Customs and Border Protection Office of Regulations and Rulings 

had the discretion in all three instances to help Africa or to hurt Africa. In all three 

instances the Office of Regulations and Rulings chose the option that ended up hurting the people in the poorest countries in Africa. The only winners from these decisions were the factories in Asia which were able to win back or keep business that 

otherwise would have been placed in Africa. My estimate is that these and other 

actions by the Bureau of Customs and Border Protection cost one billion dollars in 

lost orders for African factories over the past several years. What a shame that Congress and the President agreed to help Africa only to have unelected officials defy 

the intent of Congress and take away benefits. It is shameful and must not be allowed to happen again. 

My plea to this Committee is that, as you fine-tune this legislation, you remove 

any ambiguity in the language of the bill that would allow this situation to continue. 

Indeed, we believe that the bill should clarify that the intent of the legislation is 

to provide AGOA benefits to ‘‘all apparel’’—or ‘‘all apparel in Chapters 61 and 62’’. 

Just as the Committee avoided confusion in the Andean Trade Preference and Drug 

Eradication Act (ATPDEA) by outlining a so-called ‘‘negative list’’ for product eligibility—we believe a similar approach might be well suited for AGOA. In other 

words, all apparel products would be eligible for trade preferences except those 

products specifically excluded by the legislation. 

Mark my words, if the language is left unchanged, OR&R will probably create 

new problems that will cost tens of millions in lost orders in the future. We don’t 

want to be back here asking for Congress to pass an AGOA 4 to correct problems 

that can be avoided at the outset. 

Finally, we think that it is important that H.R. 4103 restore retroactively any 

benefits taken away by U.S. Customs for duties paid on knit-to-shape goods, polo 

shirts that were caught up in the collars and cuffs issue, and those products assessed duty because of eligibility issues over hybrid garments. The companies that 

lost millions because they believed the Ways and Means Committee’s interpretation 

of the bill when they placed orders in Africa shouldn’t suffer because unelected officials decided to rewrite the bill or change its intent. 

The AGOA apparel industry is in trouble. It desperately needs this legislation to 

survive. With the expiration of the third-country yarn and fabric provision later this 

year, followed shortly by the end of the global textile and apparel quotas, time is 

running out. 

Our experience in the first AGOA bill applies to this year—to Chairman Thomas 

and the Republican members, I make this plea: please work with the leadership to 

schedule this legislation on the floor. And to Mr. Rangel, and the Democratic members, I ask you to perform the same magic that you accomplished when you cleared 

the way for floor consideration of the first AGOA bill. We remember that House 

Leader Tom Delay was given a piece of paper by Mr. Rangel and others with a list 

of thirty to forty Democratic members who pledged to vote for the Republican rule 

on the bill. Mr. Delay knew that the votes would be there—and they were. Without 

that kind of an effort this time around, this bill doesn’t have a chance. 

Once again I would like to commend this Committee for not only its current efforts but also its previous accomplishments. I recall the words of a former chair of 

the Ways and Means Committee—Bill Archer—who set the stage for this remarkable success story when he declared, ‘‘We will have an AGOA bill with commercially 

viable apparel provisions, or we will have no bill at all.’’ Clearly, the apparel proviVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00034 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
31 

sion are the locomotive driving the wonderful success of AGOA, and clearly the 

highlight of the success story is its impact on women and children. Now, this Committee has the opportunity to continue that work. To do good by being good. To right 

a historic wrong. To make a difference in the poorest African countries. This is a 

rare chance to make an immediate and positive difference sitting here in Washington. Let’s not let this moment pass. American retailers and our company pledge 

to work tirelessly with you to enact this bill as soon as possible. The poorest countries in Africa are counting on us. Let’s not disappoint them. 

Mr. Chairman, thank you again for the opportunity to appear, and for your efforts 

to advance growth and opportunity in Africa. 

f 

Mr. CRANE. Thank you. 

Ms. SOARES-DEMELO. The poorest African countries in Africa 

are counting on us, and let us not disappoint them. 

Mr. CRANE. Thank you. Mr. Streader? 

STATEMENT OF JEFFREY STREADER, VICE PRESIDENT OF 

GLOBAL SOURCING, VANITY FAIR CORPORATION, NASHVILLE, TENNESSEE 

Mr. STREADER. Mr. Chairman, Mr. Rangel, Mr. Jefferson, my 

name is Jeffrey Streader. I am the Vice President of Global 

Sourcing with VF Imagewear, a subsidiary of VF Corporation. I am 

pleased to be here today to discuss the AGOA Acceleration Act representing VF Corporation. We are the world’s largest apparel company. We are a Fortune 300 company. We were founded in 1899 

in Reading, Pennsylvania, and today, our headquarters are in 

Greensboro, North Carolina. We have 52,000 employees worldwide 

and 17,500 associates here in the United States. Our U.S. locations 

are 39 administrative and sales offices, 23 distribution centers, 18 

factories and 214 retail outlets. Our brand portfolio includes 

Nautica, the North Face, Lee, Wrangler, VF, Lily of France, 

Jansport and many others and every channel in distribution. 

Our goal is to be the world’s most responsive apparel company. 

Our ambition is to produce apparel with a blended strategy using 

factories in both the Western Hemisphere and the Eastern Hemisphere. We produce 46 percent of our apparel today in our own factories and 54 percent we source. Production in the VF factories 

uses predominantly American fabric and will continue to do so. For 

sourcing, we have developed a comprehensive analytical framework 

which we use to assess the competitive landscape for the apparel 

and textile industry. Our strategies, although they are structured, 

are certain to change after the elimination of quota in 2005, which 

is less than 5 years after AGOA. Prior to the passage of AGOA, in 

2000, we did not source any product in Africa. 

Our decision to enter the sub-Saharan market was made after 

thoroughly assessing the cost benefit for the corporation but also 

after truly understanding the risk-reward of entering this market. 

We emerged the very principles of AGOA including the establishment of a market economy while focusing on stable transparent 

governments that demonstrated efforts to combat corruption with 

overall stability. Our continuous due diligence has identified over 

20 viable companies to engage. Currently, we import branded product for the U.S. market from Mauritius, Madagascar, Kenya, 

Lethoso, Swaziland, Mozambique and South Africa. The factories 

have met our international compliance standards, which are the 

32 

most rigorous standards in the industry. The overseas factories 

must meet the same standards of our internal factories. In our 

opinion, since AGOA’s initial passage, seven to eight of the AGOA 

nations have progressed quickly from the embryonic stage to the 

early export stage. This is when low-wage labor is used for laborintensive operations with acceptable but unrefined execution. 

Uncertainty in the region’s long-term viability has led to underinvestment and an undeveloped textile industry to augment the region’s growth. The development of a large and sophisticated textile 

industry will only begin if the rules of origin under the AGOA legislation are extended. Otherwise, a vast majority of sub-Saharan 

companies that depend on low-cost, high-quality yarns and fabrics 

in Asia will quickly be forced to go out of business. As the largest 

apparel company in the world, we embrace free trade. We are capable of providing significant steady production opportunities. We 

prefer to establish and maintain long-term partnerships. This in 

turn translates to consistent employment opportunities and regional stability. 

The VF Corporation is committed to sustaining and even growing 

our activities in sub-Saharan Africa provided the supply chain 

model continues to make economic sense for us. Unless H.R. 4103 

is passed before the expiration of the current program, we will 

have no choice but to move out of our African locations. It would 

be extremely difficult to return if this would occur. Succinctly, subSaharan Africa unconditionally needs the extension of AGOA and 

the LDC’s access to third-party fabric to even begin to compete in 

an environment that will change dramatically in 7 months. Furthermore, we believe this gives the region additional time to attract 

investment for the textile industry. 

[The prepared statement of Mr. Streader follows:] 

Statement of Jeff Streader, Vice President of Global Sourcing, VF 

Corporation, Nashville, Tennessee 

Mr. Chairman and distinguished members of the committee, 

My name is Jeffery Streader, the Vice President of Global Sourcing with VF 

Imagewear, a subsidiary of VF Corporation. I am pleased to be here today to discuss 

the AGOA Acceleration Act of 2004, H.R.4103, representing VF Corporation. 

VF Corporation is the world’s largest apparel company. VF is a Fortune 300 corporation. Our company was founded in 1899 in Reading, Pennsylvania and our corporate headquarters are currently in Greensboro, North Carolina. We employ over 

52,000 associates worldwide with 17,500 employees in the United States. Our U.S. 

locations include 39 administrative and sales offices, 23 distribution centers, 18 factories and 214 retail outlets. 

The VF brand portfolio includes Nautica, The North Face, Lee, Wrangler, Vanity 

Fair, Lily of France, Jansport and many other brands in virtually every channel of 

distribution. Our goal is to be the world’s most responsive apparel company. 

VF’s ambition has been to produce our apparel with a blended strategy using factories in both the Western Hemisphere and also the Eastern Hemisphere. VF Corporation produces 46% of our apparel in our owned factories and 54% is outsourced. 

Production in the VF factories predominantly uses American fabric. 

For outsourcing, we have developed a comprehensive analytical framework to assess the competitive landscape of the apparel and textile industry worldwide. Our 

corporate sourcing strategies are structured, but are certain to change after the 

elimination of quota in 2005. This is less than five years after the passage of AGOA. 

One tenth of the world’s population lives in sub-Saharan Africa and this region 

has the highest population growth rate in the world. With a GNI of under $500 U.S. 

annually, this is a region full of challenges. Prior to the passage of AGOA in 2000, 

VF Corporation did not source any apparel in Africa. VF’s decision to enter the subSaharan market was made after thoroughly assessing the cost/benefit for the corporation, but only after truly understanding the risk and reward of entering this 

33 

market. We embraced the very principles of AGOA, including establishment of a 

market economy, while focusing on stable, transparent governments, ones that demonstrated efforts to combat corruption and with overall stability. 

Our continuous due diligence has identified over twenty viable companies to engage. Currently, VF Corporation imports branded apparel for the U.S. market from 

Mauritius, Madagascar, Kenya, Lethoso, Swaziland, Mozambique and South Africa. 

These factories have met our International compliance standards. In spite of this, 

the aggregated volume is less than 1% of VF’s overall production. 

In our opinion, since AGOA’s initial passage, seven to eight of the AGOA nations 

have progressed quickly from the embryonic stage to the early export stage. This 

is when low wage labor is used for labor intensive operations with acceptable but 

unrefined execution. Uncertainty in the region’s long term viability has lead to 

under investment and an undeveloped textile industry to augment the region’s 

growth. 

The development of large and sophisticated textile and apparel producers will only 

begin if the ‘‘rules of origin’’ AGOA legislation are extended. Otherwise, a vast majority of sub-Saharan companies that depend on low cost, high quality yarns and 

fabric from Asia will quickly be forced to go out of business. 

As the largest apparel company in the world, VF Corporation embraces free trade. 

We are capable of providing significant, steady production opportunities. We prefer 

to establish and maintain long term partnerships. This, in turn, translates to consistent employment opportunities and regional stability. VF Corporation is committed to sustaining and even growing our activities in sub-Saharan Africa, providing the supply chain model continues to make economic sense for our American 

company. 

Unless H.R. 4103 is passed before the expiration of the current program, we will 

have no choice but to move out of our African locations. Additionally, it will be extremely difficult to return if this would occur. Succinctly, Sub-Saharan Africa unconditionally needs the extension of AGOA and the LDC’s access to 3rd party fabric 

to even begin to compete in an environment that will change dramatically in seven 

months. Furthermore, this gives the region additional time to attract investment in 

the local yarn and textile industry to sustain long term competitiveness. 

f 

Mr. CRANE. Thank you, Mr. Streader. Ms. Kiley? 

STATEMENT OF JILL KILEY, IMPORT COMPLIANCE MANAGER 

FOR DUTY PREFERENCE PROGRAMS, GAP, INC., SAN FRANCISCO, CALIFORNIA 

Ms. KILEY. Good afternoon, Chairman Crane, Ranking Member 

Rangel and other Members of the Committee on Ways and Means. 

My name is Jill Kiley. I am the Import Compliance Manager for 

Duty Preference Programs for Gap, Inc. Gap is a leading international specialty retailer offering clothing accessories and personal care for men, women, children and infants under the Gap, 

Banana Republic and Old Navy brand name. Fiscal 2003 sales 

were $15.9 billion. As of April 3, 2004, we operated 3,022 stores in 

the United States, United Kingdom, Canada, France, Japan and 

Germany. 

I appreciate the opportunity to testify before you on this very important matter. Gap has been pleased to support the AGOA and 

contribute to the economic development in sub-Saharan Africa. 

This is an incredibly important region for us, and we are thrilled 

to have been one of the first retailers in this region. We have been 

there since 1996, prior to AGOA’s inception in October of 2000. Unfortunately, restrictive interpretation of AGOA rules and potential 

expiration of benefits has hampered our and our other retailers’ 

ability to fully source from sub-Saharan Africa. Further business 

growth will also continue to be threatened in this fragile region if 

action is not taken. 

34 

First and foremost, the third-country fabric benefit for LDCs 

must be extended immediately. Without that, further investment in 

the region will be extremely difficult. Gap has already begun forecasting for our holiday and back-to-school seasons. These are the 

bread-and-butter seasons for the industry. Uncertainty regarding 

duty and profit margins due to the delay in action on AGOA III extension coupled with long transit times from the region will force 

orders to Asia or other non-African sourcing regions. In the time 

since AGOA became effective, the raw materials infrastructure in 

the region has not developed sufficiently enough to support maximum AGOA eligible garment production. We would gladly leverage more duty-free opportunities if the capacity and quality of local 

textiles warranted it. While we understand the argument for phasing out third-country fabric benefits to more fully encourage investment in the fabric and yarn industries, we need much more time 

at this point. The regional textile capacity has not proven to be 

adequate yet. It would be a shame for all the investment that has 

gone into the region thus far be for nothing if the textile industry 

does not have enough time to get off the ground. 

Secondly, interpretation of the flat knit collars and cuffs components or other flat knit components has been incredibly burdensome and rather unfortunate. It was never envisioned by apparel 

manufacturers, retailers and even the origin governments that 

these types of materials would be considered as components by 

U.S. Customs and not as materials for eligibility purposes. Production in the LDC for garments made with these components, these 

flat knit materials, was done in good faith as AGOA eligible garments. We would ask that you also make this provision retroactive 

to the effective date, again based on our original understanding in 

the spirit of the agreement that—in terms of trade liberalizing production. 

Thirdly, the application of the foreign findings and trimmings 

limit to LDC garments, which are permitted to use foreign fabrics, 

has been another issue for Gap. With the current limit of 25 percent of the total cost of components, a number of items are being 

excluded from AGOA eligibility. Unfortunately, Customs has interpreted certain language in the original AGOA to restrict benefits 

by applying this trim limit to apparel that otherwise is permitted 

to use foreign fabrics. It has cost us duty-free benefits on numerous 

styles, particularly on certain toddler styles that have a disproportionate cost of foreign heat transfers and screen prints to body fabric. We would suggest that the bill move to a provision that is a 

term that is known as major parts as opposed to even going 

through the suggestion of short supply findings and trimmings. We 

would rather see the concept of major parts adopted, which would 

be much more trade liberalizing. 

Fourth and the latest issue has been composite goods. This would 

be garments that are otherwise AGOA eligible but have a foreign 

textile component such as a belt. These are very complex situations, and it is almost enough to just move those styles out of the 

region rather than go through the time and trouble to determine 

case-by-case eligibility. Last, I would like to say, we are also in the 

Greater Developed Countries. The extension of overall benefits to 

2015 is also important to sustain economic development throughout 

35 

the continent. We do not just rely on production in the lesser-developed countries, and we do encourage extension of benefits for the 

entire SSA. Finally, I would just like to say again that I appreciate 

the opportunity to testify before you, and I am happy to take any 

questions. 

[The prepared statement of Ms. Kiley follows:] 

Statement of Jill Kiley, Import Compliance Manager, GAP, Inc., San 

Francisco, California 

Good afternoon Chairman Thomas, Ranking Member Rangel and the other members of the Ways & Means Committee. My name is Jill Kiley and I am the Import 

Compliance Manager for duty preference programs for Gap Inc. 

Gap Inc. is a leading international specialty retailer offering clothing, accessories 

and personal care products for men, women, children and babies under the Gap, Banana Republic and Old Navy brand names. Fiscal 2003 sales were $15.9 billion. As 

of April 3, 2004, Gap Inc. operated 3,022 stores in the United States, the United 

Kingdom, Canada, France, Japan and Germany. 

I appreciate the opportunity to testify before you on this very important matter. 

Gap Inc has been pleased to support the African Growth and Opportunity Act 

(AGOA) and contribute to the economic development in Sub-Saharan Africa (SSA). 

This is an incredibly important region for us in our sourcing efforts and we are 

thrilled to have been one of the first retailers in this region prior to the inception 

of AGOA in October 2000. 

As you are well aware, there have been some hurdles with the interpretation of 

AGOA. Gap Inc. takes every precaution in complying with trade agreements across 

the globe. We have five positions dedicated to this very specific task and Customs 

and Border Protection has given Gap Inc. a low-risk importer approval rating—the 

highest achievable by an importer. This is a standard we remain committed to 

maintaining. 

Unfortunately, however, restrictive interpretation of AGOA rules and potential expiration of benefits has hampered our and other retailers’ ability to fully source from 

Sub-Saharan Africa. Further business growth will also continue to be threatened in 

this fragile region if action is not taken. 

I will focus my comments today on five specific problem areas in AGOA and some 

suggested clarifications. Gap Inc. remains committed to sourcing from this region 

but resolution of these problems will greatly enhance our ability to continue to do 

so. I am happy to provide further examples and information to you upon request. 

Under current law, the Least Developed Countries (LDCs) duty-free provision, allowing for garments to be cut and sewn in African LDCs from third country or foreign origin fabrics and yarns, will expire on September 30, 2004. 

This third country fabric benefit for Least Developed Countries must be extended 

immediately—without that further investment in the region will be extremely difficult. Gap Inc. has already begun forecasting our orders for the back to school and 

holiday shopping seasons—the bread and butter seasons for our industry. Uncertainty regarding duty and profit margins due to the delay in action on the AGOA 

III extension coupled with long transit times from Africa will force orders to Asia 

or other non-African sourcing regions. The longer the clock ticks on AGOA III action, the more the region will suffer a lack of orders. Time is of the essence. 

In the time since AGOA became effective, the raw materials infrastructure in the 

region has not developed sufficiently enough to support maximum AGOA-eligible 

garment production. In other words, we would gladly leverage more duty-free opportunities for basic styles and perhaps eventually higher-valued tailored garments if 

the capacity and quality of local textiles warrants it. While we understand the argument for phasing out third country fabric benefits to more fully encourage investment in the fabric and yarn industries in the region, additional time is needed for 

the regional textile capacity to be proven adequate. It would be a shame for all the 

investment that has gone into the region to be for naught because the industry 

there did not have enough time to get off the ground. 

Secondly, the interpretation of flat knit collars/cuffs components has been incredibly burdensome. It was never envisioned by apparel retailers, manufacturers, or 

even the origin governments that flat knit materials would be considered as components by U.S. Customs rather than fabric for AGOA eligibility purposes. Production 

of Least Developed Country garments made with foreign flat-knit materials was 

done in good faith as AGOA-qualifying and it hurts all concerned to pay for a restrictive interpretation applied retroactively by Customs. 

36 

As a result of this interpretation, Gap Inc. was forced to remove production of one 

of our staple items—the pique polo shirt—out of the region. Not because we were 

unhappy with the region’s cut-and-sew quality, but because Customs took a much 

more conservative than intended approach to their treatment of the garment. We 

are pleased to see language to remedy this problem is included in the AGOA legislation. Extending this provision retroactively to the effective date of the original 

AGOA would also be appropriate. 

Thirdly, the application of the foreign findings and trimmings limits to Least Developed Country garments using foreign fabrics has been another issue for us. With 

the current limit of 25% of the total cost of components, a number of items are being 

excluded from AGOA eligibility. Unfortunately, Customs has interpreted certain 

confusing language in the original AGOA to restrict benefits by applying the foreign 

trim limit to apparel that otherwise is permitted to use all foreign fabric. It has cost 

Gap the AGOA duty-free benefits on numerous styles, particularly infant and toddler garments that have a disproportionate cost of foreign heat transfers and screen 

prints to the body fabric. 

The fourth—and most recent issue—is composite goods. Specifically, Customs has 

ruled that AGOA garments such as pants that include a foreign textile belt are not 

eligible for duty-free benefits. Each situation must be looked at case by case, which 

is complex enough to simply move the entire garment production out of the region, 

rather than risk an unfavorable eligibility determination or further impede speed 

to market. The retail reality is that fashion and our drive for competitive distinction 

may dictate certain accessories be sold with apparel. These trends which incorporate 

otherwise low-value items, such as foreign belts, should not affect the duty free eligibility of the garment itself, otherwise again orders will be forced out of the SSA 

region. 

Lastly the overall extension of duty-free benefits to 2015 for qualifying apparel 

cut and sewn in the SSA is necessary to sustain economic development throughout 

the region including the Greater Developed Countries. Gap has mindfully placed 

production programs in GDCs such as Mauritius and South Africa when feasible 

based on regional fabric availability. We have not relied solely on the relatively simpler rules and benefits of LDC third-country fabric production. Especially in light 

of quota elimination for WTO countries in 2005, a duty-free competitive advantage 

for the SSA is necessary well beyond the original AGOA benefits expiration of 2008. 

Even with the expiration of the quota system in 2005, Gap Inc. remains committed to our diversified sourcing strategy that includes Sub-Saharan Africa. However, the U.S. Congress needs to address the issues outlined in my testimony to ensure the long-term economic success of the region and its garment industry. Already, 50,000 jobs in Lesotho alone (according to in-country sources) have been created and there is the potential for more—provided the region is given the tools to 

succeed. 

On behalf of Gap Inc, I greatly appreciate the opportunity to testify before you 

on this very important matter and I look forward to answering any questions you 

may have. Thank you. 

f 

Mr. CRANE. Thank you Ms. Kiley. Mr. Hayes? 

STATEMENT OF STEPHEN HAYES, PRESIDENT, CORPORATE 

COUNCIL ON AFRICA 

Mr. HAYES. Thank you, Chairman Crane, Congressman Rangel 

and Congressman Jefferson. It is an honor to represent the Corporate Council on Africa. We represent 205 corporations which collectively represent about 85 percent of all U.S. private, direct investment in Africa. The AGOA presently serves as the cornerstone 

of U.S.-Africa trade policy and is a major part of our overall policy 

toward Africa. For us, AGOA is not simply about trade or even export-led growth in Africa. Its goals are more profound, which affect 

most of our investors. The AGOA is an investment in the future 

of Africa’s markets and, by extension, the U.S. economy. 

Today, the population of sub-Saharan Africa is 635 million, twice 

that of the United States, yet any economic activity is equal to the 

37 

State of Michigan in any given year. Africans cannot buy if they 

cannot sell. The AGOA also encourages countries to uphold the rule 

of law, govern properly and thereby create the necessity and necessary conditions for economic growth. For us, AGOA serves as a 

prime incentive to countries by offering trade privileges to those 

who exhibit improving governance, transparency, rule of law and 

respect for rights. These conditions help all of our companies. In 

that respect, participation in AGOA encourages countries to establish the conditions for real economic growth, and as they do, provide an avenue for the economic growth to access the U.S. marketplace. 

Cohesive policy is essential, and I applaud Congress and the Administration for the work it has done in tandem with AGOA to expand some of our aid budgets and demonstrate its faith in privatesector-led development. The birth of the Millennium Challenge Corporations is especially welcome with a pro-growth mandate and 

further incentives to countries to govern prudently. Encouraging 

African countries to implement sound macroeconomic policies, including good governance and the rule of law, significantly benefits 

the United States. As African income grows, the purchase of U.S. 

goods and services will lead to jobs in our market as well. Despite 

the success and the promise, 3 years is not enough, however, to 

judge AGOA’s full worth and the benefit to countries of Africa. I 

do not believe it is prudent to judge any trade policy that involves 

more than three dozen countries that are home to hundreds of millions of people, speaking thousands of languages and possessing 

such diverse levels of economic development. The AGOA still has 

impacted too few sectors, and it needs more time. 

Steps must be taken to ensure that AGOA’s promise is realized 

by reaching into those sectors that already employ so many Africans. Here, I call your attention specifically to agriculture. We continue to keep our markets shut to agricultural goods or undercut 

African farmers with our own large subsidies. Africa’s comparative 

advantage is in agriculture, a sector that employs 70 percent of Africa’s entire population. Africans already buy large quantities of 

our best goods, software, entertainment, services and, yes, our agriculture, to name a few. It is time that we start buying their best. 

We need to allow Africans to trade with what they already produce 

in abundance. Full economic benefits must reach all the population 

and not simply the elites. Opening our markets to agriculture reinforces stability. Most discourse about AGOA focuses on textiles, 

and the results are encouraging. However, the global consumer is 

increasingly ready to experience Africa’s harvest of flowers, unique 

fruits and vegetables, seafood, exotic spices and much more. If 

AGOA fails to make a real difference by ignoring the full sectors, 

such as agriculture, then our stated goal to help extricate Africans 

from poverty through this legislation will not be met. As long as 

Africans remain mired in poverty, they cannot afford American 

goods and services. If this happens, not only will AGOA have failed 

Africa, it will have failed the United States. 

We all recognize that building an economic foundation takes 

time. United States policy must be enacted with long-term vision, 

wisdom and hope. Short-term economic policies do not reflect confidence in our vision nor do they give hope to Africa. We should 

38 

therefore continue this program and couple it with other incentives 

and viable opportunities for Africa. We support the expansion of 

the LDC Apparel Benefit. Second, we recognize that AGOA is underutilized, at least partially because exporting to the United 

States is an arduous process. We advocate greater technical assistance. To sum up, AGOA helps us sow the seeds of a new market 

for American goods. It benefits Africans by creating jobs and stability and encourages governments to move from opacity to transparency, from lackluster legal systems to states that uphold the 

rule of law. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Hayes follows:] 

Statement of Stephen Hayes, President, Corporate Council on Africa 

When President Clinton signed the African Growth and Opportunity Act in 2000, 

it was a hopeful beginning for resurgence in U.S.-Africa commercial relations. President Bush supports the continuation of AGOA and hails its success. In January 

2003 the President said ‘‘From Mauritius to Mali, AGOA is helping to reform old 

economies, creating new incentives for good governance, and offering new hope for 

millions of Africans.’’ Indeed, AGOA creates hope but its full potential has not been 

realized, and work remains. For that to happen, Congress must pass an extension 

to AGOA this session. 

Trade and investment, coupled with sound economic policies, are proven engines 

of development and growth. South Korea, for example, made the right choices internally, and had support from the outside world. Today South Korea is a world leader 

in cutting edge sectors including internet technology. Many of Africa’s countries may 

have been slow to make the correct choices, and they also have had relatively little 

external support. Today, AGOA is a sensible U.S. policy for Africa, and one that encourages Africans to make the appropriate domestic decisions. 

AGOA has been in place for only three full years and in several cases, we have 

cause to celebrate. Over a dozen AGOA-driven factories have opened in Lesotho— 

a country slightly smaller than Maryland. In Kenya, direct AGOA related jobs number nearly 30,000. Because of AGOA, South Africa is now the single largest supplier 

of oranges to the U.S. And because the South Africa harvest occurs during the opposite time to U.S. producers, this does not affect the U.S. orange growers. Beyond 

the oranges, the South African government estimates that 90,000 jobs have been 

created as a result of AGOA. In Malawi, democracy and good governance are taking 

root: there are new political parties, ongoing privatization programs, and a new bill 

to halt child labor. This is largely the result of AGOA. But these successes are not 

enough to make a real difference for most Africans. 

AGOA is not simply about trade or even export-lead growth in Africa. It is an investment in the future of Africa’s markets, and by extension, the U.S. economy. 

Today the population of sub-Saharan Africa is 635 million—over twice that of the 

U.S. Yet economic activity remains small. In 2002 the Gross Domestic Product of 

sub Saharan Africa was $319 billion, smaller than that of the State of Michigan the 

year before. Africa’s underserved population has enormous market potential. There 

are 635 million consumers, hoping to enjoy American goods and services. 

However, Africans cannot buy American goods and services if they cannot afford 

them. AGOA has begun to spur the needed income generation in Africa, but as history has shown, sustained growth takes time. 

U.S. investors should support and act on this opportunity as well. Foreign firms 

are already profiting with AGOA-driven investments in Africa. It is time that U.S. 

investors reap the same benefits. Africa is no longer a vacuumfor investment: FDI 

and Africa’s stock markets produce among the highest returns in the world, with 

declining risk with each passing quarter. 

With strong incentives for positive change, AGOA recognizes what recent studies 

are proving: real economic growth cannot occur without good governance, including 

the rule of law. Daniel Kaufman and others at the World Bank have proven this 

correlation. However, they have also found that this is not a virtuous cycle: growth 

does not necessarily lead to good governance. Thus we cannot simply invest in and 

trade with Africa and assume that governance will naturally improve as economies 

grow. 

The carrot of AGOA is policy in line with the research: it induces countries to take 

steps toward needed reform. And as they do, countries are awarded with prefVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00042 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
39 

erential access to the U.S. market, a proven means for growth. That growth benefits 

everyone, and not just economically. 

Economic growth and the expansion of the rule of law in Africa bolster U.S. security. In today’s interconnected world, marginalized individuals can have influence 

beyond their borders. Stagnant economies and failed states are potential breeding 

grounds of terror. They are also terrorist havens: it is no coincidence that Al Qaeda 

has been based in Somalia and Afghanistan, both failed states. 

Commerce and further incentives for the rule of law must now build on the base 

of forward-looking leadership, and reinforce the emerging stability. 

Beyond extending the overall program, there are aspects of the proposed legislation that the Corporate Council on Africa believes deserve specific recognition. 

First, the least developed country third country apparel benefit must be extended. 

This provision was initially included in AGOA to help jumpstart the African apparel 

industry. Most African countries simply did not have fabric making capacity, and 

that remains the case in many places. However, the industry recognizes that 

vertical integration is and will be necessary for continued trade with the U.S., and 

firms are investing to become vertically integrated. For example, in Lesotho, construction has begun on a state-of-the-art denim fabric mill and plans are in place 

for a yarn spinning plant and knitted fabric mill. But, three years has not proven 

long enough for most businesses to invest in full integration. Many were hesitant 

because the AGOA benefits—regardless of where the fabric is from—expire in 2008. 

An extension of AGOA should therefore include the correct incentives for firms 

to further invest in the African textile industry. A sunset date is necessary for the 

third country fabric benefits to ensure that the industry does not become dependent 

upon imported inputs, but September of this year is too soon to halt third country 

fabric use. The proposed extension of the benefit through 2007, coupled with the 

overall program’s extension through 2015 should give businesses ample faith in 

AGOA and ample time to invest in vertical integration. This is a young industry 

and therefore we must not act with too heavy a hand. 

Second, increased on-the-ground technical assistance is essential to the long-term 

success of AGOA and the growth of African economies. AGOA is underutilized, at 

least partially because exporting to the U.S. is an arduous process. Different agencies have jurisdiction in dealing with imports and with increased security needs 

come increased security regulations and restrictions. For any new trader—especially 

the smaller businesses—the U.S. market is therefore enticing and intimidating. 

Traders may or may not have internet access to read the lengthy documentation. 

Traders may or may not have the funds to pay a customs broker. Traders may or 

may not speak English. Technical assistance is therefore welcomed and needed. 

Without it, the web of U.S. rules and regulations will continue to function as a nontariff barrier to entry for African traders. 

But technical assistance goes beyond assistance with customs. The U.S. government has mechanisms in place to help investors. The Export-Import Bank of the 

United States and the Overseas Private Investment Corporation are the most notable examples. For AGOA’s success to grow, these agencies need to put more weight 

behind AGOA. Restrictions on OPIC must be lifted as well, allowing the corporation 

to work in all viable industries in Africa. These agencies are very effective elsewhere 

in the world and in many industries; it is time for them to apply more of their talents to Africa. 

AGOA benefits Africans by creating jobs and stability. It encourages governments 

to move from opacity to transparency, from lackluster legal systems to states that 

uphold the rule of law. It provides hope and real opportunity to Africans. 

It also benefits Americans. AGOA helps to sow the seeds of a new market for 

American goods in Africa. Africans cannot buy what we are selling if they cannot 

earn a living themselves.Improved African economic viability and trade promotes 

better international relations, safety and stability. 

But AGOA cannot stand as the lone policy aimed at creating growth and opportunity in Africa. I applaud this administration for the work it has done expanding 

our aid budgets and its faith in private-sector lead development. The birth of the 

Millennium Challenge Corporation is especially welcome, with a pro-growth mandate, and further incentives for countries to govern prudently. But such progress is 

overshadowed because we continue to keep our markets shut to agricultural goods 

or undercut African farmers with large subsidies. Africa’s comparative advantage is 

in agriculture where 70% of Africans earn their living. Africans already import large 

quantities of our best goods: software, entertainment, and services to name a few. 

It is time we start importing their best. 

AGOA is crucial initiative for Africa and the United States, and one that is beginning to produce. It is also a testament of Congressional hope and belief in Africa. 

We must reaffirm this message. To do so, we must extend and enhance the legislaVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00043 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
40 

tion and couple it with parallel programs offering incentives and real opportunity 

for Africans. 

f 

Mr. CRANE. Thank you, Mr. Hayes. Now, Reverend Beckmann. 

STATEMENT OF REVEREND DAVID BECKMANN, PRESIDENT, 

BREAD FOR THE WORLD, ON BEHALF OF PARTNERSHIP TO 

CUT HUNGER AND POVERTY IN AFRICA 

Reverend BECKMANN. Thank you, Mr. Chairman, Ranking 

Member Rangel, Mr. Jefferson. I am David Beckmann. I am President of Bread for the World. This is a national Christian citizens 

movement against hunger. We organize mainly in churches. We 

mobilize about a quarter of a million letters to Congress a year on 

issues that affect poor and hungry people in the United States and 

around the world. I am also testifying on behalf of the Partnership 

to Cut Hunger and Poverty in Africa, which is a broad association 

of organizations in the United States and Africa that care about agriculture and rural development. 

I want to say three things. First, Bread for the World and the 

Partnership to Cut Hunger and Poverty in Africa support the passage of AGOA III. We do so because we think it is important to reducing poverty and hunger in Africa. I think the testimony that 

you are going to hear from the Union of Needletrades, Textiles and 

Industrial Employees (UNITE!) is important. I appreciate the field 

work that they have done, and I appreciate the Committee’s oversight and attention to the issue of workers’ rights. This could be 

a more significant part of the annual meetings between U.S. and 

African officials about AGOA. That said, it is our judgment that 

AGOA has helped to reduce poverty and hunger in Africa without 

any significant adverse effect on poor people in this country, and 

that it ought to be extended. Second point is approving AGOA III 

is urgent. I just came back from Uganda, Mr. Chairman, and I was 

struck that Uganda is an example of exactly what this Committee 

tried to do when you started AGOA. There has been a big surge 

in Ugandan exports to the United States. There are several factories in Uganda that have come into existence specifically to create textiles to respond to the opportunity of AGOA. I visited one 

rural area about an hour to the east of Kampala. There are many 

jobs except for agriculture in the whole district, and there are 1,200 

people working in a textile factory that is run by an Indian family 

that has come from outside to take advantage of AGOA. 

The President of Uganda, President Museveni, is fanatical about 

AGOA. He says it is the best thing that the United States has done 

for Africa in the whole history of relationships between the United 

States and Africa. He is talking a lot to other African leaders and 

to the people of Uganda about doing business with the rest of the 

world as the only way that Uganda and other African countries can 

really transform their economies and dramatically reduce poverty 

over the long-term. From my perspective, it is important that 

Uganda see trade not as an end in itself, but as a means to the 

end of poverty reduction. This is a country that has problems, but 

they have reduced poverty and HIV infection. They have dramatically increased enrollment in primary school. If AGOA III doesn’t 

41 

1 Bread for the World is a U.S. Christian citizens’ movement against hunger. Its nationwide 

grassroots membership of concerned individuals and churches mobilize a quarter of a million 

letters to the U.S. Congress each year on issues that are important to hungry people. The Partnership to Cut Hunger and Poverty in Africa is an independent, non-partisan effort to increase 

the level and effectiveness of U.S. development assistance to Africa’s agriculture and rural development. 

pass before AGOA II runs out, those textile factories will close. 

President Museveni’s pro-trade policies will be embarrassed, and 

Uganda’s development prospects will be adversely affected. So, 

passing AGOA III is urgent. I appreciate the fact that you are 

planning to move it through Congress just as fast as you can. 

The third point I want to make about capacity building. The 

AGOA III could have a lot more impact than AGOA has had so far 

if there were some money available for capacity building. The 

AGOA is benefiting a small number of African countries. It could 

have much broader, much deeper impact in Africa if there were 

funding available to help countries, help individuals, help businesses take advantage of the opportunities of AGOA. Thank you. 

[The prepared statement of Reverend Beckmann follows:] 

Statement of Reverend David Beckmann, President, Bread for the World 

Mr. Chairman and Members of the House Ways and Means Trade Subcommittee, 

I thank you for this opportunity to testify before your committee and also for all 

the support that you, and this Committee, have given to Africa through the years. 

I represent two institutions, Bread for the World and the Partnership to Cut Hunger and Poverty in Africa, which strongly believe that current trends of hunger and 

poverty in Africa can be reversed, and progress made towards achieving sustainable 

development in Africa.1

The challenge of improving the lives of nearly 700 million people, half of whom live on less than $1 a day and one-third considered chronically undernourished, is 

daunting. Africa is the only region in the world where hunger, poverty and disease 

are pervasive and increasing. 

Yet we live at a time when incredible opportunities exist to reverse these trends 

and greatly improve the lives of poor people in Africa. Many African governments 

are now embracing democracy, experiencing peaceful power transitions and investing more in uplifting the lives of their people. New democratic ideals and Africaled initiatives that hold governments accountable, such as the Africa-wide NEPAD 

initiative, are being put in place and becoming acceptable by countries emerging 

from years of colonialism and dictatorship. The United States must support these 

positive efforts and give change a chance. 

We see AGOA as profoundly important to Africa. AGOA has laid a good foundation for partnership between the United States and Africa, and helped to transform 

hundreds of thousands of lives in Africa through creation of gainful employment, 

stable incomes and better livelihoods. 

AGOA Can Help Reduce Hunger and Poverty in Africa 

AGOA’s enactment in 2000 marked a turning point in U.S.-Africa trade policy. 

AGOA has become, according to many African leaders, a valuable symbol of partnership for development between the United States and Africa. President Yoweri 

Museveni of Uganda has been quoted many times saying that what Africa needs is 

‘‘trade and not just aid’’ to support its sustainable economic development. 

The primary objective of AGOA is to encourage increased trade and investment 

between the United States and sub-Saharan Africa by reducing trade barriers, expanding U.S. development assistance, negotiating trade agreements, promoting private sector engagement and strengthening democracy. As part of a long-term U.S. 

strategic engagement, AGOA aims to build capacity and infrastructure in sub-Saharan Africa and expand its participation in the global economy. 

Thirty-seven African countries have met the eligibility requirements to export to 

the United States under AGOA. To become eligible under AGOA, sub-Saharan African countries must show progress in establishing: 

1. Good governance, including a mechanism to combat corruption; 

2. Market-based economies, including the elimination of barriers to U.S. trade 

and investment 

42 

3. The rule of law and respect for internationally recognized human rights, including workers’ rights. 

Trade has the potential to help lift African people out of the cycle of hunger and 

poverty. That potential, however, can only be realized with the establishment of institutions and policies that raise economic productivity and achieve equitable distribution of benefits. We urge the U.S. government to adopt a comprehensive Africa 

policy, including a strengthened AGOA, increased development assistance (including 

the promised Millennium Challenge Account), increased emphasis on agriculture 

and rural development, and a vigorous response to famine and civil conflicts. U.S. 

policy, including AGOA, should be responsive to the New Partnership for African 

Development (NePAD), which is Africa’s own comprehensive development policy. 

The highest priority for U.S. and African development policy should be to reduce 

hunger and poverty. 

We regard AGOA as an important part of a comprehensive policy framework within which we can focus our advocacy to insist that the United States support capacity 

building, technology transfer, market access for African producers and infrastructure investments that will promote measurable reductions in hunger and poverty. 

The emergence of African nations that are self-reliant, prosperous, peaceful and 

democratic is not only a matter of the U.S. national interest but also a moral imperative. 

Opponents of the legislation say AGOA is fundamentally flawed because it is 

based on questionable ‘‘trickle-down’’ economic theory and lacks an institutionalized 

role for civil society. Some opponents still argue that AGOA imposes stringent eligibility requirements in spite of the fact that nearly 80 percent of sub-Saharan African countries have already been granted AGOA eligibility status. Others say that 

AGOA offers African countries inherently unequal trading relationships with the 

United States, and parallels the World Trade Organization’s (WTO) efforts to secure 

unlimited access in developing countries for lucrative banking and insurance interests in exchange for limited market access. 

Another argument against AGOA is that it provides multinational corporations 

with unhindered access to African markets, whereas fledgling African companies are 

not well equipped to take advantage of new opportunities offered by AGOA. 

Others note that U.S. non-governmental organizations and the U.S. Congress 

have been ineffective in implementing mechanisms to monitor AGOA. They also assert that Africa’s textile and apparel sector will never survive the onslaught from 

China, India and other Asian countries after the expiration of the WTO Agreement 

on Clothing and Textiles (ACT) eliminating worldwide apparel quotas in 2005. Finally, opponents of AGOA argue that without the parallel removal of domestic U.S. 

agriculture subsidies and other trade distorting practices, AGOA will never be able 

to unleash the economic potential of the African agriculture sector. 

There is some truth in each of these arguments. Nonetheless, on balance, we support AGOA and what it represents for U.S.-Africa relations. We are fully supportive 

of an AGOA III that will: 

1. Increase agricultural productivity and rural development in the region, including increased technical assistance and capacity building. 

2. Encourage investments in infrastructure—roads, railways and ports—to facilitate the movement of goods within countries and across borders. 

3. Promote increased U.S. investment that is mutually beneficial. 

4. Extend the ‘‘third country fabric’’ provision thereby saving tens of thousands 

of jobs. 

5. Facilitate ongoing dialogue between the United States and African governments. 

6. Encourage expansion of information and communication technologies. 

AGOA has had a positive impact in Africa in a relatively short time, stimulating 

economic growth and job creation at a time of economic recession in most African 

countries, and encouraged many countries to adopt policies aimed at ending hunger 

and poverty. Five countries (Lesotho, Kenya, Namibia, Swaziland and Uganda) have 

credited AGOA with creating nearly 200,000 jobs. Examples abound, in Uganda, of 

young women who have become employed for the first time and left endless cycles 

of hunger and poverty. In Southern Africa, families have been re-united as men find 

jobs near their spouses and do not have to migrate far looking for jobs, only to come 

home infected with HIV/AIDS. 

AGOA has become a household name in many African countries, touching the 

lives of many poor people. Many Africans—especially the more than 200,000 employed in AGOA-related industries—see it as a lifeline and opportunity for gainful 

employment and sustainable incomes. Families that are currently benefiting from 

43 

AGOA as farmers growing cotton for these industries or as workers spinning yarn 

can now send their children to school and afford basic health services. 

During the first half of 2003, U.S. imports (including both AGOA and the Generalized System of Preferences) increased by 65 percent to $6.6 billion. This was primarily due to increases in energy-related imports from Nigeria, which totaled $5.4 

billion of total imports compared to $3.0 billion in the first half of 2002. AGOA-related imports of African textiles and apparel increased by $148.4 million (40.7 percent) over 2002. 

At the moment, Africa accounts for less than 2 percent of global trade and its exports to the United States barely reach 2 percent of the U.S. total imports in value 

terms. The United States represents the single largest country market for Africa, 

importing 26 percent of Africa’s exports compared to United Kingdom’s 10 percent 

and France’s 7 percent. Trade between the United States and Africa totaled $33 billion in 2003, up from $24 billion in 2002, with total African exports to the United 

States accounting for $26 billion, with $14 billion of them AGOA-related. 

After the energy, mining and transport sectors, AGOA’s emphasis has been on the 

textile and apparel sector. Currently 19 countries have sufficient infrastructure to 

directly benefit from the textiles and apparel provisions of AGOA. For example: 

• In Lesotho, thirteen new garment factories opened in 2001 and 6 in 2002, increasing total employment from 29,000 to 45,000. 

• In Madagascar, new companies in 2002 brought in $10.6 million in international investment, creating 5,100 jobs. 

• In Kenya, AGOA-related textile and apparel businesses now employ about 

200,000 people. 

Challenges faced by AGOA 

AGOA represents a potential that is yet to be fully exploited. Out of the current 

37 AGOA-eligible African countries, only about 7 of them have fully benefited from 

AGOA. The rest of the countries face serious constraints that hinder their effective 

participation in AGOA. Severe food insecurity caused by low farm productivity and 

frequent adverse weather, a massive debt totaling over 250 billion and a burden of 

70 percent of the world’s HIV/AIDS-infected people are straining Africa’s limited resources. 

The Need to Address Agriculture. So far, most of AGOA benefits have accrued 

to the energy, mining and transport equipment sectors. But, the most effective way 

of ending hunger and poverty in the continent is by investing in agriculture and 

rural development. More than 70 percent of Africa’s population lives in rural areas 

and depend largely on farming. 

In Africa, agriculture is a key sector for promoting economic development and reducing hunger and poverty. Most poor people in Africa live in rural areas and depend largely on agriculture, which accounts for 35 percent of sub-Saharan Africa’s 

Gross Domestic Product, 40 percent of its exports and 70 percent of its employment. 

Expanding AGOA to include agriculture would have a significant impact on reducing hunger and poverty. The International Food Policy Research Institute (IFPRI) 

estimates that a 1 percent increase in agricultural productivity would raise the incomes of 6 million African people above $1 per day. A $1 increase in agricultural 

production generates about $2.32 in economic growth. AGOA must make it easier 

to export agricultural products to the United States. 

Improving agriculture and rural development in Africa has the potential to increase incomes and transform more lives, allowing families to get better nutrition, 

health and education, and creating more dynamic economies and markets for U.S. 

exports. Such investments will strengthen local and regional markets, address important food standards and safety concerns, and allow African farmers and traders 

gain the capacity and skills they need to move food in local and regional markets 

more efficiently, reducing hunger, famine and poverty. 

The Need to Diversify. Most African countries remain dependent on one or two 

products to carry their entire economy. Unless African countries diversify their 

economies, they will remain highly vulnerable to severe economic downturns and 

will be the first countries to suffer in a depressed international economy. 

The Need for Further Infrastructure Development. Many African nations 

lack the basic infrastructure to efficiently move their products to regional or global 

markets. Roads, water for irrigation, storage facilities and reliable transportation 

are all needed to strengthen the ability of African farmers and small businesses to 

market their products. 

The Need for Access to Capital. International lending agencies should streamline requirements for access to capital for African countries. Financing is important 

for infrastructure development, business expansion and operational costs. The U.S. 

44 

government should provide tax incentives for U.S. companies to make local capacity 

building, trade, agriculture and infrastructure investments in Africa. 

The Need for Technical Assistance. AGOA should target technical assistance 

to ease constraints such as poor infrastructure, roads and communication networks, 

lack of sanitary and phyto-sanitary standards, credit and market information so 

vital in international trade, and providing incentives for public and private sector 

investments in agriculture and rural industries. African and U.S. businesses need 

training to meet the challenges of producing ‘‘export-ready’’ goods. 

The Need for Market Expansion and Regional Integration. Efficient largescale production lowers costs and enhances competitiveness. Regional market integration is necessary to allow a larger market demand for domestic production. Expanding market access and lowering trade barriers for African agricultural products 

through AGOA will improve not only national economies but also the lives of the 

poorest people in sub-Saharan Africa. 

AGOA Must Be Extended Now 

The ‘‘third country fabric’’ provision is due to expire on September 30, 2004. Uncertainty over its extension is already causing cancellation of orders and job losses 

in many countries in Africa. In Kenya alone, this may result in the loss of 30,000 

jobs and $30 to $40 million in lost revenue this year. Congress should act now to 

extend the ‘‘third country fabric’’ provision by at least 3 years—a minimum period 

needed to allow Africa to build adequate capacity for fabric and apparel manufacturing. 

The President has already signaled approval to extend AGOA beyond 2008, and 

the Congress should extend the legislation to 2015 as stipulated in the current bills. 

The approaching deadlines are dampening new investments and placement of new 

orders. Such extensions are needed in order to provide certainty and encourage businesses to commit their resources for the long-term, enhancing the prospects for new 

investments. 

The longer Congress waits to make this important decision on third-country fabrics, the greater the losses in jobs and investments, which African countries can illafford. Moreover, in January 2005, the WTO will lift its textile and apparel quota, 

exposing Africa’s fledgling textile and apparel industry to stiff competition from 

Asian economies. Extending AGOA would give Africa more time and increase its capacity to strengthen its industry to compete more effectively in the global market. 

Recommendations 

To strengthen AGOA’s impact on hunger and poverty, Bread for the World recommends that AGOA be revised in these ways: 

1. Many economic development goals can be achieved within the existing 

framework of AGOA by increasing appropriations targeted to strengthen the 

capacity building provisions of the Act. In order to encourage the production, 

processing and transportation of more and better quality exports, the United 

States should support AGOA eligible countries in the areas itemized below. 

a. Technical training and capacity building in agricultural production, 

trade, processing, research and markets especially for institutions serving smallholder farmers, small-scale rural businesses, co-operatives, 

marketing and transport organizations. 

b. Specialized technical training to increase African capacity to negotiate 

in the WTO. 

c. Market product and price information gathering, delivery and access to 

farmers, traders, processors and policy makers. 

d. Creating a comprehensive information database on U.S. and African 

agribusinesses to serve as a clearinghouse for specific inquiries regarding international trade, laws, contacts and such. 

2. Obtaining necessary capital is a major constraint on development. The U.S. 

government should press the Overseas Private Investment Corporation 

(OPIC) and the Export-Import Bank to respond to the AGOA policy dialogue 

and bring significant new resources to help African countries attract more 

investment capital. In addition, the U.S. government should reduce the risks 

for commercial bank lending to agribusiness, provide training in market and 

loan facilities, establish loan guarantee funds, defray supervisory costs and 

promote an increase in the number of U.S. financial firms doing business 

in Africa. 

3. AGOA should encourage and support African countries in the establishment 

and enforcement of effective laws, rules and regulations governing international trade and marketing. 

45 

4. The U.S. government should establish an AGOA agricultural trade advisory 

team to facilitate communication between African and American stakeholders. The advisory team would include designees of U.S. and African governments, educational institutions, the private sector, including smallholder 

producer organizations, and NGO representatives. 

5. Consumer preferences in the United States have increased demand for highquality niche products and value-added products, such as year-round fresh 

fruits and vegetables, higher value horticulture and floriculture products, 

organic tea, raw cotton, cottonseed, spices, nuts, processed seafood and folk 

craft items. The United States should provide technical assistance for eligible countries to identify and access these niche agricultural markets, especially for products from smallholder farmers. 

6. The U.S. government should provide tax incentives for U.S. companies to 

make trade, agriculture and infrastructure investments in Africa. 

Most of these changes will take additional financial resources. Moreover, an educated, healthy workforce is integral to successful African economic development. 

This underscores why increases in development assistance (including the promised 

Millennium Challenge Account) are necessary for strengthening mutually beneficial 

trade and investment that will help reduce hunger and poverty in sub-Saharan Africa. 

Conclusion 

Mr. Chairman, I hope you will move swiftly and resolutely to pass a bipartisan, 

comprehensive AGOA III. 

f 

Mr. CRANE. Thank you. Our next witness is Mr. Kirk. 

STATEMENT OF ROBERT KIRK, VICE PRESIDENT, THE 

SERVICES GROUP, ARLINGTON, VIRGINIA 

Mr. KIRK. Thank you, Chairman Crane, Ranking Member Rangel and Congressman Jefferson. My name is Robert Kirk. I am Vice 

President with the Services Group, which is an economic consulting 

company. I specialize in international trade work, and I am speaking in a personal capacity. My focus for the intervention is on the 

special rules of origin for the LDCs. The liberal rule of origin which 

allows for the use of third-party cloth is in many ways what made 

AGOA unique. When AGOA was implemented in 2000, this was a 

breakthrough, not only to include apparel but to allow third-party 

cloth in contrast to other preferential schemes which have been on 

the books for many other Organisation for Economic Co-operation 

and Development countries. 

When we look at the achievements over the past 4 years, we look 

at the trend in trade—and we remove the oil and related products, 

we look at the textiles and apparel—we see major expansion. The 

LDCs which have access to the special rule increased their exports 

of apparel by over 176 percent in the period 1999, just before 

AGOA, to 2002. That increase has continued. When we look at 

what has happened with those countries’ trade under the Cotonou 

agreement with Europe or we look at the other qualifying AGOA 

countries that do not qualify for the special rule, we find that there 

has been very little difference in trade, very little increase in apparel trade. That to me points out the importance of the liberal 

rule of origin in expanding exports and promoting investment. 

Now we often hear arguments that this is a very narrow and 

shallow investment that is taking place. These are low-paid jobs. 

It is true they are low-paid jobs. In the history of economic development, many of the countries that are today more developed started 

46 

1Subsequently Canada implemented an enhanced GSP in 2002 which has a simple minimum 

local content rule of origin of 40 per cent of ex-factory price for Least Developed Countries for 

all GSP products. 

out with these low-paying jobs: Mauritius 30 years ago; many of 

the Far East Asian countries. It is a foot hold. 

It also allows countries to engage in the international economy, 

and that is what is so positive. The investment that is taking place 

is sourcing from the most sufficient suppliers in the world. It is allowing the countries to fit into the increasing international division 

of labor. It is not trying to super impose with special incentives a 

certain sort of industrial development to take place. So, I would 

argue that a caution against moving toward adopting stricter rules 

of origin since this would initially lead to undoubtedly a loss of jobs 

in the labor intensive manufacturing. 

The upstream industry, the textile industry is much more capsule intensive, creates very few jobs. It is true that much remains 

to be done in African economies to enable them to take a fuller role 

in the world economy. By bringing in investment, this is creating 

incentives for positive policy change and difficult regulatory reforms, through actually creating an incentive, through seeing benefits flow through. So, to—I would urge that the success that AGOA 

has had comes from largely the more liberal rules of origin and 

would urge that it is very important that the special rule is extended. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Kirk follows:] 

Statement of Robert Kirk, Vice President, The Services Group, Arlington, 

Virginia 

1. In four years AGOA has emerged as an extremely important and successful 

Special and Differential Treatment program. AGOA 1 was unique in granting 

preferences for apparel and allowing for a Special Rule for Lesser Developed 

Countries that allows the use of third party cloth. AGOA has stimulated an 

expansion of non traditional exports from Sub Saharan Africa. Excluding oil 

and related products, which accounted for more than 80 per cent of exports in 

2002, the major increases occurred in apparel from five Lesser Developed 

Countries (Kenya, Lesotho, Madagascar, Malawi and Swaziland), motor vehicles from South Africa and Tobacco from Malawi. The exports of apparel for 

the Lesser Developed Countries qualified under the Special Rule increased by 

176 per cent between 1999 and 2002, while exports of apparel from AGOA 

beneficiaries without apparel benefits experienced a 30 per cent decline in their 

exports to the U.S. over the same period. The countries that qualified for the 

Special Rule have seen their apparel exports grow much faster than countries 

that cannot source third party cloth. 

2. The increase in apparel exports has dominated the ‘new’ trade under AGOA. 

The Lesser Developed Countries have used the derogation on the rules of origin to source third party cloth for their apparel products. The same African 

countries qualify for duty free exports to the EU under the Cotonou Agreement, providing they meet the more stringent rules of origin and source cloth 

from either the EU or an African, Caribbean or Pacific country. Exports of apparel to the EU have not increased significantly. 

3. Rules of Origin specify that certain activities must be sourced in an eligible 

country in order to qualify for a specific incentive. Where the rule requires an 

input that is not produced locally it is frequently argued that this will act as 

an incentive to establish domestic or regional production. This approach is 

similar to the local content argument for import substituting activities. It is 

based on an implicit industrial structure that assumes an integrated set of industrial activities. Recent reductions in trade transactions costs have created 

opportunities for significantly increased specialization of production. The increased fragmentation of trade evidenced by the increased trade in intermediate inputs provides evidence of the economic gains from specialization. 

47 

4. In the Lesser Developed Economies there is currently insufficient supply of the 

diverse intermediate inputs required by the existing apparel producers to satisfy their demands. It is sometimes argued that a stricter rule of origin would 

stimulate additional investment to produce the inputs. Others argue that there 

is already unused capacity which could be reactivated if apparel producers had 

to source their cloth within either Africa or the U.S. The idea of using rules 

of origin to create incentives to develop clusters of linked industries appears 

plausible. However, upon examination it is clear that using rules of origin in 

this way represents a form of protectionism that will inhibit global competitiveness. The evidence from East Asia and from successful developing economies 

such as Mauritius indicate that as firms expand substantial external economies 

of scale will create positive incentives for linkages and increased regional 

sourcing of inputs. There is already some evidence that this is beginning to develop in some of the Lesser Developed Countries. The capital intensive textile 

industry will create fewer employment opportunities relative to the more labor 

intensive apparel sector. 

5. Realizing internationally competitive linkages, industrial deepening and labor 

skill upgrading is achieved best by creating a sound enabling environment and 

trade policies that permits investors to source their inputs from the most competitive supplier. The shallow production base and the need to improve the 

business environment would caution against imposing additional market access 

requirements on Lesser Developed African Economies. Further, the phase out 

of quotas (under the WTO Agreement on Textiles and Clothing) is expected to 

result in increased competition in the U.S. market from Asian apparel suppliers. Moving towards more restrictive rules of origin at this juncture would 

risk imposing higher costs at the same time as African exporters experience 

increased competition. 

6. More restrictive rules of origin will also increase compliance costs as firms 

have to keep more detailed records to establish the origin of all their major inputs. The administrative costs of complying with a more restrictive rule of origin can be high for small and medium sized firms. 

7. For many African economies, with a small industrial base and a relatively recent history of macroeconomic stability, the ability to source intermediate inputs from the most efficient suppliers in the world provides an opportunity for 

economic growth. Policies which impose additional conditions on the investment will, ceteris paribus, lead to a reduction in investment. 

8. AGOA is simply one vehicle for augmenting economic growth and reducing poverty in Africa, in order to sustain and enhance growth it is necessary for the 

beneficiary countries to address the domestic constraints to investment and 

trade and to harness sound economic policies to exporting under AGOA. 

9. The success of AGOA in stimulating an increase in non traditional exports has 

augmented economic growth and contributed to reducing poverty. The economies eligible for the flexible rule of origin have realized much higher rates of 

apparel exports than those subject to the more restrictive rules of origin. By 

encouraging linkages to global supply chains AGOA is assisting African economies to participate more fully in the global economy. Requiring restrictive rules 

of origin will interfere with this process and is a form of protectionism that 

threatens to raise the costs of participating in the global economy. This risks 

making African economies less attractive to investment. 

f 

Mr. CRANE. Thank you, Mr. Kirk. I would like to yield to our 

Ranking Member Mr. Rangel to introduce our last guest. 

Mr. RANGEL. Thank you, Mr. Chairman. I asked permission of 

Mr. Levinson to introduce you because my only question to the 

panel is to ask them to respond to your testimony. Like Africa, so 

many newcomers to America and certainly minorities and low-income people have gained entry into the marketplace through our 

textile and apparel industry. The UNITE! is the parent organization of the International Labor Garments Union Workers that I 

was once a member. My mother retired after 25 years. Of course, 

the initiation of trade agreements with developing countries have 

had a severe economic impact on their membership and their jobs. 

48 

More importantly, his concern is one that is felt throughout the 

Congress, and that is that there be some international standard for 

labor, that there be some laws that the countries have that are not 

only on the books, but they are enforced. Just as most industrialized nations started this way, most countries that enjoy having 

a middle class started this way as well. It has been the labor 

unions and not the entrepreneurs of America that have set the 

standards. No one dreams or hopes that we start off with U.S. 

standards, but we do intend to make certain that there are some 

standards. So, I hope you listen carefully to Mr. Levinson’s testimony because I will be asking you just one question and that is to 

respond to it. Mr. Levinson, thank you for being here. 

STATEMENT OF MARK LEVINSON, CHIEF ECONOMIST, UNITE! 

Mr. LEVINSON. Chairman Crane, Mr. Rangel, Mr. Jefferson, I 

appreciate the opportunity to appear before the Committee today, 

and I appreciate that special introduction. Four years after AGOA 

was signed into law, it does not appear to us to have lived up to 

its name. While exports from Africa have grown sharply under 

AGOA, this increased trade has failed to translate into robust 

growth and sustainable development for the region. We believe that 

is the standard by which it should be measured. While exports 

under AGOA have grown more than 45 percent from 2001 to 2003, 

real annual gross domestic product growth in sub-Saharan Africa 

actually fell from 3.7 percent to 3.5 percent. Even in some of the 

countries that have seen their AGOA exports rise the fastest, annual growth last year was lower than it was in 2001. I have attached some charts to my testimony with more figures along these 

lines. 

In addition, widespread unemployment, high poverty rates, low 

wages and violations of worker rights continue to plague the region. Why hasn’t AGOA delivered on its promise? I believe there 

are three basic reasons. First, AGOA failed to address the underlying impediments to development in the region, particularly countries’ unsustainable debt burdens. Two, AGOA’s conditionality creates strong new investor rights but only provides minimal protections for worker rights, exacerbating unequal bargaining power and 

speeding up the race to the bottom. Three, AGOA cannot compensate for the threat posed to African producers by the phase out 

of global textile and apparel quotas next year. When quotas are 

eliminated, AGOA countries stand to lose major market shares and 

many exports to China. 

I want to concentrate my remarks on worker rights and the 

phase out of apparel and textile quotas. While AGOA contains conditions on workers’ rights, these have not been strong enough to 

ensure that workers’ fundamental human rights are actually respected in the region. Lesotho, for example, is the third-largest 

AGOA exporter, and its shipments under AGOA have shot up more 

than 188 percent since 2001. According to an investigation by 

UNITE! researchers, workers in Lesotho make only $0.30 an hour, 

less than half the basic wage needed to support a family of four. 

Many workers who we interviewed were so desperate to make ends 

meet, they were forced to borrow money at usurious rates, sometimes from their own supervisors. Management refuses to recognize 

49 

legitimate union representation, and the government does little to 

hold employers accountable. In addition, the U.S. Department of 

State reports that blacklists are commonly used by employers in 

the textile and apparel sector. 

Violations of workers’ rights are not isolated to Lesotho. In Nigeria, all unions must affiliate with the one legally mandated labor 

federation sanctioned by the government. In Kenya, free trade zone 

employers are specifically exempted from health and safety laws. 

In Cameroon, there were reports of trade union leader harassment 

and failure by the government to enforce existing laws. In my submitted testimony, I have a longer example about Namibia, a huge 

factory in Namibia, where a Namibian-based research institute has 

done extensive research of violations at that factory, which I don’t 

have time to go into here. 

Perhaps the most striking example of AGOA’s failure to protect 

workers’ rights is in Swaziland. The American Federation of LaborCongress of Industrial Organizations submitted workers’ rights petitions on Swaziland in 1999 and 2002. Though the Administration 

accepted the 2002 petition in September, 2003, there has still not 

been any effective action taken to address the violations detailed 

in the petition. The government of Swaziland is a monarchy that 

systematically suppresses trade union rights. Union leaders that 

helped organize a peaceful demonstration in 2001 were charged 

with contempt of court, had their passports withdrawn and were 

barred from addressing public audiences. Trade unionists that seek 

to enforce their rights confront the judiciary whose autonomy and 

authority has been undermined by the king of Swaziland and 

which is incapable of establishing rule of law. Decrees from the 

king have banned free speech and political dissent, further curtailing trade union activities. 

According to the State Department, the government continues to 

turn a blind eye to abuses of workers’ rights by multinational employers. Despite these flagrant violations of workers’ rights, Swaziland still enjoys its full AGOA benefits and has seen its exports to 

the United States under AGOA jump 143 percent since 2001. The 

current GSP petition on Swaziland has been under review for more 

than 7 months with no effective action to ensure that AGOA conditions are being met. 

Let me say a few words about the expiration of apparel and textile quotas. In 246 days from today—246 days—apparel and textile 

quotas expire. The AGOA cannot save the textile and apparel industry in sub-Saharan Africa if quotas are allowed to expire. If 

quotas expire—it is not just Africa—almost all apparel and textile 

producing countries around the world will be devastated. Workers 

in Latin America, the Caribbean and Asia and Africa will be 

thrown into direct, unregulated competition with China, and millions will lose their jobs as a result. It will further decimate the industry in the United States, which has already suffered huge job 

losses. More than 337,000 American apparel and textile workers 

have lost their jobs just since this Administration took office in 

January of 2001. A third of the industry has been decimated. 

According to industry analysts, if quotas expire within 2 to 3 

years, up to 600,000 workers in the United States, we expect to 

lose their jobs. Categories where import quotas have already been 

50 

phased out offer a small window into the future. So, for example, 

in the last 2 years for the products that were removed from quota 

in 2002—and there were products that were removed in 2002— 

China increased its exports to the United States by $4.1 billion 

while the rest of the world declined by $1.3 billion. 

In the apparel categories where quotas disappeared in 2002, China’s share of U.S. imports went from 9 percent before the quotas 

expired to 60 percent last year. They are expected to go to 70 percent this year. At the same time, sub-Saharan Africa’s share of imports in those categories dropped. Some AGOA countries saw large 

declines in those categories. Mauritius saw exports drop by nearly 

50 percent. Kenya’s exports suffered a loss of nearly 75 percent. 

Madagascar’s declined almost 40 percent in those categories. This 

is entirely expected. 

The U.S. International Trade Commission in its recent study 

said that production would shift from Africa to China once quotas 

were eliminated. If China captures 70 percent of the entire U.S. apparel and textile market when quotas expire, which is entirely possible and which they have done in the goods that have already expired from quota, $42 billion of trade will go from other exporting 

countries to China, the largest shift in production in world history. 

The projected export losses for countries are—and this is just assuming that they—what they would lose in the U.S. market is proportionate to what they have now. The Caribbean Basin Initiative 

region would lose over $6 billion. Mexico, $5.4 billion. Bangladesh, 

$1 billion. Lesotho, almost $300 million. Mauritius, almost $200 

million. 

Producers from 31 countries, including the United States, Africa, 

Turkey, Mexico, have recently joined together to call for an extension of the quota system to 2008. UNITE! along with other apparel 

and textile worker unions from around the world are demanding 

that textile and apparel quotas be extended and the phase out not 

occur until there are enforceable protections for workers’ rights in 

the global trading system. If we don’t extend quotas, in my view, 

even if we pass this extension of AGOA, we are not going to save 

the apparel and textile industry in Africa. Thank you very much. 

[The prepared statement of Mr. Levinson follows:] 

Statement of Mark Levinson, Chief Economist, UNITE! 

From countries all across the continent of Africa, AGOA is helping to reform 

old economies, creating new jobs, is attracting new investment, most importantly, is offering hope to millions of Africans. 

George Bush 

6/26/2003 

We dislike the wages and working on Saturdays and Sundays. We work very 

hard for this company filling those containers all the time within a few days. 

They benefit from us but we don’t get anything in return. 

Worker at Ramatex factory in Namibia 

Quoted in Ramatex: On the Other Side of the Fence 

Labour Resource and Research Institute, October 2003 

Despite President Bush’s glowing assessment of the African Growth and Opportunity Act, it is apparent now, four years after the program was signed into law, 

that it has not lived up to its name. While exports from Africa have grown sharply 

51 

under AGOA, this increased trade has failed to translate into robust growth and 

sustainable development for the region. 

While exports under the AGOA program grew by more than 45 percent from 2001 

to 2003, real annual GDP growth in sub-Saharan Africa actually fell from 3.7 percent to 3.5 percent. Even in some of the countries that have seen their AGOA exports rise the fastest, annual growth last year was lower than it was in 2001 (See 

Chart A and Chart B). In addition, widespread unemployment, high poverty rates, 

low wages and violations of workers’ rights continue to plague the region. 

Why hasn’t AGOA delivered on its promise? There are three basic reasons: 

1. AGOA failed to address the underlying impediments to development in the region, particularly countries’ unsustainable debt burdens. 

2. AGOA’s conditionality creates strong new investor rights but only provides 

minimal protections for workers’ rights, exacerbating unequal bargaining 

power and speeding up the race to the bottom. 

3. AGOA cannot compensate for the threat posed to African producers by the 

phase-out of global textile and apparel quotas next year. When quotas are 

eliminated, AGOA countries stand to lose major market share and many export 

jobs to China. 

1) Debt in Africa 

With mounting unsustainable debt burdens and low revenue, many African countries are unable to invest in infrastructure and basic human services like healthcare 

and education that are vital for development. External debt burdens stand at 53 

percent of GDP in sub-Saharan Africa. In Africa as a whole, fourteen cents of every 

dollar earned on exports goes to debt service payments. Even with growing exports 

and enhanced international debt relief, Africa’s debt burden has continued to grow 

since AGOA’s implementation, and it hit $275.5 billion in 2001. Unfortunately, the 

current AGOA extension bill would do nothing to help find solutions to Africa’s debt 

crisis. As long as governments in the region are forced to send billions of dollars 

to international creditors each year instead of investing those resources in health 

care, education, and infrastructure, lasting development in the region will be extremely difficult to achieve. 

2) A Failed Development Model 

Worker Rights Need to Be Strengthened 

AGOA contains conditions protecting investor rights and intellectual property 

rights that are very similar to conditions that developing countries have refused to 

add to the agenda of the World Trade Organization and balked at in bilateral trade 

negotiations. These conditions further strengthen the hand of transnational corporations investing in Africa, and reduce the scope for public policies designed to help 

capture some of the benefits of those investments for local economic development. 

As a result, investors in the region enjoy extremely favorable access—tax holidays, 

subsidized provision of services like electricity and water, and lax government regulation—while contributing very little to the domestic economy in terms of decent employment, linkages to local small and medium enterprises, and investments in the 

community. 

Thus, while exports are booming, profits are being captured by the very few, and 

often by transnational companies with few domestic linkages. This perverse model 

of development perhaps explains some of the disjuncture between the soaring exports under AGOA and disappointing growth in the region overall. Workers are unable to capture their fair share of the wealth they create through rising wages; African businesses are denied contracts in favor of third-country suppliers (a provision 

that would be extended under the current bill); and local governments forego tax 

revenue in order to attract scarce investment. By eroding governments’ bargaining 

power with foreign investors, and failing to build the bargaining power of workers, 

AGOA has exacerbated an imbalance that allows investors to pit governments 

against governments, and workers against workers, in a race to the bottom in regulatory standards and working conditions. 

While AGOA also contains conditions on workers’ rights, these have not been 

strong enough to ensure that workers’ fundamental human rights are actually respected in the region. Lesotho is the third largest AGOA exporter, and its shipments 

under AGOA have shot up more than 188 percent since 2001. But, according to an 

investigation by UNITE! researchers, workers in Lesotho making apparel for The 

Gap make only about 30 cents an hour, less than half of the basic wage needed to 

support a family of four. Many workers are so desperate to make ends meet that 

they are forced to borrow money at usurious rates, sometimes from their own supervisors. Workers are subjected to verbal and physical abuse and forced to work unVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00055 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
52 

paid overtime. Though many workers are fighting to unionize their factories, and 

unions have majority support at some facilities, management refuses to recognize 

legitimate union representation, and the government does little to hold employers 

accountable. In addition, the U.S. State Department reports that blacklists are commonly used by employers in the textile and apparel sector. Violations of workers’ 

rights are not isolated to Lesotho. In Nigeria, all unions must affiliate with the one 

legally mandated labor federation sanctioned by the government. In Kenya, free 

trade zone employers are specifically exempted from health and safety laws. In 

Cameroon, there were reports of trade union leader harassment and failure by the 

government to enforce existing labor laws. 

Ramatex in Namibia 

Many of the problems of AGOA are illustrated by the experience of workers at 

Ramatex in Namibia. Ramatex, which employees 7,500 workers, is the most important foreign investment in Namibia since independence. The government provided 

a $120 million $N subsidy to Ramatex, a company based in Malaysia, to locate in 

Namibia. According to a comprehensive report on Ramatex by the Namibian based 

Labour Resource and Research Institute (LRRI): 

The financial support that Ramatex received from the Namibian government is 

equivalent to the salaries of all workers for 34 months—almost 3 years. A huge 

investment by any standard which can only be justified if Ramatex’ operations 

in Namibia will lead to long-term sustainable jobs of decent quality. 

According to the LRRI report, female workers are forced to take pregnancy tests 

(at their own expense), there have been several strikes because of low pay (approximately $50 per month) and workers have serious health and safety concerns. 

Listen to workers at Ramatex: 

We work the same hours everyday. If you are tired you are told to go home and 

never to come back again. If you miss work on Saturday and Sunday, you are 

just told to go home or you get fired depending on the number of warnings. If 

you just miss work on Saturday and Sunday, the moment the Chinese supervisor 

see you he or she will only talk to the Filipino in the office, they will then tell 

you, ‘go office, sign warning’. 

I start at seven in the morning. We iron over a hundred items in an hour, and 

we stand the whole day. The standing is very painful, but there is nothing I can 

do because it is my work. I leave at 19h30 in the evening, whether it is a weekend or normal weekday. Sunday-to-Sunday. When I started I used to attend 

night classes but I don’t get time anymore and I stopped going to classes, because 

I have no time 

We dislike the wages and working on Saturdays and Sundays. We work very 

hard for this company filling those containers all the time within a few days. 

They benefit from us but we don’t get anything in return. 

The LRRI report concludes: 

Ramatex workers experience the daily frustrations of not being able to make 

ends meet despite working 9-11 hours every day! Unless this situation is redressed in the near future, Ramatex will essentially be contributing to the establishment of a large number of ‘working poor’—people in full-time employment, unable to even meet their basic needs. This stands in sharp contrast to 

the Namibian government’s stated objective of promoting decent work in line 

with ILO standards. 

Swaziland 

Perhaps the most striking example of AGOA’s failure to protect workers’ rights 

is in Swaziland. The AFL–CIO submitted workers’ rights petitions on Swaziland in 

1999 and 2002. Though the Administration accepted the 2002 petition on September 

2003, there has still not been any effective action taken to redress the violations 

detailed in the petition. The government of Swaziland is a monarchy that systematically represses trade union rights. Union leaders that helped organize a peaceful 

demonstration in 2001 were charged with contempt of court, had their passports 

withdrawn, and were barred from addressing public audiences. Trade unionists that 

seek to enforce their rights confront a judiciary whose autonomy and authority have 

been undermined by the King of Swaziland, and which is incapable of establishing 

rule of law. Decrees from the King have banned free speech and political dissent, 

further curtailing trade union activities. According to the U.S. State Department, 

53 

the government continues to turn a bind eye to abuses of workers rights by multinational employers. Despite these flagrant violations of workers’ rights, Swaziland 

still enjoys its full AGOA benefits and has seen its exports to the U.S. under AGOA 

jump 143 percent since 2001. The current GSP petition on Swaziland has been 

under review for more than seven months, with no effective action to ensure that 

AGOA conditions are being met. 

Unfortunately, the current AGOA extension would do nothing to strengthen the 

workers’ rights provisions of the program, nor to ensure that the current provisions 

are administered more consistently and aggressively. Instead, extension of AGOA 

under the current circumstances will likely only encourage the current pattern to 

persist. Footloose multinational investors will remain free to take advantage of desperate governments and struggling workers, profit from additional access to the 

U.S. market, and contribute very little to long-term economic development in the region. 

3) The Elimination of Apparel and Textile Quotas 

Even if these important flaws in AGOA were fixed, there is a more serious problem that must be addressed. At the end of this year, 246 days from today, apparel 

and textile quotas expire. AGOA cannot save the textile and apparel industry in 

Sub-Saharan Africa if quotas are allowed expire. Simply granting more tariff preferences to countries whose exports will soon be swamped by Chinese production is 

like rearranging the furniture when your house is on fire. 

If quotas expire almost all apparel and textile producing countries around the 

world will be devastated. Workers in Latin America, the Caribbean, Asia and subSaharan Africa will be thrown into direct, unregulated, competition with China, and 

millions will lose their jobs as a result. It will also further decimate the industry 

in the U.S., which has already suffered large job losses. More than 32 percent— 

337,000—U.S. textile and apparel jobs have been lost since January 2001. Hundreds 

of plants have closed devastating communities. But this pales in comparison to what 

will happen when quotas expire. Industry representatives predict that 600,000 U.S. 

workers will lose their jobs within several years of the expiration of quotas. 

Categories where import quotas have already been phased out offer a glimpse of 

what is to come. In the last two years, for the products removed from quota in 2002, 

China increased its exports by $4.1 billion while the rest of the world’s declined by 

$1.3 billion. In the apparel categories where quotas disappeared in 2002, China’s 

share of U.S. imports (in square meters) jumped from 9 percent in 2001 to 60 percent 

in 2003. It is expected to go to 70 percent by the end of this year. At the same time, 

sub-Saharan Africa’s share of imports in the same categories dropped. Some AGOA 

countries saw large declines in these categories: Mauritius saw its exports drop by 

nearly 51 percent, Kenya’s exports suffered a loss of nearly 75 percent, 

Madagascar’s exports declined by 39 percent. In a recent study, the U.S. International Trade Commission found that production would undoubtedly shift from Africa to China once quotas were eliminated, regardless of AGOA. One manufacturer 

from Zambia told Women’s Wear Daily, ‘‘Even if we didn’t pay our workers, we still 

would be unable to cut our prices to match China’s.’’ 

If China captures 70 percent of the entire U.S apparel and textile market that 

would result in a net shift of approximately $42 billion in trade from other exporting 

countries to China. The projected export losses (assuming losses proportionate to existing market share) for countries are: CBI region $6.3 billion, Mexico $5.4 billion, 

Indonesia $1.6 billion, Bangladesh $1 billion, Lesotho $289 million, Mauritius $187 

million. 

Producers from 31 countries including the U.S., Africa, Turkey and Mexico have 

recently joined together to call for an extension of the quota system until 2008. 

UNITE!, along with other apparel and textile worker unions from around the world, 

under the auspices of the International Textile Garment Leather Workers Federation (ITGLWF), is demanding that the textile and apparel quotas be extended, and 

that phase-out not occur until there are enforceable protections for workers’ rights 

in the global trading system. Only with such guarantees in place will workers in 

the U.S. and around the world be able to compete on a fair playing field. 

Other Concerns With the Bill 

The bill extends the third-country fabric provision that allows for export of apparel products to the U.S. to receive duty free treatment without having to use U.S. 

or regional yarns or fabrics. Under this provision, Chinese yarns and fabrics are 

shipped to Africa, cut and sewn into garments and then exported to the U.s. duty 

free. This will result in the loss of U.S. jobs because the U.S. industry will lose yarn 

and fabric orders to China and other suppliers. It makes little sense why China, 

which is not a party to this agreement, should receive such a large benefit from it. 

54 

Conclusion 

There is nothing wrong with African countries having access to U.S. markets. But 

this should not be done at the expense of workers in America or in Africa. Market 

access should be linked to adherence to internationally recognized labor rights. U.S. 

policy toward Africa should be judged by its effect on the lives of ordinary people. 

Broad based development requires that workers have internationally recognized 

human rights, improvements in physical infrastructure, production of basic commodities for national, regional and international markets; promotion of locally owned enterprises; and sufficient government control to balance private capital needs with 

broader societal needs. AGOA fall short in all these areas. 

Chart A. AGOA Exports and Real GDP Growth in 

sub-Saharan Africa, 2001–2003 

Sources: U.S. Department of Commerce and IMF World Economic Outlook, April 

2004 


Insert illus 99684a.001
55 

Chart B. Change in Annual AGOA Exports and 

Change in Annual Real GDP Growth Rates in 

Selected sub-Saharan African Countries, from 

2001 to 2003 

Sources: U.S. Department of Commerce and IMF World Economic Outlook, April 

2004 

f 

Mr. CRANE. Thank you, Mr. Levinson. Let me just read a section of the bill to you, Ms. Soares-Demelo, and it is the sense of 

Congress on interpretation of textile and apparel provisions of 

AGOA. It says, ‘‘It is the sense of the Congress that the executive 

branch, particularly the Committee for the Implementation of Textile Agreements, the U.S. Customs and Border Protection of the 

U.S. Department of Homeland Security and the U.S. Department 

of Commerce should interpret, implement and enforce provisions 

relating to preferential treatment of textile and apparel articles 

broadly in order to expand trade by maximizing opportunities for 

imports of such articles from eligible sub-Saharan countries.’’ I 

hope that that addresses the concern that you registered earlier. 

I would like to put a question up to the entire panel for any panelist to respond to and that is, why are some countries not yet benefiting more fully from U.S. investment flows? Is it because they 

lack petroleum and gas sectors or because of more fundamental 

issues with the structure of their economies and governments? 

What provisions or incentives would help increase U.S. direct-investment in sub-Saharan Africa in sectors other than petroleum 

and gas? Anyone wish to respond? 

Mr. HAYES. The fact is that U.S. investment flows beyond the 

energy sector. There has not been a significant upgrade on U.S. investment in Africa. The incentives to invest simply aren’t there. FiVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 E:\HR\OC\A684.XXX A684

Insert illus 99684a.002
56 

nancing is very, very difficult to get. The restrictions on the ExportImport Bank of the United States and the Organization of the Petroleum Exporting Countries are limited to certain industries. 

Private banking in the United States does not feel secure in supporting investment in Africa, and that is one of the areas we have 

to work on. The African banking sector does not have a history of 

supporting private-sector investment, U.S. or their own private-sector investment. Again, until there is greater transparency and rule 

of law, companies are frankly very reluctant to invest. Yet, I do 

think there are great investment opportunities in many countries. 

Why it is not uniform is very simple, too. I think the rule of law, 

the issues of transparency the various disparities on resources and 

so forth, all contribute to very uneven development. 

I think this country really needs to look at financing issues especially and look at how we increase the capital flows to Africa from 

our own investment portfolio. The two strongest investors right 

now are China and South Africa. There are reasons for that. The 

United States is not, beyond the energy sector, yet—a significant 

investor. 

Mr. CRANE. Anyone else have a comment? Yes, Mr. Streader? 

Mr. STREADER. For VF, continuity of product and integrity of 

our brands, it takes a while for us to move from one production location to another. When AGOA was enacted, we immediately began 

to look at economic benefits that came with AGOA and Africa, but 

it takes awhile for due diligence, us first to identify not only the 

governments that we felt were stable, but also looking at the infrastructure, the development of roads, the ports, the ability to 

leave—to get our raw materials in and to leave quickly and then 

subsequently looking at what existed from a production standpoint. 

The move to Africa for us over the 3-year period is basically a start 

from zero. We believe there are greater opportunities here as the 

infrastructure and the abilities mature, but it is going to take time. 

Mr. CRANE. We have someone with us now who was one of the 

original workers in the vineyards to create our first AGOA bill, and 

that is Congressman McDermott. He will be recognized after we go 

through the chain of command here. Let me first yield to Mr. Rangel. 

Mr. RANGEL. Thank you. I will be brief. I would hope that all 

of you would send to me any information that you have as it relates to laborers’ rights and issues at the workplace. It would help 

me. Also, Reverend Beckmann, if you could send me some information on the organization that you represent, and do they have involvement with things besides hunger and poverty, your organization? 

Reverend BECKMANN. People are hungry and poor because of 

a lot of other things, so—— 

Mr. RANGEL. Have they taken position on the war? 

Reverend BECKMANN. Sure. To the extent that it affects hungry people. 

Mr. RANGEL. What position is that? 

Reverend BECKMANN. You mean on the Iraq war? 

Mr. RANGEL. Yes. 

Reverend BECKMANN. We argued before the war that the 

United States should slow down. We are a religious organization, 

57 

and partly we reflected the judgment of the Catholic bishops and 

other religious authorities, that moving when we did, it was not a 

just war. The doctrine of just war says you have to wait until you 

have exhausted all other remedies. Our focus is on what is good for 

poor people. So, the emphasis in our thinking was on the tremendous diversion of attention and resources that the war would entail 

away from the things that make for better livelihoods for people at 

the bottom. 

Mr. RANGEL. Economic class that fights the war. 

Reverend BECKMANN. Absolutely, sir. 

Mr. RANGEL. Well, I hope some of you will briefly take care of 

my concerns about labor conditions by writing and sending me information, but I do hope to take advantage of this opportunity and 

comment on some of Mr. Levinson’s remarks, not dealing with 

quotas—but I think we all agree that we have to do something 

there—but as it relates to wages and working conditions, it would 

help me with my thinking. 

Reverend BECKMANN. I would like to speak to it, if I may, Mr. 

Rangel. I found the written testimony really helpful, especially the 

middle part about the field work that they have done. I thought 

their first argument is a bogus argument. Just because some of the 

same countries that have had rapid exports have also had declining 

gross national product during this period of global recession doesn’t 

mean that the exports didn’t make things better than they would 

have been otherwise. So, I didn’t find convincing at all. The AGOA 

is a significant thing, but it is a small thing. There are lots of other 

reasons why Africans are still poor and a lot of other things that 

they need to do and that America and the other industrialized 

countries can do to help reduce poverty, promote healthy development in Africa. However, that is not a reason not to do AGOA. It 

is just that this is only one piece. 

I thought the most convincing part of the written testimony was 

the field work that they have done, especially the concern about 

Swaziland. In Bread for the World’s view, what may be most important is that worker rights really be part of trade policy and 

trade agreements. We do have international agreement on basic 

worker rights. I think the most important of those is the right to 

associate. The funding that people in Lesotho are getting 30 cents 

an hour is not commensurate in itself. That is $2.50 a day. The average per capita income in Lesotho is probably a dollar day. So, if 

they are getting an income of $2.50 a day, in that market they may 

be happy. What is fundamentally important is the right to associate, so that the workers in Lesotho or wherever can make their 

own judgments about whether they are getting a fair deal or not; 

and if they are not, that they can organize unions and push to defend their own rights. 

So, I thought that part of the analysis was really, really important and helpful. I have been to two or three of the annual AGOA 

conferences. One of the best features of AGOA has been that it 

brings together African leaders together with top leaders of U.S. 

Government, and then we have helped to develop parallel fora so 

that African businesspeople are getting together with U.S. 

businesspeople, African civil society is getting together with U.S. 

civil society. These have been very productive fora. I was struck 

58 

that, for example, in 2001 it was delayed a couple of months because of September 11, but in November 2001, you had the President and four secretaries all meeting at length with Africans. The 

Secretary of Commerce never meets with Africans. These annual 

meetings have been helpful. Within all those discussions, this kind 

of analytical work, criticism, and concern had seldom been expressed. So, I appreciate the testimony. I appreciate the Committee’s attention to this, and it seems to me that part of the ongoing 

dialog about AGOA ought to be about labor rights. There is labor 

rights language in the law, so the Administration needs to make 

that part of the discussion with African governments about the implementation of AGOA. 

Mr. RANGEL. Thank you, Reverend. Thank you. People like you 

are going to send me back to the church. Thank you for your testimony. 

Chairman CRANE. Mr. Jefferson. 

Mr. JEFFERSON. Thank you, Mr. Chairman. One of the reasons 

for extending the third-country fabric provisions, apart from the 

reason that it is fundamental to making AGOA work now for African nations, is the hope that there will be time to permit investments in the country sufficient to create a level of reasonable fabric 

production that can sustain the apparel industry. 

As AGOA III was originally introduced by Mr. Rangel and Mr. 

McDermott and me, before the Chairman substituted his provision 

we had a 4-year window of opportunity for this to happen. Now it 

is down to 2.5 years. The question is whether you think that that 

is sufficient time to generate the required investment in reasonable 

fabric production, which of course is the premise upon which this 

extension is based, and if so, what evidences do you see of investment moving in this area in those countries, in the African countries that we are hoping to see fabric produced in? Whoever might 

want to approach it. 

Mr. STREADER. Mr. Jefferson, what we have observed is that 

the initial setups were in garment factories which were easier to 

do in a smaller capital investment. We believe that the third-party 

fabric extension needs to take place because along the way to foster 

growth in the area in Africa, you are going to need the Asian fabrics, but it would—I believe it would bring on the investment that 

is needed for the community in the textile—in the textile sector, 

which is an 18—to 36-month period to put up a textile mill to really get it going with any efficiency, and the cost is much larger. I 

believe you will see partnerships between American and African 

companies if, in fact, this is extended. 

Ms. KILEY. I would just like to add that while the original 

AGOA was effective October of 2000, each country had approvals 

that they had to go through; so in effect, not every country has 

been eligible for benefits including, if the fabric was produced 

there, that it would qualify as regional until they met their approval—their eligibility measures. So, those were phased in, 

throughout 2001 and even, as we speak, additional countries docking in. 

Mr. JEFFERSON. So, the two of you think this 2-and-a-half year 

extension is going to be time sufficient to permit the kind of investment that is needed to produce fabric there on the Continent? 

59 

Mr. HAYES. If I might, also, Congressman Rangel asked a question to us. I would like to take that part on also. I am concerned 

frankly, Congressman Jefferson, that 2-and-a-half years is enough 

time. I think, given infrastructure, given the realities of change, 

the slowness of getting the visas for AGOA—most countries still 

don’t have their visas as for AGOA—I think 2-and-a-half years is 

not enough time. From my perspective 2-and-a-half years though is 

better than closure. I think that we are going to need a lot more 

time. 

In terms of your points with the question of Mr. Levinson, I 

think there is quite a bit in his statement that I agree with. I don’t 

think, though, that AGOA was meant to address all the impediments. The criticism of AGOA that I have had from the very beginning is that it doesn’t go far enough. I think much more needs to 

be done with Africa for the sake of our own economy. More partnerships need to be built, more technical assistance. If we address 

labor laws, at the same time we are going to address education for 

young people; otherwise you have a vast unemployed and disaffected youth. We have seen evidence of where that goes in terms 

of discontent, rebellion, and terrorism. 

So, I think there are a number of issues that have to be addressed comprehensively that haven’t been done so far yet for—for 

and with Africa, because I think they are an enormous potential 

trading partner. Unfortunately, one of the weaker sectors of the 

Corporate Council is that we have no textile companies within our 

area. So, I think other companies will have to answer the textilespecific questions. I think issues such as Swaziland—was with 

President Masari last night in Boston, who is doing the negotiations on behalf of the African Union behind the scenes. I think we 

have got to work for change there, and I think that is happening. 

There are other issues on China. For 3 years I have been saying 

that one of the major benefactors of AGOA has been China. At 

least they have been using it to create jobs, which, again, I don’t 

think is entirely a negative, but I do think we have to address the 

issues of United States-China. What we have been advocating at 

the Corporate Council is a dialog with China on Africa, frankly, to 

begin to look at are there areas of cooperation, are there areas of 

change. I think that Mr. Levinson hit on some key critical points. 

Chairman CRANE. Thank you. Ms. Soares-Demelo. 

Ms. SOARES-DEMELO. Just to go back a few points, first to Mr. 

Levinson. I just wanted to point out, being someone who has spent 

a lot of time in factories and working with different factory owners 

on different products, certainly I can tell him that this particular 

jacket was made in a unionized South African factory and the 

workers were making at least $220 a month. I think that is a pretty good start, and I am not so sure what more he would want. My 

second point was back to Mr. Crane. Unless the word ‘‘shall’’ is 

changed to ‘‘must,’’ ORTL will create problems, we can pretty much 

count on that. As I do a lot of work on different products, there are 

so many small issues that come up that continue to be a stumbling 

block to doing good business in Africa. 

As far as the extension of time to develop an industry in Africa, 

I think we have to look at the capacity on sewing, which is the 

ground state, and grow from there. Certainly mill investment is 

60 

huge, as my other colleagues have pointed out, and the variety of— 

especially for the customers that I have—of the fabrics they need 

is great. From the ground state we can start with certain basic 

products. Long term, of course, we want Africa to be able to do 

from the ground to the garment and to be able to do it all, because 

that is what is really sustainable in the global world today. Right 

now the capacity in sewing is still very small, and they need to 

grow that as step one before they can really get the investment of 

the mills behind that. 

Chairman CRANE. Thank you. Mr. McDermott. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. I appreciate your 

having this hearing. I am sorry I wasn’t able to be here for the 

bulk of it. Mr. Kirk, I read an article recently from a World Bank 

economist who suggested that third-country fabric—there was no 

reason to put any limitation on it. It really didn’t make much 

sense. I have been looking for any evidence to suggest that by putting these kinds of tightened rules of origin, we somehow force investment in the more basics, so that we start making fabric inside 

the countries that are using third-party fabric. Is there any evidence that that has ever worked? 

Mr. KIRK. Thank you, Congressman McDermott. I am familiar 

with that article. When viewed that way, a rule of origin is a form 

of local content requirement, which is a form of protectionist policy. 

Now, when one is looking at extremely large markets like the U.S. 

market or even the European market, it can create incentives. So, 

certain industrial development can take place as a result of the incentives to supply that market under a preference. Has it been successful? Well, if we look at the European record where there has 

been the Lomay Convention and the Cotonou agreement since 

1990, we go back 30 years, we see very limited success. 

Mr. MCDERMOTT. Because they did not open up to third-party 

fabric? 

Mr. KIRK. I think that is one of the reasons. The other reason 

would have to look at domestic policies within the African-Caribbean-Pacific countries in that agreement. Certainly the restrictions 

on local content would be a constraining factor, and increasingly 

this appears to be recognized. In a sense, the success of AGOA in 

expanding exports of apparel has been contrasted to the lack of increase in exports to Europe under their preferential scheme. 

Mr. MCDERMOTT. So, actually ours was more liberal, or at 

least more progressive, in terms of allowing them to get an industry up and running; is what you are suggesting? 

Mr. KIRK. Yes. 

Mr. MCDERMOTT. Is there any example of where the tightening 

of the rules discourages investment? 

Mr. KIRK. I think a tightening of the rules in this particular 

case—we are talking about the special rule—would lead to a loss 

of jobs in the apparel sector immediately, because it is almost certainly the case that the imports could not be sourced competitively 

at present. 

Mr. MCDERMOTT. Let me switch to Mr. Streader. You are 

sourcing a lot out of Africa, and if they close down—if we give another 2-and-a-half years, what are you going to do in 2007? Are you 

61 

going to stay until 2007 and go along inch-by-inch with us, always 

wondering if we are going to extend it for another couple of years? 

Mr. STREADER. Honestly, it is on the back of our mind, and we 

are measuring and looking at all of the—the quizzes and free trade 

agreements that are in progress all the time, as we put together 

the best supply chain model that makes sense for our publicly traded American company. There is an economic value that we put to 

this, but along the way, truly, it is a blended strategy. We will not 

be 70 percent in China. We will not, not even close. We will always 

have a presence here. The blended strategy, it really warrants us 

to look hard at Africa to continue to build what we are doing there, 

which is still—it is a large number, sir, but it is small in terms of 

the overall VF quantity because of the magnitude of the corporation, but we will continue to look at it. 

Mr. MCDERMOTT. Give me your reasons for why you wouldn’t 

just put it all in China. Why not? You have got it all in one place. 

Do it all out of there. The containers are there, the ships are there; 

why fiddle around with 20 percent out of Africa or somewhere else? 

Mr. STREADER. Well, honestly speaking, we are not convinced 

that China is the only answer. There are many other viable options 

in the Western Hemisphere and Central America where there are 

still some great cost benefits coming outside of Central America, 

that the speed to market and the opportunity to bring product here 

is—there is a true benefit to that. Along the way we are looking 

at, for instance, India and South Asia and there are many other 

places. So, it is truly a benefited blended strategy. We will not be 

heavy in China. It will be important to us, but we would like to 

have the variables which include Africa for us. We would like that. 

Mr. MCDERMOTT. So, even the distance makes a difference, 

even though you are ordering now for, what, let’s see, this is 

April—so you are ordering for spring next year? Is that what you 

are planning right now? 

Mr. STREADER. Spring and for September and October. So, this 

decision is something that affects us every day. The next order, do 

we keep it in the present location or in Mombassa or Nairobi, or 

do we think about moving it because of the ramifications of a 19- 

or 30-some percent duty? We are measuring that right now. We are 

concerned. 

Mr. MCDERMOTT. How long can you wait before you pull the 

plug on it? The Congress sits here and fiddles around. You must 

have a drop-dead date. You don’t want to tell us, huh? 

Mr. STREADER. My chairman asks me that question frequently 

and it—it is not—it is not in September, I will tell you that. It is 

much before that. 

Mr. MCDERMOTT. I can imagine you might give yourself a little 

slack. 

Mr. STREADER. I am hoping we can move this along in 30 days 

or 45 days. We really are—we are very anxious for this to progress. 

Mr. MCDERMOTT. Can you give a response to the idea that if 

there was ending access to third-party fabric, how would that 

change your investment pattern? More likely to put more in, or are 

there other factors that make the decision? 

Mr. STREADER. There are many factors, sir. It is efficiencies, it 

is speed, it is the ability to sell a full package, and not just by 

62 

labor. There are a lot of variables that we look at we have, but it 

is truly, we have a comprehensive framework that we use. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. I appreciate your 

taking the time to work with us here. For all your work over the 

last 5 or 6 years on this issue you are a real hero. Thank you. 

Chairman CRANE. Thank you. We want to express appreciation 

to all of you folks for your willingness to give of your time and to 

communicate with us on this important piece of legislation that we 

have under consideration. I would ask you, if you do have the time, 

to please communicate with our other colleagues. To any extent you 

can, please try and convey messages to them, because we need to 

continue the broad bipartisan support that we have had, but a big 

part of that is education. I thank you all for your participation. 

With that, the hearing stands adjourned. 

[Whereupon, at 3:55 p.m., the hearing was adjourned.] 

[Submissions for the record follow:] 

f 

[BY PERMISSION OF THE CHAIRMAN:] 

African Coalition for Trade, Inc. 

Washington, DC 20007 

April 29, 2004 

Chairman Philip Crane 

Trade Subcommittee 

Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairman Crane: 

We are writing in connection with the Ways and Means Trade Subcommittee’s 

April 29, 2004 hearing on H.R. 4103, the AGOA Acceleration Act of 2004, to express 

our support for this important legislation. 

The African Coalition for Trade (ACT) is a trade association of African private sector companies and groups that support expanded opportunities for mutually beneficial trade and investment ties between Africa and the United States. ACT’s members come from across Africa, including Botswana, Cote d’Ivoire, Kenya, Lesotho, 

Madagascar, Malawi, Mauritius, Mozambique, Senegal, South Africa, Swaziland, 

Tanzania and Zambia. ACT fully supports H.R. 4103. 

AGOA has been a tremendous success in its first four years, but that success is 

also fragile. To date, more than 80% of the apparel that has entered the United 

States under AGOA has been from the less developed countries (LDCs) and has 

been made with third-country fabric. But the LDCs’ access to third-country fabric 

is scheduled to expire on September 30, 2004. The situation is made all the more 

threatening by the fact that a mere three months later on January 1, 2005, the 

Multi-Fiber Arrangement (MFA) system of quotas on textile and apparel imports 

from the China and the other largest producers in the world is scheduled to terminate pursuant to the Uruguay Round Agreement on Textiles and Clothing. 

There can be little doubt that the LDCs’ infant apparel industries, suddenly 

stripped of access to their primary source of inputs and almost simultaneously facing unfettered competition from China, are staring into the face of disaster. Literally hundreds of thousands of jobs are in jeopardy. If these jobs disappear, there 

are no realistic prospects for alternative employment. 

H.R. 4103 would avert this impending crisis by extending the LDCs’ access to 

third-country fabric for three more years to give the LDCs time to adjust to the new 

rules of origin and the new competition from China and, simultaneously, to allow 

more time for investment to be made in the African yarn and fabric industry so that 

it can better meet the input requirements of the garment manufacturers. 

H.R. 4103 would also make technical corrections to AGOA’s apparel provisions to: 

(1) permit use of imported collars and cuffs, (2) authorize commingling of U.S. and 

African-origin fabric in the same garment, (3) allow short supply fabrics to be 

63 

woven/knit in Africa, (4) authorize retroactive duty refunds for goods imported since 

AGOA took effect in 2000 that meet the AGOA eligibility standards as amended by 

the preceding provisions, and (5) instruct the Bureau of Customs and Border Protection (CBP) to interpret AGOA liberally in order to expand trade opportunities as 

Congress has intended. 

These technical corrections are absolutely essential to correct CBP’s past unnecessarily restrictive interpretations of AGOA and to prevent CBP from continuing to 

undermine the intent of Congress in the future. Moreover, it is only equitable to authorize retroactive duty refunds for products that were imported since AGOA was 

enacted and that would have qualified for duty-free eligibility but for CBP’s past 

rulings that have been inconsistent with the intent of Congress. 

ACT and our members in the African private sector appreciate the opportunity 

to present our views to the Trade Subcommittee on these important issues. Please 

let us know if you require additional information or if we may otherwise be of assistance. 

Respectfully submitted, 

Paul Ryberg 

f 

President 

[BY PERMISSION OF THE CHAIRMAN:] 

Statement of AGOA Civil Society Network 

Mr. Chairman, Congressman Levin and Members of the Subcommittee, The 

AGOA Civil Society Network is pleased to provide this written testimony to stress 

the significance of the AGOA Acceleration Act to our organization and the people 

of Africa and the United States. 

The Africa Growth and Opportunity Act (AGOA) Civil Society Network—a consortium of civil society groups and private sector representatives from the U.S. and Africa—are happy to see the AGOA Acceleration Act’s introduction into the House and 

look forward to it’s speedy progress within Congress. The AGOA Acceleration Act 

contains a number of provisions that members of the AGOA Civil Society Network 

believe are important to the advancement and continued success of AGOA. 

We hope that under the provisions of the AGOA Acceleration Act, the following 

will be possible and encouraged during implementation: 

• The three major sectors—civil society, government and private sector—will fully 

participate in the AGOA process with an eye towards enabling African businesses to meet international standards and become more competitive in the 

global market. 

• Good corporate governance and an investment in human resources development 

will be promoted to ensure that trade benefits are properly diffused throughout 

African societies. 

• In order to ensure equitable trading opportunities for Africa, the United States, 

European Union and Japan will collectively eliminate subsidies and quotas and 

all forms of trade protection and allow the laws of comparative advantage in 

a free market system to create a level playing field that can allow for African 

participation. 

• Under the established interagency trade advisory committee, participating US 

institutions will collaborate with and support African-led civic organizations 

that promote AGOA’s goals and objectives. In turn, civil society groups will support the trade advisory committees efforts and AGOA implementation through 

advocacy, capacity building and technical assistance for Africans in need on the 

ground. 

• The development of infrastructure projects that increase trade capacity through 

ecotourism will enable African countries to look beyond petroleum in their quest 

for development. As a result of this expansion, more direct flights and direct 

sea routes between Africa and the US will be established to facilitate and ease 

the process of bilateral trade activity. Efforts at the local level including the one 

led by Miami-Dade county through the International Sister Seaport and International Sister Airport programs will be engaged in the AGOA process and 

called upon in executing programs and disseminating information about national and international trade efforts. 

• Civil society will be engaged by United State government agencies in monitoring AGOA eligibility and compliance, as well as tracking the impact of trade 

64 

on the masses of people of Africa and the US. This should be done in collaboration with centers of excellence in Africa to increase African participation and 

develop an objective, African point of view regarding US-African trade, intraAfrican trade and it’s link to poverty reduction. Collaboration with US institutions, particularly civil society organizations, in this effort will ensure that 

redundancies are avoided for the greatest amount of impact. 

f 

[BY PERMISSION OF THE CHAIRMAN:] 

American Chamber of Commerce 

Port Louis, Mauritius 

April 29, 2004 

Chairman William Thomas 

Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C.20515 

Dear Chairman Thomas: 

We are writing in connection with the Ways and Means Committee’s April 29, 

2004 hearing on H.R. 4103, the AGOA Acceleration Act of 2004, to express our support for this important legislation. The American Chamber of Commerce in Mauritius consists of Mauritian companies that import from or export to the United 

States and American companies that do business in Mauritius. 

We fully support H.R. 4103, including in particular the extension of the lesser developed countries’ (LDCs’) access to third-country fabric and the technical corrections to AGOA’s apparel provisions that permit: (1) use of imported collars and cuffs, 

(2) commingling of U.S. and African-origin fabric in the same garment, and (3) short 

supply fabrics to be woven/knit in Africa. 

AGOA has been a tremendous success in its first four years, but that success is 

also fragile. To date, more than 80% of the apparel that has entered the United 

States under AGOA has been from the LDCs and has been made with third-country 

fabric. With the expiration of AGOA’s third-country fabric provision now less than 

six months away, the LDCs are confronting the very real prospect of an almost complete collapse of their infant apparel industries that have been created in response 

to AGOA. 

That situation is made all the more threatening by the fact that on January 1, 

2005—a mere three months after the scheduled expiration of the LDCs’ access to 

third-country fabric—the Multi-Fiber Arrangement (MFA) system of quotas on textile and apparel imports from the China and the other largest producers in the 

world is scheduled to terminate pursuant to the Uruguay Round Agreement on Textiles and Clothing. 

There can be little doubt that the LDCs’ infant apparel industries, suddenly 

stripped of access to their primary source of inputs and almost simultaneously facing unfettered competition from China, are staring into the face of disaster. Literally hundreds of thousands of jobs are in jeopardy. If these jobs disappear, there 

are no realistic prospects for alternative employment. 

H.R. 4103 would avert this impending crisis by extending the LDCs’ access to 

third-country fabric for three more years to give the LDCs time to adjust to the new 

rules of origin and the new competition from China and, simultaneously, to allow 

more time for investment to be made in the African yarn and fabric industry so that 

it can better meet the input requirements of the garment manufacturers. We fully 

support H.R. 4103 in order to protect the LDCs from disaster. 

But H.R. 4103 does not go far enough in ensuring that the promise of AGOA is 

realized for all AGOA beneficiaries. Rather, we respectfully suggest that H.R. 4103 

should be revised to add special dispensation to permit Mauritius to utilize thirdcountry fabric in order to prevent a crisis in our apparel industry. Similar relief was 

granted to Botswana and Namibia in the so-called AGOA II legislation enacted in 

August 2002, when it had become apparent that these non-LDCs were not benefiting from AGOA. The same relief is now needed for Mauritius. 

Since AGOA was enacted, apparel imports from the LDCs have increased by more 

than 250%, leading to the creation of more than 200,000 new apparel jobs. By contrast, during the last 15 months in Mauritius more than 30 apparel factories have 

closed, costing 12,000 jobs, representing fully 15% of EPZ jobs in Mauritius at the 

time AGOA was enacted. During March 2003-February 2004, U.S. apparel imports 

65 

from Mauritius have declined by 15%. Mauritius is the only AGOA beneficiary 

whose apparel exports have declined to such an extent during this time. 

This drop in apparel employment, production and exports is attributable to two 

factors: (1) increased competition from neighboring LDCs, who have enjoyed the 

competitive advantage of being able to utilize more plentiful and less expensive 

third-country fabrics, while we are limited to using only more expensive, less available African or U.S.-origin fabrics; and (2) the prospect of unfettered competition 

from China, effective January 1, 2005. 

Because of the shortage of inputs eligible for duty-free treatment that are available to Mauritius, U.S. importers who used to source apparel in Mauritius have in 

the past year or two begun placing their orders in LDCs to capture the duty-free 

benefits of AGOA. By all indications, the situation will only worsen when the MFA 

quotas on China are lifted at the end of the year. Ironically, if the current trend 

continues, the new industries in the LDCs may survive the lifting of quotas on 

China, while our more established apparel sector in Mauritius, deprived of access 

to essential inputs, is in jeopardy. AGOA is now creating the prospect of the poor 

having to pay the price of economic development for the poorest. This is not what 

we had understood AGOA was intended to do. 

To prevent further job losses in Mauritius, we respectfully request that H.R. 4103 

should be revised to include special temporary relief to allow Mauritius to use thirdcountry fabric during whatever period the LDCs’ access to third-country fabric is extended. We appreciate the Committee’s consideration of our position on this issue, 

which is critical to the survival of the Mauritius apparel industry. 

Respectfully submitted, 

Aleda Koenig 

f 

Vice-Chairman 

[BY PERMISSION OF THE CHAIRMAN:] 

Quatre Bornes, Mauritius 

April 29, 2004 

Chairman Phil Crane 

Ways and Means Trade Subcommittee 

U.S House of Representatives 

1102 Longworth House Office Building 

Washington, D.C.20515 

Dear Mr. Chairman, 

We are writing on behalf of the following shirt manufacturers and weaving mills 

of Mauritius regarding the AGOA Acceleration Act of 2004, HR 4103 and to express 

our strong support for enacting the AGOA Acceleration Act of 2004, HR 4103, including in particular the technical corrections to the apparel provisions: 

• Aquarelle Clothing Ltd—Shirt manufacturer with factories located both in Mauritius and Madagascar 

• New Island Clothing Ltd—Shirt manufacturer with factory located in Mauritius 

• Consolidated Fabrics Ltd—Weaving mill located in Mauritius 

• Socota Textile Mills Ltd—Weaving mill located in Mauritius 

Our current customers in the USA are Abercrombie and Fitch / J. Crew / Nordstrom / Nautica / Eddie Bauer / Express / Banana Republic / JOS A Bank etc. 

Since enactment of AGOA I we have been unable to benefit from the short supply 

provision under AGOA i.e. exporting duty free with the use of African fabric and 

African garment making under the short supply provision. 

During the same period of time, it is to be noted that our Asian competition has 

been able to benefit from the short supply provision using Asian fabric with garment 

making in sub-Saharan Africa. 

This situation has caused us serious prejudices in terms of competitiveness and 

duty savings. We firmly believe that it is totally unfair and against the spirit of 

AGOA which at the origin was in favor of promoting the African Textile Industry. 

Therefore we hereby reiterate our strong support for enacting the AGOA Acceleration Act of 2004, HR 4103, including in particular the technical corrections to the 

apparel provisions. We also support the need for this to be made retroactive in order 

to address the inequity of the current situation. 

66 

We are at your entire disposal for any further information you may need. 

Yours truly, 

Eric Eynaud 

Marketing Executive 

Aquarelle Clothing, Ltd. 

Elvis Cateaux 

General Manager 

New Island Clothing, Ltd. 

Eric Thorel 

General Manager 

Consolidated Fabrics, Ltd. 

Olivier Stekelorom 

General Manager 

f 

Socota Textile Mills, Ltd. 

[BY PERMISSION OF THE CHAIRMAN:] 

BMD Textiles, Ltd. 

Cape Town, Republic of South Africa 

May 3, 2004 

Chairman Philip Crane 

Trade Subcommittee 

Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C.20515 

Dear Chairman Crane 

BMD Textiles (Pty) Ltd, is a textile company, involved in fabric knitting, operating in Cape Town, South Africa, specializing in synthetic fabrics for the baseball, 

football and basketball markets. This written submission is in support of H.R. 4103, 

AGOA Acceleration Act of 2004. 

May we state from the outset that our Company, our Industry and in fact sub 

Saharan Africa (SSA) is extremely grateful for the initiatives taken in implementing 

the AGOA legislation that has brought substantial benefits to so many of our people. We are constantly being made aware of the positive effects that the additional 

job creation that AGOA has resulted in, has had on the people of Africa. 

Poverty reduction through the creation of formal employment impacts on so many 

aspects of life in Africa. Women especially benefit from this income and are now 

able to feed, clothe and most importantly, educate their children. Investment, poverty reduction and stability in Africa will also impact positively on reducing HIV/ 

AIDS and/or assist families who have lost breadwinners to this disease. 

Since it’s enactment, BMD has experienced the benefits of AGOA first hand with 

increased levels of business being conducted with clothing manufacturers for the 

USA market. We have developed very limited business relations with other African 

countries such as Lesotho and Swaziland where some of our products are sold to 

clothing manufacturers in those countries. The reason for this limited success in 

LDC countries is due to the third country exemption provision of AGOA.. 

With regard to H.R. 4103, AGOA Acceleration Act of 2004, we would like to make 

the following submissions: 

1. The extension of AGOA through to 2015 is fully supported as this will provide 

long term benefits, stability and certainty for existing and potential investors. 

2. We are aware that the intention of AGOA is to create sustainable development 

and trade in and with Africa. This can only be achieved by ensuring that the 

Textile and Clothing supply chain remains integrated and that a climate of certainty and stability is created with regard to the third country exemption extension. 

3. Whilst not ideal, we accept that a two year extension followed by a one year 

phased down approach is a reasonable compromise proposal under the circumstances. This should provide ample time to build sufficient textile capacities. However, unless this date is implemented, there is a very real chance 

that the long term success of AGOA will be undermined and that sustainable 

67 

development will be severely compromised. We would therefore urge that the 

termination of the third county exemption input at the end of the third year 

be final and unambiguous so that investor confidence can be created. 

4. In order to further encourage investment confidence, mechanisms currently 

available to the United States Government to assist investors in Africa would 

be welcome. This would for example require current restrictions on the Overseas Private Investment Corporation to be lifted. 

5. We would support any efforts to correct the technical difficulties with regard 

to interpretation that seem to have occurred. In addition to correcting these 

unintended errors of interpretation, we would like to see the new legislation 

provide for more flexible interpretation, based on the spirit and intent of the 

Legislature. 

Finally, whilst the above submission is made in the interests of the Textile and 

Apparel Industry, we are aware that proposed changes to AGOA would have significant benefits in the Agricultural sector as well. Acknowledging that we are not competent to comment on agricultural matters, we are aware that this sector employs 

between 70% and 80% of the labour force in SSA and any benefits of sustainable 

development in this area of the African economy would be vigorously supported. 

Respectfully submitted 

Dr. H. Prader 

f 

Executive Chairman 

Statement of Dollar General Corporation, Goodlettsville, Tennessee 

This is the statement of Dollar General Corporation (‘‘Dollar General’’) urging the 

prompt passage of the AGOA Acceleration Act of 2004 (hereinafter ‘‘H.R. 4103’’ or 

the ‘‘Bill’’). 

Dollar General is a customer-driven distributor of consumable basics. Our niche 

is profitable small stores delivering convenience and value. We deliver this value by 

offering our customers good quality at an everyday low price on both national 

brands and private label goods. Included in our private label program is a large portion of our imported apparel. The apparel is manufactured in a variety of countries 

including Bangladesh, Indonesia, India, Cambodia, Philippines, Thailand, Vietnam, 

and sub-Saharan Africa. 

Dollar General applauds the Subcommittee on Trade for taking up this important 

issue. The continued development of the economies of sub-Saharan Africa is crucial 

to the advancement of democracy in the region. While these economies have made 

significant strides in the textile and apparel sector since the enactment of the African Growth and Opportunity Act in 2000 (‘‘AGOA’’), the reality is that much of 

these gains will be forfeited unless the third-country fabric provisions are extended. 

In addition, Dollar General requests a change in the Bill as introduced to redress 

a significant problem experienced by Dollar General and others. 

Section 7(c) of the Bill would amend Section 112(d), 19 U.S.C. 3721(d), to make 

it clear that the use of imported collars or cuffs would not disqualify a garment otherwise eligible for the third-country fabric preference. This is a very welcome clarification. 

This clarification would not have been necessary had the agency responsible for 

implementing AGOA, United States Customs and Border Protection (‘‘CBP’’), interpreted AGOA to effectuate the clear purpose of the legislation. However, CBP adopted an unnecessarily narrow interpretation of AGOA with the result that a variety 

of the types of garments an emerging apparel industry can be expected to produce 

have been denied the AGOA preference. The merchandise most directly affected by 

the narrow interpretation is polo shirts. CBP ruled that because the collar and cuff 

components were not fabric, polo shirts cut and sewn in AGOA countries with thirdcountry fabric were not eligible for the preference. The collars and cuffs typically 

were imported in rolls, but separated by various types of dividing lines. CBP ruled 

that these rolls were not considered fabric. This decision eliminated the ability of 

the lesser-developed AGOA countries to manufacture polo shirts because the collar 

and cuff must be produced from the same yarn dye lot and at the same time as the 

body fabric to ensure accurate color matches. 

This decision caused many importers to pull out of sub-Saharan Africa. This was 

a very unfortunate development and has retarded the development of the apparel 

industry in sub-Saharan Africa. Apparel industries do not begin by making complicated tailored garments. They begin with basic garments like polo shirts and 

68 

move to more complicated, higher value added production. The Bill will eliminate 

this impediment to growth and development. 

The proposed change will would eliminate future problems with respect to collars 

and cuffs. However, the manner in which the change is effected could have an adverse impact on the argument that polo shirts made with imported collars and cuffs 

qualify under subsection 112(b)(3)B as originally enacted. We strongly believe that 

the interpretation of the provision by CBP was overly narrow and inconsistent with 

the desire of Congress to encourage trade with the lesser-developed sub-Saharan African countries. Dollar General and others should have the opportunity to make that 

argument. Accordingly, we ask that section 7(c) of the Bill be revised to read as follows: 

(3) COLLARS AND CUFFS. An article otherwise eligible for preferential treatment under this section will not be ineligible for such treatment because the 

article incorporates collars and cuffs (cut or knit-to-shape) that were not produced in an eligible beneficiary sub-Saharan African country. 

This minor change will accomplish the same clarification as the current version 

of the Bill. 

Section 8 of the Bill makes certain provisions retroactive to the 2000 enactment 

of AGOA. This treatment is extended to apparel articles that meet the requirements 

of ‘‘Section 112(b) of the African Growth and Opportunity Act (as amended by section 3108 of the Trade Act of 2002 and this Act).’’ 

Polo shirts made with imported collars and cuffs will meet the requirements of 

Section 112(b). However, the change that makes this possible is not an amendment 

to section 112(b). It is an amendment to section 112(d) which applies only to section 

112(b). 

The cuff and collar provision should be placed on the same footing as other clarifications of section 112(b) eligibility requirements. In order to ensure that the effective date provision is implemented correctly, we ask that section 8(d) of the Bill be 

revised by adding at the end the following: 

and apparel articles that meet the requirements of section 112(b) after applying 

section 112(d)(3) as added by this Act. 

We believe that this revision will redress the disadvantage to which Dollar General and others were placed because of the erroneously narrow interpretation of the 

third-country fabric provision of AGOA by CBP. 

Dollar General appreciates the opportunity to express its views on the Bill and 

urges that they be considered favorably by the Congress. 

f 

Duro Industries 

Fall River, Massachusetts 02724 

May 4, 2004 

Chairman Philip Crane 

Trade Subcommittee 

Committee on Ways & Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairman Crane: 

We are writing in connection with the Ways and Means Trade Subcommittee’s 

April 29,2004 hearing on H.R. 4103, the AGOA Acceleration Act of 2004, to express 

our support for this important legislation. 

Duro Industries is a major U.S. manufacturer of fabrics used as linings for jackets 

& coats. Encouraged by the new opportunities for trade created by the African 

Growth & Opportunity Act (AGOA), Duro has sold significant volumes of lining fabric to jacket/coat manufacturers in AGOA countries. U.S. Customs and Border Protection (CBP) has managed single-handedly to virtually destroy this export opportunity and, in the process is on the verge of causing the loss of thousands of jobs 

here in the United States and tens of thousands of jobs in Africa, by its unbelievable 

interpretation of AGOA that prohibits commingling U.S. and African fabric in the 

same garment. According to CBP, a garment made of 100% African fabric is eligible 

under AGOA, and a garment made of 100% U.S. fabrics is likewise eligible. But a 

garment made of both U.S. and African fabric is ineligible. This bizarre interpretation turns the intent of Congress on its head. 

69 

H.R. 4103 would make technical corrections to AGOA’s apparel provisions, inter 

alias, to confirm that Congress intended to allow commingling of U.S. and Africanorigin fabric in the same garment. Equally important, the bill authorize retroactive 

duty refunds for goods imported since AGOA took effect in 2000 that meet the 

AGOA eligibility standards as amended by the bill. 

These technical corrections are absolutely essential to prevent the loss of literally 

thousands of jobs in both the United States and Africa. Moreover, it is only equitable to authorize retroactive duty refunds for products that were imported since 

AGOA was enacted and that would have qualified for duty-free eligibility but for 

CBP’s past rulings that have been inconsistent with the intent of Congress. 

We appreciate the opportunity to present our views to the Trade Subcommittee 

on these important issues. Please let us know if you require additional information 

or if we may be of assistance. 

Respectfully submitted 

William J. Milowitz 

f 

Vice President 

Eastman Chemical Company, Voridian Division 

Kingsport, Tennessee 37662 

May 4, 2004 

Chairman Philip Crane 

Trade Subcommittee 

Committee on Ways and Means 

U. S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairman Crane: 

Thank you for the opportunity to express our opinions regarding H.R. 4103, 

‘‘AGOA Acceleration Act of 2004,’’ and issues raised during the Trade Subcommittee’s Hearing on this important Bill on April 29. 

Eastman Chemical Company’s Voridian Division, located in Kingsport, Tennessee 

manufacturers acetate filament yarn that is used by our customers in a variety of 

textile applications. One of the largest applications of acetate filament yarn is in the 

production of woven lining fabrics that are used in tailored apparel such as suits 

and sport coats. In fact, our largest U.S. customers for acetate filament yarn weave 

such lining fabrics. 

As you know, the textile industry in the U.S. has been under tremendous competitive pressure from lower-cost imports from a number of countries including China. 

As a result, many of our domestic textile mills and apparel producers have been 

forced to close their doors, and employment in the U.S. textile industry is in a downward spiral. 

When the Trade and Development Act of 2000 (PL 106–200) extended certain 

trade benefits to the countries of Sub-Saharan Africa, we supported the initiative 

because we saw benefits not only for the developing countries of Africa, but also for 

the textile industry of the U.S. The yarn-forward and fabric-forward rules of origin 

included in PL 106–200 meant that U.S. textile mills would also share in the growth 

that was expected to occur in the embryonic textile industries of the Sub-Saharan 

African nations. This meant that our U.S. customers who weave acetate lining fabrics could export their product to AGOA-qualified countries to be made into apparel 

that would qualify for duty-free status when imported into the U.S. 

We further supported the concept of ‘‘co-mingling’’ fabrics from the U.S. and qualifying African countries to produce apparel that would qualify for duty-free status 

when imported into the U.S. We support the concept of retroactively qualifying such 

co-mingled apparel that was denied duty-free status by Customs. 

We continue to believe that AGOA should provide benefits to the U.S. textile industry, along with benefits to countries in Sub-Saharan Africa, and could not, and 

cannot, support provisions that allow Sub-Saharan African countries to use ‘‘thirdcountry’’ fabrics in the production of apparel to be granted duty-free status when 

imported into the U.S., if such fabrics are produced in sufficient quantity and are 

commercially available in the U.S. or one, or more, of the qualifying African countries. Specifically, tailored apparel items assembled in qualifying Sub-Saharan African countries should contain lining fabrics made in the U.S. or one of the qualifying 

Sub-Saharan countries to qualify for duty-free treatment since these fabrics are proVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00073 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
70 

duced in the U.S. and in one, or more, of the Sub-Saharan countries in sufficient 

quantities. 

Eastman Chemical Company supports the extension of the AGOA proposed in 

H.R. 4103, but cannot support provisions of the Bill that would allow the use of 

‘‘third-country’’ fabrics, if such fabrics are produced in sufficient quantity in the U.S. 

or one of the qualifying Sub-Saharan African countries. It is our belief that to allow 

the use of such fabrics will be detrimental to the textile industry of the U.S., to our 

customers who produce acetate lining fabrics and to Eastman Chemical Company, 

as a producer of acetate filament yarn. 

Thank you for the opportunity to express our opinions on H.R. 4103. 

Sincerely yours, 

Richard L. Johnson 

f 

Group Vice President, Fibers 

House of Dreams, Inc. 

New York, New York, 10023 

May 3, 2004 

Chairman Philip Crane 

Trade Subcommittee 

Committee on Ways & Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515 

Dear Committee Members, 

I wish to thank you for considering the comments I express below. 

House Of Dreams, Inc. (hereafter referred to as HOD), designs and markets apparel to American retailers. It manufactures garments in Europe and Sub Saharan 

Africa. Being an immigrant from Africa, I was delighted when the AGOA act was 

promulgated in 2000, not because it would be beneficial to my corporation, but because it would be beneficial to Africa as a whole as well as the American consumer. 

It made sense. At the first opportunity I shifted production from Europe to facilities 

in Africa. Africa was my place of birth, and I was proud to participate in developing 

its economy, albeit indirectly. I did not want to take advantage of the so called 

cheap labor markets, but rather really wanted to assist in fostering trade between 

Africa and the USA by improving infrastructure and providing my knowledge of the 

USA markets to companies in Sub Saharan Africa. However, soon after AGOA was 

introduced I became disillusioned by the realities of AGOA—here is my opinions as 

to what the problems with AGOA are, as presently implemented. 

1. US Customs Department does not support AGOA. Rather, they attempt to interpret AGOA to facilitate the imposition of duties on product that, I believe, 

was contemplated to be duty free by the writers of AGOA. This is problematic 

because the adopted version of AGOA was unclear in many areas, when viewed 

in hindsight, and US Customs in such situations and in the absence of clarity, 

interpreted AGOA from a strict legal interpretation of the text without due consideration to the spirit of the agreement. 

To illustrate my point, I present the following case history of an actual event that 

I encountered. Among the many apparel categories that my company designs and 

markets, Mens dress shirts are one category that we imported from Sub Saharan 

Africa. The dress shirts we market are made from an exceptionally fine count cotton 

(170/2 me). Prior to shifting production of these shirts from Europe to Sub Saharan 

Africa, I investigated whether such product would qualify for duty free entry into 

the US, in terms of AGOA. AGOA was not clear on this point. The short supply provisions seemed to suggest that provided the yarn used was in short supply (as contemplated by S12(t)), the yarn could be imported and woven into fabric in Sub Saharan Africa, and the resultant garment would then enter duty free. The act was clear 

that such would be the case if it was a womens blouse, but did not provide the same 

clarity if it was a mans shirt (sexual discrimination at the very least). Having followed AGOA from the earliest discussions to it’s eventual passing, I was aware that 

the intent of AGOA was to provide relief in the form of duties such that it could 

facilitate increased trade between the two continents, whilst simultaneously preserving and protecting the textile and apparel industry in the USA. To this end, I 

contacted nearly every spinner of cotton fiber in the USA and asked if they could 

spin yarn of the fine cotton count required. Every spinner responded in writing that 

71 

they could not. Despite the mill in Africa being able to weave such fine cotton, no 

mill in Africa was able to spin cotton of that count either. As AGOA requires either 

the yarn to be of African or US origin, or a short supply fabric for the resultant 

garment to qualify for duty free entry, I sought clarity from US Customs. All the 

information was given to US customs in writing and an opinion from them was 

sought. Soon after submission, US customs verbally communicated that they believed that the yarn was in fact in short supply, and accordingly agreed with my 

interpretation that it would be possible to import the yarn from Europe, weave the 

fabric in Africa and manufacture the garment in Africa and this would qualify for 

duty free entry into the US under S12(t). However, they did suggest that I request 

a formal written binding ruling, which I immediately submitted (March 19th 2001). 

As my company was the first to attempt this, the US customs in the US, communicated this to their officers in Mauritius (the country in which the fabric and garments were to be made), such that the officers there would authorize and issue the 

necessary certificates, which need accompany the shipments at time of export. The 

Mauritian Minister of Trade also investigated this matter prior to issuing any visas, 

and he too was convinced that such garments were duty free in terms of AGOA. 

Further, I spent considerable time and money assisting the mill in Mauritius develop the necessary expertise to manufacture such high quality fabric. You see the 

point of my shifting production from Europe to Africa was not for cheap labor—the 

garments I manufacture are high end product that is not particularly sensitive to 

price—but rather because I spent 30 years of my life in Africa, I know what Africa’s 

economic obstacles are. Africa has abundant raw material and mineral resources, 

which they have exported for years, but unfortunately never, had the expertise to 

add value to such product. My desire was to uplift the mills and garment manufacturers level of expertise such that they can compete not on ‘‘price’’ but rather on 

quality. The mill in Mauritius was overjoyed, and soon the type of cloth I encouraged them to develop became one of their major product lines. Profits improved, as 

did their ability to share such profits with their workforce by improving wages and 

work conditions. I was treated like a hero. After importing such shirts for almost 

one year, a binding ruling was eventually received from US Customs (February 28, 

2002). To my horror, not only did they reverse course, but they also sought duty 

on past shipments as well as shipments that had just been presented to Customs 

for clearance. To add insult to the injury, their written ruling concluded ‘‘Subheading 9819.11.21, HTSUS, specifies that, in regard to articles cut and assembled 

in a beneficiary sub-Saharan African country from fabric (as in this case), the fabric 

must be formed other than in ‘‘the United States or a beneficiary sub-Saharan African country’’. The irony of the US customs interpretation is best illustrated by the 

fact that it would extend duty free status to shirts made from Chinese origin fabric, 

while disqualifying shirts made from African or US origin fabric. This clearly could 

not have been congress’ goal. 

One can only imagine the cash flow and profitability problems this created. We 

formally objected to their interpretation of AGOA and continued importing the 

items, paying the duty under ‘‘objection’’ until the matter was resolved. In January 

2004, US Customs advised that our complaint was overruled and that they are 

sticking to their interpretation of AGOA, despite CITA agreeing with our interpretation by clarifying that such garments do qualify as duty free, as published in the 

federal register in October 2003. 

How can AGOA work if Congress, US Customs And CITA are not ad idem? Further, I suggest that a year is an unacceptable period of time to wait for a response 

for clarification. In order for business on both continents to flourish and consequently the objectives of AGOA to be achieved, business requires clarity if not certainty in a timelier manner. No businessperson will invest in maximizing and developing trade between the continents when such ambiguity exists. In the interim, my 

business has suffered, and the Mauritian mill was left devastated. 

I further entered into a major technology agreement with the premier worsted 

wool supplier in the world—Dormeuil Ltd., whereby at my expense, they shared 

technology and know how with mills in South Africa. This technology and know how 

enabled the mills (who have suffered a lack of expertise as a result of the years of 

isolation from international trade), produce world-class quality fabrics, suitable for 

the better end mens tailored clothing market in the USA. I subsequently terminated 

this contract (much to the dismay of the mills in South Africa), because of the attitude of US Customs and the lack of clarity that AGOA provides. This was a great 

shame, but I cannot fight the US Customs single-handed. As South Africa has progressed democratically and economically, the wage rates have risen and they can 

no longer compete on price. Unfortunately, due to both the lack of mills in the USA 

or Sub Saharan Africa producing fabric desired by the US markets, they cannot now 

even compete on quality. This was my initial concern with AGOA and was the reaVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00075 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
72 

son why I believed that it was important to invest in providing the technology to 

the sub Saharan mills. My opinion is the lack of consensus between congress and 

US Customs is to blame, and certainly to blame for me ceasing to pay and provide 

the required technology. If the intention of AGOA is to assist Africa in it’s economic 

development in the long term, AGOA and the various US government bodies responsible for it’s implementation must not obstruct the development of the ‘‘added value’’ 

processing in Africa. This is made clear by the comparative export volume differences between the LDC’s and NON LDC AGOA beneficiary countries. 

2. I fully support the retroactivity provision being discussed as part of AGOA 111. 

This will at least provide a basic level of comfort to businesses that require 

clarity on an AGOA issue, but are uncomfortable with the time it takes to get 

clarification. In the case study illustrated above, I concluded that a year is an 

unreasonable period for a business to wait for clarity. However, I am a realist 

and if this time frame cannot be improved upon, at least a businessperson such 

as myself who made every good faith effort to obtain clarity before importation 

can at least be refunded should clarity be forthcoming down the line. 

3. I further support the proposal to allow the use of third country trims, commingling of US And African fabrics and partial assembly of garments in both the 

US and Africa. 

In Conclusion, I strongly urge congress to modify AGOA such that obstacles to 

trade that do not impact US manufacturers be removed for example, many components of a garment such as trims and fusible’s are not readily available in the US 

or Africa, and such a restriction that the source of such items must be principally 

from US or African origin, merely impedes trade and simultaneously does not protect US business because they are not available from US manufacturers. Until such 

obstacles are removed, and unless it allows for regional weaving of fabrics in Africa 

from imported yarn, I firmly believe that the objectives of AGOA will not be 

achieved. 

Thank you for your consideration of the above points. 

Yours Sincerely, 

Stanley Lerman 

f 

CEO & President 

Jaysix USA, Inc. 

Fredericksburg, Virginia 22401 

May 03, 2004 

Chairman Phil Crane 

Ways and Means Trade Subcommittee 

US House of Representatives 

1102 Longworth House Office Building 

Washington DC 20515 

Dear Sir, 

We would like to express our strong support for enacting the AGOA Acceleration 

Act of 2004, HR 4103, including in particular the technical corrections to the apparel provisions. 

Our company was established in 2001 in the USA, to import apparel (mainly 

men’s shirts) from AGOA countries. After proving that we had good technical expertise and a price advantage over competing countries, we have obtained orders from 

well known US retailers such as Jos A Banks, Federated Stores and Brooks Bros. 

However, when US Customs required that short supply fabrics not be woven in 

Africa, our pricing became uncompetitive with shirts made from short supply fabrics 

originating from China which can also be imported without duty. As a result, orders 

from our customers have almost completely dried up. It has been particularly difficult to substantiate our position, when our customers discovered that ladies shirts 

from AGOA countries can be imported without duty. Especially as the only difference between men’s and ladies shirts is the side on which buttons are placed. 

In addition, as we had accepted long term seasonal orders before the 

abovementioned Customs rulings came into effect, we have had to bear the cost of 

import duty on these orders, which we had contracted to deliver to our customers. 

As a young Company this unplanned financial burden has been particularly difficult 

to bear. 

In light of the above, we express our strong support to the Ways and Means Committee to enact the AGOA Acceleration Act of 2004, HR 4103, so that the disadvanVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00076 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
73 

tage which men’s shirts made from short supply fabrics of AGOA origin are currently subjected to, can be rectified. We also express our strong support that this 

be made retroactive in order to address the inequity of the current situation. 

Yours truly, 

Guy Prudhomme 

f 

President 

Statement of Rodney Birkins, Jr., J.C. Penney Purchasing Corporation, 

Plano, Texas 

These written comments will address the critical importance of extending the current AGOA benefits and are being submitted on behalf of J.C. Penney Corporation 

Inc. and J. C. Penney Purchasing Corporation. I am the President of the J. C. 

Penney Purchasing Corporation (‘‘JCPPC’’), the global procurement arm for merchandise for sale in JCPenney’s retail, catalog and internet operations. Eighty percent of JCPenney sales are textile and apparel related. My comments regarding the 

extension of current AGOA benefits will be directed at the textile and apparel industry, and specifically at the future ability of AGOA apparel manufacturers to use 

third country fabric. 

Within my capacity as President of JCPPC, I am responsible for the development 

of our strategic sourcing plans and managing the assets to support our global merchandise procurement. We currently purchase and import merchandise from 55 

countries world wide and from all areas of the globe ranging from nearby Mexico 

to China and Southeast Asia to the countries of the Sub-Saharan Africa. Last year 

alone, JCPPC’s international purchases of goods were valued at $7 billion retail. 

Our extensive global sourcing experience places JCPenney in a unique position to 

understand and comment on the proposed AGOA trade legislation and its potential 

impact on the sourcing decisions of U.S. purchasers. 

The positive impact of AGOA is quite evident. The AGOA benefits that allow duty 

free treatment for goods meeting specific criteria have provided the impetus for foreign and local investment and fueled the creation of much needed jobs within the 

region. One area where jobs have been created is the apparel manufacturing industry. U.S. purchasers have responded favorably to the AGOA countries as a source 

for product. U.S. imports of apparel under AGOA have risen from approximately 75 

million SMEs in 2001 to over 300 million SMEs in 2003. As the attached chart indicates, the vast majority of AGOA apparel is made with third country fabric. AGOA, 

with the provisions allowing the use of third country fabric, has provided a glimmer 

of hope to a region of unparalleled poverty. 

However, now there is a dark cloud on the horizon and unless changes are made 

to the proposed AGOA Acceleration Act of 2004, the prior economic gains achieved 

under the Trade Act of 2002 could be lost. I do not make this pronouncement lightly. This is a critical moment in the history for the Sub-Saharan economies and the 

fledging apparel manufacturers in those countries. Already, the removal of quotas 

on textiles and apparel in 2005 has created global changes in apparel manufacturing patterns. These changes coupled with the uncertainty of AOGA manufacturers’ future ability to utilize third country fabric are starting to take its toll on the 

apparel manufacturers in the region. As we speak, AGOA apparel factories are 

being emptied. Orders are being shifted out of the region. The uncertainty concerning the future use of third country fabric, beyond AGOA’s current expiration 

date, is the driving factor. The ability of U.S. importers to obtain duty free treatment for apparel produced with third country fabric is vital to the survival of the 

AGOA region as a producer of apparel. 

Let me take a few moments to explain the necessity for AGOA apparel manufacturers to have the flexibility to use third country fabric in AGOA apparel products. 

Today, decisions where to source merchandise are driven by quota availability. 2005, 

with the elimination of quotas on textiles and apparel, will see a period of great 

change to sourcing patterns. Instead of being driven by the artificial constraints of 

quotas, sourcing decisions will become more rationalized and will be based upon 

sound business reasons. Post 2005, common themes among businesses sourcing 

world wide are: 

• The reduction in the number of countries where merchandise is sourced. This 

will allow businesses to take advance of volume discounts that were previously 

unavailable under the quota system. 

74 

• The reduction in the number of companies or suppliers that a business deals 

with. This will allow businesses to develop long terms relationships with a few 

reliable key suppliers. 

• Global deflation of 8%–18% in the prices of textiles and apparel resulting from: 

• Elimination of quota charges 

• Use of the most efficient supply chains 

• Over capacity within the apparel manufacturing industry 

Many wrongly assume that retailers are look for the lowest price when making 

sourcing decisions. I will not deny that price is important, but actually, the most 

important criteria is the speed of the sourcing timeline. The merchandise JCPenney 

purchases runs the gamut from core commodities to high fashion items. Each of 

these has a different sourcing timeline. High fashion has a short shelf life and by 

necessity a short production timeline. Core commodities have more flexibility in 

sourcing and have a longer sourcing timeline. Countries must meet the relevant 

timeline requirement to be considered as a potential source country. 

Once a decision is made on the relevant timeline, price enters into the sourcing 

decision matrix. The speed and price components are not static in the decision making process, but are like counterweights on a scale. The shorter the sourcing 

timeline, the greater the price of the product. Conversely, the longer the production 

lead time the less we will pay for a product. This relationship of speed and price 

relates directly to the risk assumed by JCPenney. The greater the sourcing timeline, 

the greater the risk that the product will not meet the needs and fashion tastes of 

JCPenney customers. The shorter the sourcing timeline, the less risk JCPenney assumes regarding its ability to sell a particular product. So, with longer lead time 

production areas, importers and retailers expect lower pricing to offset the elevated 

risk. 

The AGOA region has one of the longest sourcing timelines in the world due in 

part to the lengthy transit time between Africa and the U.S. Under AGOA and the 

resulting duty free treatment of complying products, this region gained a competitive advantage and became more attractive as a sourcing region. Not being restricted by quota availability has added to the attractiveness of the region over the 

last few years. However, this particular competitive advantage will go away in January of 2005. The elimination of quotas in 2005 heightens the need for AGOA apparel manufacturers to be cost competitive. 

To determine the cost competitiveness of AGOA apparel, we need to break it down 

to the cost components: 

• Transportation costs per container out of the AGOA region are approximately 

double the transportation cost per container from East Asia. Additionally, transit times from AGOA countries average approximately 40 days while transit 

time from East Asia averages 14 days. 

• While wage rates in the AGOA are lower than many other apparel manufacturing countries, the productivity of the AGOA labor force averages about 60% 

of industry standard. The low productivity means that even with a lower wage 

rate, the labor cost in a garment is relatively high. 

• Plant and equipment expense are higher in the garment cost. Since fewer garments are produced in the facility due to the low sewing productivity, a greater 

fixed asset cost is charged to each garment. 

• Fabric costs—The hope, when AGOA was originally crafted, was that a textile 

industry would develop within the region to support the Sub-Saharan apparel 

industry. With limited exceptions, that hope has not been realized. The high 

cost, approximately $80–$100 million, of establishing a textile plant has proved 

too expensive for a region with limited economic resources. The uncertainty of 

the global apparel manufacturing industry as a result of the end of quota in 

2005 is another deterrent to the establishment of regional textile factories. As 

a result, although there is some regional fabric production, the amount of regional fabric currently produced falls substantially short of the demand by 

AGOA apparel manufacturers. Additionally, regional fabric runs 15%–20% higher than fabric purchased in the global markets. Today, regional fabric is used 

in only about 14% of total AGOA apparel production. 

• Duty costs—a typical cost component for textile products is the amount of duty 

an importer is required to pay on the product. The duty free treatment accorded 

AGOA products helps to partially offset the higher costs for AGOA products 

However, duty elimination alone is not enough. When all of the cost components 

are factored in, the costs of sourcing apparel in AGOA countries is high and noncompetitive. High costs with long lead times are a combination which will spell disVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00078 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
75 

aster for the apparel manufacturers in the AGOA region and will send business to 

other competing economies. 

The only hope for the AGOA region to remain competitive is the extension of the 

ability to use third country fabric. Third country fabric is vital to the very survival 

of the apparel manufacturing in the AGOA region. Without access to textiles from 

the most competitive markets, the AGOA countries will have difficulty competing 

in the marketplace of the future. 

The current AGOA legislation planted a seed of hope of economic growth for this 

region. This growth is now being slowly realized. Failure to all continued use of 

third country fabric will crush the fledgling apparel manufacturing industry and 

with it the economic benefits already gained. With the passage of the AOGA Acceleration Act of 2004, Congress has an opportunity to provide for real economic gains 

for the AGOA region not just illusory benefits. 

The proposed legislation provides only for a 2 year extension of third country fabric at the current levels with a phase out in the third year. 2005 will radically 

change the global manufacturing playing field and be a period of hyper-competitiveness. This will create a time of great uncertainty. It is unrealistic to expect major 

investment in textile production within the AGOA region during this period of transition and market adjustment. 

To provide U.S. importers and AGOA manufacturers stability, the AGOA Acceleration Act of 2004, with the extension of third country fabric, must be passed and 

passed quickly. JCPenney strongly urges that the third country fabric allowance be 

extended permanently, or at a minimum that this allowance is extended for a period 

of 7 years. This period of time will allow AGOA countries to continue realizing the 

benefits of AGOA through apparel production while providing an adequate transition time for the potential establishment of a viable regional textile manufacturing 

industry. 

f 

[BY PERMISSION OF THE CHAIRMAN:] 

Mauritius Export Processing Zone Association 

Port Louis, Mauritius 

April 29, 2004 

Chairman William Thomas 

Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairman Thomas: 

We are writing in connection with the Ways and Means Committee’s April 29, 

2004 Hearing on H.R. 4103, the AGOA Acceleration Act of 2004, to express our support for this important legislation. The Mauritius Export Processing Zone Association (MEPZA) is the trade association of the apparel and other manufacturers that 

operate in the Export Processing Zone in Mauritius. 

We fully support H.R. 4103, including in particular the extension of the lesser 

devloped countries’ (LDCs’) access to third-country fabric and the technical corrections to AGOA’s apparel provisions that permit: (1) use of imported collars and cuffs, 

(2) commingling of U.S. and African-origin fabric in the same garment, and (3) short 

supply fabrics to be woven’knit in Africa. 

AGOA has been a tremendous success in its first four years, but that success is 

also fragile. To date, more than 80% of the apparel that has entered the United 

States under AGOA has been from the LDCs and has been made with third-country 

fabric. With the expiration of AGOA’s third-country fabric provision now less than 

six months away, the LDCs are confronting the very real prospect of an almost complete collapse of their infant apparel industries that have been created in response 

to AGOA. 

That situation is made all the more threatening by the fact that on January 1, 

2005—a mere three months after the scheduled expiration of the LDCs’ access to 

third-country fabric—the Multi-Fiber Arrangement (MFA) system of quotas on textile and apparel imports from the China and the other largest producers in the 

world is scheduled to terminate pursuant to the Uruguay Round Agreement on Textiles and Clothing. 

There can be little doubt that the LDC’s infant apparel industries, suddenly 

stripped of access to their primary source of inputs and almost simultaneously facVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00079 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
76 

ing unfettered copmetition from China, are staring into the face of disaster. 

Litterally hundreds of thousands of jobs are in jeopardy. If these jobs disappear, 

there are no realistic prospects for alternate employment. 

H.R. 4103 would avert this impending crisis by extending LDCs’ access to thirdcountry fabric for three more years to give the LDCs time to adjust to the new rules 

of origin and the new competition from China and, simultaneously, too allow more 

time for investment to be made in the African yarn and fabric industry so that it 

can better meet the input requirements of the garment manufacturers. We fully 

support H.R. 4103 in order to protect LDCs from disaster. 

But H.R. 4103 does not go far enough in ensuring that the promise of AGOA is 

realized for all AGOA beneficiaries. Rather, we respectfully suggest that H.R. 4103 

should be revised to add special dispensation to permit Mauritius to utilize thirdcountry fabric in order to prevent a crisis in our apparel industry. Similar relief was 

granted to Botswana and Namibia in the so-called AGOA II legislation enacted in 

August 2002, when it had become apparent that these non-LDCs were not benefiting from AGOA. The same relief is now needed for Mauritius. 

Since AGOA was enacted, apparel imports from the lDCs have increased by more 

than 250%, leading to the creation of more than 200,000 new apparel jobs. By contrast, during the last 15 months in Mauritius more than 30 apparel factories have 

closed, costing 12,000 jobs, representing fully 15% of EPZ jobs in Mauritius at the 

time AGOA was enacted. During March 2003-February 2004, U.S. apparel imports 

from Mauritius have declined by 15%. Mauritius is the only AGOA beneficiary 

whose apparel exports have declined to such and extent during this time. 

This drop in apparel employment, production and exports is attributable to two 

factors: (1) increased competition from neighboring LDCs, who have enjoyed the 

competitive advantage of being able to utilize more plentiful and less expensive 

third-country fabrics, while we are limited to using only more expensive, less available African or U.S. origin fabrics; and (2) the prospect of unfettered competition 

from China, effective January 1. 2005. 

Because of the shortage of imputs elligible for duty-free treatment that are available to Mauritius, U.S. importers who used to source apparel in Mauritius have in 

the past year or two begun placing their orders in LDCs to capture the duty-free 

benefits of AGOA. By all indications, the situation will only worsen when the MFA 

quotas on China are lifted at the end of the year. Ironically, if the current trend 

continues, the new industries in the LDCs may survive the lifting quotas, while our 

more established apparel sector in Mauritius, deprived of access to essential inputs. 

Agoa is now creating the prospect of the poor having to pay the price of economic 

development for the poorest. This is now what we had understood AGOA was intended to do. 

To prevent further job losses in Mauritius, we respectfully request that H.R. 4103 

should be revised to include special temporary relief to allow Mauritius to use thirdcountry fabric during whatever period the LDCs’ access to third-country fabric is extended. We appreciate the Committee’s consideration of our position on this issue, 

which id critical to the survival of the Mauritius apparel Industry. 

Respectfully submitted, 

Danielle Wong 

f 

Director 

Statement of Maurice Vigier de Latour, Chairman, Mauritius-U.S. Business 

Association, Inc. 

The Mauritius-U.S. Business Association Inc. (MUSBA) commends the Committee 

on Ways and Means for holding hearings on the AGOA Acceleration Act of 2004, 

H.R. 4103. MUSBA is a bilateral trade association whose members are private sector companies, business organizations, and individuals in Mauritius and the United 

States who are engaged in mutually beneficial trade and investment between the 

two countries. 

The African Growth and Opportunity Act (AGOA) has been a huge success in its 

first four years by creating literally hundreds of thousands of new jobs in Africa, 

establishing opportunities for sustainable economic development in the world’s poorest region, and building a new foundation based on hope, mutual benefit and friendship for the long term economic relationship between Africa and the United States. 

These economic successes in turn have reinforced the strong movement in Africa toward democracy, political stability, peace and respect for human rights. 

But while AGOA’s success has been noteworthy, it is also fragile. The cornerstone 

of AGOA is its system of trade preferences (quota-free/duty-free access to the U.S. 

77 

market) for apparel made in Africa that meets the AGOA rules of origin. For 

AGOA’s first four years (October 2000-September 2004), these rules of origin have 

permitted the less developed AGOA beneficiaries (LDCs) to utilize yarns and fabrics 

imported from outside Africa or the United States, so-called ‘‘third-country fabric.’’ 

Thereafter, AGOA as originally enacted would require that only yarns/fabrics made 

in Africa or the United States be used. 

To date, more than 80% of the apparel that has entered the United States under 

AGOA has been from the LDCs and has been made with third-country fabric. With 

the expiration of AGOA’s third-country fabric provision now less than six months 

away, Africa is confronting the very real prospect of an almost complete collapse of 

the infant apparel industry that has been created in response to AGOA. 

The situation is made all the more tenuous by the fact that on January 1, 2005— 

a mere three months after the scheduled expiration of the LDCs’ access to thirdcountry fabric—the Multi-Fiber Arrangement (MFA) system of quotas on textile and 

apparel imports from the largest and most competitive producers in the world is 

scheduled to terminate pursuant to the Uruguay Round Agreement on Textiles and 

Clothing. 

There can be little doubt that the infant apparel industries of Africa, suddenly 

stripped of access to their primary source of inputs and almost simultaneously facing unfettered competition from China, are staring into the face of disaster. Literally hundreds of thousands of jobs are in jeopardy in countries where the unemployment rates average nearly 50%. If these jobs disappear, there are no realistic 

prospects for alternative employment. The hopes and aspirations of literally millions 

of Africans hang in the balance. 

The AGOA Acceleration Act would address this impending crisis by extending the 

LDCs’ access to third-country fabric for three more years to give the LDCs time to 

adjust to the new rules of origin and the new competition from China and, simultaneously, to allow more time for investment to be made in the African yarn and fabric industry so that it can better meet the input requirements of the garment manufacturers. 

When AGOA was enacted in 2000, it was thought that four years should be a long 

enough period of access to third-country fabric to ‘‘jump start’’ the apparel sector in 

the LDCs. It must be remembered, however, that at that time China was not a 

member of the WTO and, therefore, the MFA quotas on China were not scheduled 

to be phased out. In the meantime, China has joined the WTO. As a consequence, 

the fundamental assumptions on which the September 30, 2004 expiration date for 

third-country fabric was based have been completely changed. It is no longer reasonable to assume that the infant apparel industries created from scratch in the African LDCs during the past four years should be mature enough to go toe-to-toe with 

the world’s largest and lowest cost producer of textiles and apparel. These changed 

circumstances cry out for an extension of AGOA’s third-country fabric provision. 

Time is already running out for the LDCs. Orders are being cancelled today, as 

U.S. importers conclude they cannot tolerate the uncertainty of whether their cargoes will be duty free after September 30, 2004. African workers are already being 

laid off as their factories are losing business. H.R. 4103 must be enacted as quickly 

as possible, and well before September 30, 2004, in order to prevent the destruction 

of what AGOA has accomplished so far. 

Although enactment of H.R. 4103 is of critical importance, the AGOA Acceleration 

Act does not go far enough in protecting the promise of AGOA. Rather, we respectfully suggest that H.R. 4103 should be revised to add special dispensation to permit 

Mauritius to utilize third-country fabric in order to prevent a crisis in its apparel 

industry. Similar relief was granted to Botswana and Namibia in the so-called 

AGOA II legislation enacted in August 2002, when it had become apparent that 

these non-LDCs were not benefiting from AGOA. 

While more than 200,000 new apparel jobs have been created in LDCs across Africa in response to AGOA, more than 30 apparel factories have closed in Mauritius, 

costing 12,000 jobs, all in the last 15 months. It is ironic that Mauritius, which was 

deemed too competitive to warrant access to third-country fabric when AGOA was 

enacted, has now lost 15% of the apparel industry jobs it had at that time. 

This contraction of the Mauritian apparel industry is reflected in the official import statistics maintained by the U.S. Department of Commerce, which report that 

apparel imports from Mauritius have dropped 15% during the 12-month period 

March 2003-February 2004. While apparel imports from the AGOA LDCs have 

grown by 228% since AGOA was enacted in 2000, apparel imports from Mauritius 

have not kept pace. Rather, apparel imports from Mauritius have grown by just 13% 

since 2000, which is less than the 19% increase in U.S. apparel imports from all 

origins. Thus, while Africa’s share of the U.S. apparel import market has more than 

doubled since AGOA was enacted, Mauritius is losing market share. In other words, 

78 

Mauritius received little or no benefit from AGOA during 2000–02; even more troubling, beginning in 2003 and continuing to date, Mauritius is actually being harmed 

by AGOA as its exports to the United States are falling. 

It is ironic that Mauritius should be suffering declining apparel exports to the 

United States because Mauritius has probably done more than any other country 

of Africa to contribute to the success of AGOA. Mauritius has invested its own capital in the development of both the apparel sector in neighboring LDCs (including 

Madagascar and Mozambique) and the textile sector both in Mauritius and in LDCs 

(Mali). In addition, Mauritius has made its technical expertise in the textile and apparel sector available to the LDCs. But the Mauritian textile and apparel sector will 

not be able to continue to invest in the development of its neighbors if its export 

revenues from sales to the United States continue to decline. 

Since AGOA was enacted, Mauritius has gone from being the largest African supplier of apparel to the United States to the number six slot, behind Lesotho, Kenya, 

South Africa, Swaziland, and Madagascar. This is reflected in the fact that Mauritius has had the lowest growth rate of all the countries that have exported apparel 

duty-free under AGOA. Indeed, Mauritius’ rate of growth is lower than even Botswana. Recognizing that Botswana was not benefiting from AGOA, Congress 

changed Botswana from a non-LDC to an LDC in AGOA II to enable it to compete 

on equal terms with the LDCs. 

Comparison of U.S. Apparel Imports from AGOA Countries 

Country 2000 Imports 

(msme) 

2003 Imports 

(msme) 

% Growth 

2003/2000 

Swaziland 7 .166 49 .164 586 .1 

Kenya 12 .556 52 .228 315 .9 

Lesotho 34 .365 103 .865 202 .2 

Madagascar 20 .495 45 .639 122 .7 

Malawi 3 .311 7 .049 112 .9 

Namibia 0 10 .543 >100 

Ghana 0 6 .176 >100 

Cape Verde 0 1 .271 >100 

Ethiopia 0 1 .172 >100 

Uganda 0 0 .841 100 

Mozambique 0 0 .423 >100 

Tanzania 0 0 .345 >100 

South Africa 37 .925 70 .251 85 .2% 

Botswana 2 .167 3 .051 40 .8% 

Mauritius 39 .771 45 .124 13 .5 

Africa Totals 157 .756 397 .142 151 .7 

U.S. Imports from the World 16,035 .35 18,863 .52 17 .6 

Even South Africa, the only other non-LDC that exports apparel to the United 

States, has far outstripped Mauritius. South Africa’s apparel exports to the United 

States have increased by 32.326 million square meter equivalents (msme) or 85%, 

six times the growth by Mauritius of 5.353 msme or 13.5%. The reason is that South 

Africa’s yarn and fabric industry is many multiples larger than the Mauritian textile industry, so South Africa has been better able to supply its own yarn and fabric 

to its apparel manufacturers, while Mauritius alone in Africa has been left without 

an adequate source for yarn/fabric inputs for duty-free apparel production. In addition, the Mauritian yarn/fabric industry is limited to cotton and to a lesser extent 

wool production, while the South African industry produces the full range of yarns/ 

fabrics, including man-made fibers. 

While Mauritius is investing in adding new yarn/fabric capacity, this takes time, 

as is illustrated by the fact that the first new yarn spinning plant to be built in 

Mauritius since AGOA was enacted opened for business only in October 2003, a full 

three years after AGOA was enacted. Even with the new plant, Mauritius produces 

only about one-third of the yarn requirements of its apparel sector. Consequently, 

Mauritius ranks near the bottom of all AGOA countries in the percentage of its apparel exports to the United States that qualify for duty-free entry under AGOA. 

79 

2003 Duty-Free Apparel Imports under AGOA 

Country Total Imports 

(msme) 

Duty-Free 

Imports 

(msme) 

% Duty-Free 

Mozambique 0 .423 0 .418 98 .8 

Ghana 6 .205 6 .108 98 .4 

Malawi 7 .049 6 .873 97 .5 

Lesotho 103 .865 98 .574 94 .9 

Madagascar 45 .643 42 .856 93 .9 

Kenya 52 .642 48 .850 92 .8 

Swaziland 49 .166 45 .288 92 .1 

Ethiopia 1 .172 1 .078 91 .9 

Uganda 0 .841 0 .739 88 .9 

Botswana 3 .051 2 .643 86 .6 

Mauritius 45 .146 19 .983 44 .3 

South Africa 85 .899 28 .064 32 .7 

Tanzania 1 .289 0 .326 25 .2 

Total 402 .391 301 .8 75 .0 

Because of the shortage of inputs eligible for duty-free treatment that are available to Mauritius, U.S. importers who used to source apparel in Mauritius have in 

the past year or two begun placing their orders in LDCs to capture the duty-free 

benefits of AGOA. Ironically, AGOA is now creating the prospect of the poor having 

to pay the price of economic development for the poorest. This is obviously not what 

AGOA was intended to do. 

To prevent further job losses in Mauritius, we respectfully request that H.R. 4103 

should be revised to include special temporary relief to allow Mauritius to use thirdcountry fabric during whatever period the LDCs’ access to third-country fabric is extended. We appreciate the Committee’s consideration of our position on this critical 

issue, and we would be happy to respond to any requests for additional information. 

f 

New River Industries, Inc. 

Radford, Virginia 24141 

Chairman Philip Crane 

Trade Subcommittee 

Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairman Crane: 

We are writing in connection with the Ways and Means Trade Subcommittee’s 

April 29, 2004 hearing on H.R. 4103, the AGOA Acceleration Act of 2004, to express 

our support for this important legislation. 

New River Industries, Inc. is a major U.S. manufacturer of fabrics used as linings 

for jackets and coats. Encouraged by the new opportunities for trade created by the 

African Growth and Opportunity Act (AGOA), New River has sold significant volumes of lining fabric going to jacket/coat manufacturers in AGOA countries. U.S. 

Customs and Border Protection (CBP) has managed single-handedly to virtually destroy this export opportunity and, in the process is on the verge of causing the loss 

of thousands of jobs here in the U.S. and tens of thousands of jobs in Africa, by it’s 

unbelievable interpretation of AGOA that prohibits commingling U.S. and African 

fabric in the same garment. According to CBP, a garment made of 100% African fabric is eligible under AGOA, and a garment made of 100% U.S. fabric is likewise eligible. But a garment made of both U.S. and African fabric is ineligible. This bizarre 

interpretation turns the intent of Congress on its head. 

H.R. 4103 would make technical corrections to AGOA’s apparel provisions, inter 

alia, to confirm that Congress intended to allow commingling of U.S. and Africanorigin fabric in the same garment. Equally important, the bill authorizes retroactive 

duty refunds for goods imported since AGOA took effect in 2000 that meet the 

AGOA eligibility standards as amended by the bill. 

These technical corrections are absolutely essential to prevent the loss of literally 

thousands of jobs in both the U.S. and Africa. Moreover, it is only equitable to authorize retroactive duty refunds for products that were imported since AGOA was 

80 

enacted and that would have qualified for duty-free eligibility but for CBP’s past 

rulings that have been inconsistent with the intent of Congress. 

We appreciate the opportunity to present our views to the Trade Subcommittee 

on these important issues. Please let us know if you require additional information 

or if we may otherwise be of assistance. 

Sincerely, 

Paul Poandl 

f 

Executive Vice President 

[BY PERMISSION OF THE CHAIRMAN:] 

Statement of Nien Hsing Textile Company, Ltd., Taipei, Taiwan 

Nien Hsing Textile Co., Ltd. is a vertically integrated manufacturer specializing 

in denim fabric and jeans from cotton fiber to ready made garment. Our main customers are VF, Gap Inc, Wal-mart, Target, Jordache, Calvin Klein, and DKNY. Over 

90% of our markets are in the USA. In the Nien Hsing fabric division, presently 

we have denim mills in Taiwan, Mexico and Lesotho, as well as a dyeing plant in 

Nicaragua. We are ranked fifth in the world denim fabric production. Furthermore, 

in the garment division, we currently have jeans factories in Mexico, Nicaragua and 

Lesotho with an annual production of over three million dozens of jeans. At present 

we are ranked first in the non-brand jeans manufacturer in the world. Due to these 

investments, we have created over 27 000 jobs in the lesser-developed countries over 

world. 

When AGOA I officially came into effect on October 1st 2000, Nien Hsing began 

planning an investment in Lesotho of two garment factories that would employ 6700 

workers, a ring spinning yarn mill and a vertical yarn and denim mill. These new 

facilities are now operational at a cost of over $100 million USD, creating about 

10,000 jobs in Lesotho. Nien Hsing now ranks as one of the main garment producers 

and the largest denim fabric and yarn manufacturer within the AGOA LDCs (See 

Annex I for details of Nien Hsing facilities in Lesotho). 

We believe that for the continuous growth, development and prosperity of the African textile and garment industry, the AGOA III must adopt the following three 

principles: 

1. The extension of third country fabric sourcing for LDCs must not be 

more than three years. 

2. The extension of third country fabric sourcing for LDCs must not include denim fabric (U.S. HTS 5209.42) 

3. The Rule of Origin should only apply to fabric that provides the essential character of the garment. 

The extension of third country fabric sourcing for LDCs must not be 

more than three years. 

There must be textile industry development amongst Sub-Saharan African (SSA) 

AGOA beneficiary countries to form a stable vertical supply chain of fabric with existing garment factories. Through the means of high capital investment of textile 

industry, SSA can raise the need of local raw materials and supplies, to raise the 

industrial skill level, and to increase the diversity, depth and stability of local textile and garment industry. 

By calculating Nien Hsing’s denim mill and ring spinning yarn mill projected full 

production, in future, we will purchase from African countries and from the USA 

an estimate 61 million pounds of cotton annually, other spare parts for the machinery repairs and maintenance will also be creating more business opportunities for 

SSA regions. 

Nien Hsing Textile was attracted to invest over $100 million USD in Lesotho to 

establish a vertically integrated denim mill (covering spinning, weaving and dyeing, 

and one ring spinning yarn mill) because the special rule allowing LDCs to utilize 

third-country fabric would expire September 30, 2004. Nien Hsing probably would 

not have made this investment if we had known that deadline might be extended. 

It is our understanding that other companies that had planned to invest in textile 

plants in SSA have either cancelled or suspended their investment plans because 

of AGOA III’s possible extension of third-country fabric. 

It takes two years to bring a textile mill from the evaluation process to full production. Therefore, the extension for third country fabric sourcing for the LDCs 

81 

should not be more than three years. Anything more than three years will bring serious harm to existing textile industries and prevent potential new investments in 

the SSA countries. 

The extension of third country fabric sourcing for LDCs must not include denim 

fabric (U.S. HTS 5209.42). 

One of AGOA’s goals is the development of a vertically integrated textile-apparel 

industry in SSA to anchor these jobs in the region and to make these new industries 

more competitive. The main justification for extending the LDCs’ access to thirdcountry fabric is the relative shortage of Africa-origin yarns and fabrics. 

But no shortage exists in the denim sector. By July 2004, Nien Hsing’s denim 

mill, with original design capacity of 40 million square meters per year, will be producing 1.7 million square meters per month (20 million square meters anually). In 

2003, U.S. denim apparel imports from SSA totaled 39.5 million square meters (See 

Annex II). 

In other words, Nien Hsing by itself has the capacity to produce—and shortly will 

be producing—enough denim to supply the total imports of denim garments under 

AGOA. This capacity can easily be increased to accommodate increasing demand. 

Moreover, there are already several other denim mills in SSA. Therefore, there is 

no shortage of denim fabric in SSA and no justification for extending the importation of third-country denim. Nien Hsing should not be penalized for having adopted 

the policies of AGOA by building an integrated denim plant by September 30, 2004. 

Rule of Origin only applies to fabric that provides the essential character of the 

garment. 

In contrast to denim fabric, which is not in short supply in Africa, various other 

components and inputs are not readily available. The problem is compounded because fashion designers insist upon an almost endless variety of constantly changing 

minor components and inputs. It is unrealistic, therefore, to require minor components and inputs to be sourced in Africa. Nien Hsing recommends the basic AGOA 

rule of origin be limited to fabric that provides the essential character of the garment and that manufacturers be allowed to source other minor components and inputs outside of the region. 

Nien Hsing’s investment planning for AGOA III. 

If AGOA III can be passed with our suggestions, Nien Hsing will plan: 

1. To increase monthly denim production from July production of 1.7 million 

square meters to up to 3.4 million square meters as necessary to supply the 

requirements for denim. At full production, our denim fabric output will be 

more than enough to supply AGOA consumption, and it can also be exported 

to the South Africa market as well as to EU market. This will represent a 

milestone in LDCs textile industry. 

2. The ring spinning yarn production will be increased from 0.7 million KGs per 

month of July 2004 to 1.4 million KGs per month. Nien Hsing will also play 

an active role to encourage other textile industries to join us in a strategic alliance, and utilize our mills’ production to establish a knitted fabric mill and 

dyeing plant. If our ring spinning yarn can be totally made into knitted fabric, 

this is enough knit fabric to produce 5 million dozen knitted garments annually. 

Future development for textile and garment industry in the AGOA beneficiary countries 

As demonstrated by our investment of over $100 million USD, Nien Hsing believes the future of Africa is one that has a competitive textile-garment industry 

with its own cotton fields, its own yarn mills, its own weaving and knitting plants, 

its own dyeing mills and its own garment factories. 

Finally, I would like to thank the Chairman and members of the House Committee on Ways and Means for giving us this opportunity to present our suggestions. 

We would welcome the Chairman and all the Committee Members to come and visit 

our factories in Lesotho to witness the growth of least developed countries in Africa 

and to witness the spirit of AGOA that is working in Africa. 

82 

ANNEX I 

Investment of Nien Hsing Textile Co., Ltd. in Kingdom of Lesotho 

Year of 

Investment 

Investment 

Amount 

(Million 

USD) 

Capacity 

(Thousands of 

Unit per year) 

Number 

of 

Employees 

Remarks 

Textile Division 

O.E. Yarn & 

Denim Mill 

2002 65 20,000 SMEs 800 Half of designed 

capacity 

Ring Spining Yarn 

Mill 

2002 25 10,000 KGs 400 Half of designed 

capacity 

Garment Division 

C & Y Garment 1991 5 400 Dozs 2100 

Nien Hsing Garment 2000 6 500 Dozs 3700 

Global Garment 2002 6 500 Dozs 3000 

Total 107 10,000 

ANNEX II 

2003 Blue Denim Imports from Africa 

(all figures in thousand square meter equivalents) 

M/B 

Trousers 

W/G 

Slacks 

B/G 

Playsuits 

W/G 

Skirts Totals 

Botswana 134 194 0 0 328 

Kenya 1,222 3,904 19 104 5,249 

Lesotho 5,960 8,165 96 60 14,281 

Madagascar 1,297 2,771 0 15 4,083 

Malawi 283 238 0 0 521 

Swaziland 1,445 656 19 15 2,135 

LDC Subtotal 10,341 15,928 134 194 25,497 

Mauritius 1,937 2,354 0 164 4,455 

South Africa 5,200 3,412 19 268 8,899 

Non-LDC Subtotal 7,137 5,766 19 432 13,324 

Totals 17,478 21,695 153 626 39,952 

(Source: U.S. Department of Commerce.) 

M/B Trousers = HTS 6203.42.40.10, 6203.42.40.35 

W/G Slacks = HTS 6204.62.40.10, 6204.62.40.40 

B/G Playsuits = HTS 6203.42.40.30, 6204.62.40.35 

W/G Skirts = HTS 6204.52.20.30, 6204.52.20.40 

f 

83 

Nigerian-American Chamber of Commerce 

Imo State, Nigeria 

May 3, 2004 

Congressman Philip M. Crane 

Chairman Subcommittee on Trade, 

Committee on Ways & Means, 

(U. S. House of Representatives), 

1104 Long worth House Office Building, 

Washington, DC, USA. 

Dear Congressman Crane and Distinguished Hon. Members, Subcommittee on 

Trade, Committee on Ways & Means, 

I am moved by your sincere commitment and a distinct sense of appreciation towards the wonderful and noble work you all are doing in the U.S. Congress to address the trade and development needs of sub-Saharan Africa (SSA), aimed at expediting development and sustainable growth in African trade with the United States 

and by implication the world trade organization (WT0) in the new millennium, to 

send you this my Statement For Printed Record of Hearing. 

Based on the experience I gained from my just concluded case-study research in 

the United States, published under the title: ‘‘NIGERIA INITIATIVE FOR 

AGOA’’, a documentation of the factors LIMITING Nigeria’s performances on the 

AGOA to Petroleum and the STRATEGIES necessary to expand Nigeria’s participation/opportunities in the AGOA to a wide range of Agricultural and Manufactured 

Products, I have come to the conclusion that for the ‘‘AGOA Acceleration Act of 

2004’’ to achieve expected results, it will be necessary that congress consider the following: That; 

1. Technical Assistance must be defined and structured in the ‘‘AGOA Acceleration Act 2004’’ to address the specific and peculiar Limitations and localized 

circumstances, obstructing the active participation of each designated sub 

Saharam African Country in the AGOA, particularly on an individual/case by 

case consideration, as against a general standard, because the situation in each 

country is different. This point is very crucial, considering that outside South 

Africa and Mauritius, the private sector is either weak or non-existent and in 

most cases participation is concentrated in TEXTILE/APAREL SECTORS, of 

the economies of most sub Saharan African Countries. 

2. The active implementation of the AGOA may succeed better if Technical Assistance (public-private) and deliberately encouraged private-private partnerships for production under AGOA in sub Saharan African Countries (SSAs), including U.S. Export Credit and Project Finance Structuring Assistance Programs are restructured in the ‘‘AGOA Acceleration Act 2004’’ to offer the 

United States, the opportunity to actualize billions of dollars (currently lost 

due to poor performance) in export of equipment, materials, parts/supplies and 

expertise, which local producers seriously need to produce and export under 

AGOA from SSA, while SSAs will in return, gain from ‘Accelerated Manufacturing and Agricultural Production Capacity Development, globally competitive 

International Trade Capacity and Export Production Experience’, necessary to 

remain competitive under AGOA and in the WTO, after AGOA. This way, 

SSAs will have the opportunity to build high-growth and high-wage paying 

economies, minimize unemployment, effectively reduce poverty through PRODUCTIVITY and create prosperity for their citizens, necessary to sustain Presidential Democracy and Good Governance. 

3. Majority of AGOA-Designated sub Saharam African Countries lack the basic 

infrastructure, national conducive environment for investment/business development and experienced labor for competitive export production and international trade management, though they have the great potential capable of 

building a competitive export-oriented economy and the creation of large and 

varied export market for U.S. exports under the AGOA. 

Thus, the need for strategies that include, ‘‘Build Operate & Transfer (BOT)’’, 

‘‘Build Operate & Own-Contracts (BOO)’’ and other types of ‘‘Infrastructure Finance 

Structuring Concepts’’, including the development of Export Manufacturing Incubator System, in form of ‘‘Export Free Zone Manufacturing Villages’’ and ‘‘Agricultural Export Production Villages’’, with exclusive conducive environment amongst 

others, designed and managed by Independent Foreign/Local Managers to guarantee 

successful repayment of Foreign Financing involved. The encouragement of the foregoing by the ‘‘AGOA Acceleration Act 2004’’, may be necessary to achieve the long 

term mutual trade and economic interests of the U.S. and SSAs in the AGOA. 

84 

Finally, I am pleased to recommend that since most private sector leaders with 

local knowledge of STRATEGIES and SOLUTIONS on the foregoing are based in 

Africa and may not easily attend and present oral testimonies in future, the Congress may encourage the U.S. Department of State and the Department of Commerce to assist some of us to visit and contribute, as well as present some case studies that will assist Congress better understand and appreciate the peculiar obstacles 

and limitations to be considered in the new AGOA legislation. In addition, the 

‘‘AGOA Acceleration Act 2004’’ may consider providing for: 

• National Initiative/Strategies Arrangement, by each AGOA-Country, for accelerated and successful implementation of the AGOA, as a condition to benefit from U.S. 

Technical Assistance, from 2005, onwards. This will serve as an implementation 

plan, which each country will follow, accordingly. 

• USAID AGOA-Countries’ National Initiative/Strategies Articulation, Development and Assessment Committee, for the Articulation/Review of National Initiative/ 

Strategies, to ensure accelerated and successful implementation of the AGOA. African private sector leaders, whose current studies and publications on the AGOA are 

assessed relevant and strategic to the successful implementation of the AGOA, may 

be appointed into the USAID AGOA-Countries’ National Initiative/strategies Assessment Committee. 

• Encourage more capacity building training programs for the private sector, as 

against public sector/civil servants, particularly as AGOA can only be actualized if 

the private sector is able to produce and export competitively by advancing the program from ‘‘Talking-To-Doing’’. 

Warm regards, 

Mazi Felix Fon Oji 

f 

President 

[BY PERMISSION OF THE CHAIRMAN:] 

Office of the Special Advisor to the President on AGOA 

Abuja, Nigeria 

April 30, 2004 

Congressman Thomas, Chairman, 

Committee on Ways & Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515. 

On behalf of the Nigerian government and other Sub-Saharan African countries, 

I congratulate you and members of the Committee for a successful hearing on the 

above bill yesterday 29th April 2004. 

In view of the call from some quarters that the 3rd Country Fabric Provision of 

the AGOA is extended beyond three years, I reiterate the stand of the Nigerian Textile Manufacturers and Government that an extension of this provision for a definite 

period of three years is enough as a longer extension WILL harm our textile sector 

greatly. 

The Nigerian textile industry is the largest in Sub Saharan Africa, in terms of 

production capacity. Its installed capacity stands at over 1.2 billion square metre 

equivalent. 

Out of the existing 50 major mills, 50% are fully integrated, from fibre to fabric 

while some more are currently investing in integrated production facilities to take 

advantage of AGOA. The production capacity utilisation stands at 35–40% and at 

that, Nigeria is the largest exporter of cotton yarn to the European Union and a 

major supplier to the West African countries. 

The textile sector is the largest employer of labour after the Government. It currently employs about 50,000 workers directly in textile factories and about 750,000 

in the cotton farming sector. 

Since the enactment of AGOA, there has been increased investment in the textile 

and apparel sector in Nigeria like other Sub-Saharan countries. For instance, a textile mill in Lagos recently invested in a new plant for the production of denim and 

similar fabrics. 

The product range currently exported from Nigeria which we intend to supply to 

other Sub-Saharan African countries once Nigeria’s Textile Visa is granted include 

the following: 

85 

a. Cotton Yarn for weaving and knitting 

i. Ring spun—combed and carded (NE 16–30) 

ii. Open End (NE 6–24) 

b. Polyester Filament Yarn 

i. 75/150/300Denier 

ii. Grey, Bleached White and Dyed 

iii. Texturized 

c. Woven Grey Cloth 

i. 63–102 inches 

ii. Plain and twill weaves 

d. Knitted Fabric (circular) 

i. Grey 

ii. Bleached white and Dyed 

e. Dyed Fabrics for Suiting and Shirting 

i. Fibre dyed 

ii. Yarn dyed 

iii. Piece dyed 

iv. Spun/Filament Polyester 

v. Blended (PV/PC) 

vi. Cotton—drill, (shirting, denim, bottom weights—from new mill in mid 

2004) 

f. Printed Fabrics 

i. Real wax prints 

ii. African Prints (Fancy) 

• Up to 8 colour designs 

• Special effects available—embossing, dew drops 

We believe that an extension of the 3rd Country Fabric Provision would further 

impair our concerted efforts to rejuvenate this extremely important sector to our 

economy which has suffered over 57% loss in employment (in seven years) and a 

69% reduction in number of factories. A prolonged or permanent extension would 

put at risk the new investment of over $100 million in the past three to four years 

AGOA has been in existence and the livelihood of cotton growers in the West African region who supply the Nigerian Textile Industry. This threat to livelihood of cotton growers can perpetuate rural poverty. 

NIGERIA WILL BE IN A POSITION TO SUPPLY YARN AND FABRIC AS 

PRODUCTION INPUTS TO APPAREL PRODUCERS OF ELIGIBLE SUBSAHARAN AFRICAN COUNTRIES THAT HAVE BEEN GRANTED TEXTILE VISA. 

Congressman Thomas, may I use this medium to earnestly plead that the Committee on Ways & Means members to: 

i. extend for a definite and final duration of three years, the 3rd Country Fabric Provision; 

ii. assist to ensue that the Act is passed quickly in both the House and the 

Senate to prevent further underutilisation of installed production capacity 

and flight of investment capital from Sub-Saharan Africa due to uncertainty 

and 

iii. request the Office of the United States Trade Representative to approve Nigeria’s Visa application which they have informed us has satisfied every 

technical and eligibility condition. 

I thank you and your colleagues for your diligence and concerted efforts to assist 

the Sub-Saharan African countries develop and better their economies through a 

companied programme of trade partnership and technical assistance. 

Please accept my personal warm regards, 

G.M. Sasore 

f 

Presidential Adviser 

Statement of Retail Industry Leaders Association, Arlington, Virginia 

This statement is submitted on behalf of the Retail Industry Leaders Association 

(RILA) in strong support of H.R. 4103, the Africa Growth and Opportunity Act 

(AGOA) Acceleration Act of 2004. 

86 

RILA is an alliance of the world’s most successful and innovative retailer and supplier companies—the leaders of the retail industry. RILA members represent more 

than $1 trillion in sales annually and operate more than 100,000 stores, manufacturing facilities and distribution centers nationwide. Its member retailers and suppliers have facilities in all 50 states, as well as internationally, and employ millions 

of workers domestically and worldwide. 

RILA actively supported the original African Growth and Opportunity Act 

(AGOA), which received overwhelming bipartisan support when Congress passed the 

legislation in 2000. RILA continues to believe that the AGOA program is critical to 

helping the nations of sub-Saharan Africa (SSA) compete in the worldeconomy. 

RILA strongly supports the ‘‘AGOA Acceleration Act of 2004’’ (H.R. 4103, and 

urges Congress to pass the legislation as quickly as possible. Specifically, RILA supports the three-year extension of the third country fabric provision, a clarification 

of what products and processes qualify for duty-free benefits under AGOA and increased efforts to support infrastructure and trade capacity. 

Textile and Apparel Benefits 

Third Country Fabric Provision 

Extending the third country fabric provision before it is set to expire this fall is 

key to maintaining AGOA as a viable sourcing option for textiles and apparel. Exports from sub-Saharan African nations have increased dramatically since the enactment of the original AGOA legislation, particularly in the textile and apparel sector. According to Department of Commerce statistics, AGOA textile and apparel imports increased by almost 50 percent to $1.2 billion in 2003. As pointed out in the 

bill’s findings, this increase has led to substantial increases in foreign investment 

and the creation of tens of thousands of jobs. African women have benefited the 

most from these new jobs. It is also important to note that the increase in exports 

from AGOA nations has not resulted in a large net-increase in textile and apparel 

imports. Rather, companies have redirected and diversified their sourcing to include 

AGOA countries. 

In the few short years that AGOA has been in existence, it has led to some real 

benefits for some of the poorest countries in Africa. We can look to Uganda as an 

example. As a landlocked nation faced with continuous border problems and internal strife, Uganda faces constant challenges. However, the Ugandan government 

has recognized the potential of AGOA to bring benefits to the country. In 1999, 

there were no apparel exports from Uganda, only coffee and some natural resources. 

However, in the first two months of 2004, Uganda shipped about 240,000 articles 

of clothing to the U.S. This increase is a direct result of Uganda being able to 

produce apparel using the third-country yarn and fabric provision. 

However, now Uganda and the rest of the eligible lesser-developed countries 

(LDCs) face a dual challenge. Not only is the third-country fabric provision set to 

expire at the end of September, but global quotas on textiles and apparel will be 

removed at the end of the year. If AGOA nations are to remain a viable sourcing 

option, the third-country fabric provision needs to be extended until the necessary 

infrastructure can be develop in the region to allow for full vertical integration. 

Retailers are already placing orders for the busy Back-to-School and Christmas 

shopping seasons as well as looking at sourcing options for the first quarter of 2005 

and beyond. Without the extension of the third-country fabric provision, AGOA will 

immediately become a less attractive sourcing option and it is unlikely that nations 

will be able to sustain, let alone build upon the early successes of AGOA. Extending 

the third-party fabric provisions, even after the removal of quotas, will maintain 

AGOA nations advantage over other nations such as China because of the duty-free 

benefits that AGOA qualifying products receive. We strongly support the extension 

of the AGOA textile and apparel provisions beyond 2004 and believe it is key to 

maintaining Sub Saharan Africa’s viability as a post-quota sourcing option. 

Clarification of Eligible Products and Procedures 

When Congress passed AGOA in 1999, the vision and intent was to help a region 

of the world that had very little trade with the United States. Those who were looking to invest and source products from the region welcomed the ambitious and liberal textile and apparel rule of origin. While trade has significantly increased, retailers and apparel manufacturers have continuously struggled as U.S. Customs and 

Border Protection (CBP) and the Committee for the Implementation of Textile 

Agreements (CITA) have taken a very narrow interpretation of the law, denying 

duty-free access to garments that Congress intended to cover. 

Too many times, CBP and CITA have made decisions that have forced retailers 

to cancel orders and place them elsewhere because the garment would not receive 

87 

benefits. We applaud the sponsors of the bill for including a sense of the Congress 

statement calling for broad interpretation of AGOA by CBP and CITA. 

Infrastructure and Trade Capacity 

While granting duty-free benefits for eligible products has established AGOA nations as a viable sourcing option, the nations of SSA continue to face numerous challenges. The lack of a modern infrastructure is a continuing problem. If you have a 

factory that can manufacture the product, but there is no infrastructure in place to 

facilitate the movement of the merchandise from the factory to the port for export, 

the order most likely won’t be placed. We fully support the language in the bill calling for the development of infrastructure projects to help trade capacity and 

transboundary cooperation to help facilitate trade. This is critical to the region continuing to expand. 

SSA nations need help with infrastructure relating to roads, but also dealing with 

the rail system, the ports and information systems. RILA encourages Congress to 

support efforts to bring technical assistance to the nations of SSA. Not only will this 

help with the facilitation of trade, but improving the infrastructure, especially the 

ports, will also help in the war on terrorism. RILA believes that technical assistance 

should not be limited to facilitating the movement of goods, but also ensuring the 

security of those goods through the ports. 

Conclusion 

RILA believes that the African Growth and Opportunity Act has had a positive 

impact on the nations of sub-Saharan Africa. It would be a shame for Congress to 

allow benefits under AGOA lapse as the nations of SSA face a critical juncture with 

global quotas set to expire at year’s end. For this reason, and for the continued viability of the region, we strongly urge Congress to pass the AGOA Acceleration Act 

of 2004 as soon as possible. This will send a strong signal of commitment by the 

U.S. to SSA and will encourage those currently doing business in the region to 

maintain their relationships and investment in the region. 

f 

Statement of ShopKo Stores, Inc., Green Bay, Wisconsin 

ShopKo Stores, Inc. (‘‘ShopKo’’) urges the prompt passage of H.R. 4103, the AGOA 

Acceleration Act of 2004 (hereinafter ‘‘H.R. 4103’’). 

ShopKo is a customer-driven retailer of quality goods, including apparel, and services in two very distinct market environments; mid-sized to larger cities like Omaha, 

Neb., and Salt Lake City, Utah and smaller rural communities like Clintonville, 

Wis. Our retail operations included 359 stores in 23 states as of January 31, 2004. 

One hundred forty-one locations are operated as ShopKo stores and 218 as Pamida 

stores in cities and towns throughout the Midwest, WesternMountain and Pacific 

Northwest regions. ShopKo apparel is manufactured in a variety of countries including sub-Saharan Africa. 

ShopKo appreciates the efforts of the Subcommittee on Trade to address the difficulties faced by the poorest countries in Africa. The development of the economies 

of sub-Saharan Africa is crucial to the advancement of democracy in the region. 

While these economies have made significant strides in the textile and apparel sector since the enactment of the African Growth and Opportunity Act in 2000 

(‘‘AGOA’’), the unfortunate reality is that these advances are in jeopardy unless the 

third-country fabric provisions are extended for at least three years. 

ShopKo began to source apparel in sub-Saharan Africa before the enactment of 

AGOA. AGOA resulted in increased purchases. However, if we are to continue 

sourcing in sub-Saharan Africa it is imperative that the third-country fabric provisions be extended for at least three years. Even with the duty advantage, producers 

in sub-Saharan Africa will find it difficult to compete against producers in the countries where quota restrictions will disappear on January 1, 2005. Without the duty 

advantage and the ability to use third-country inputs, they will have no chance at 

all. 

ShopKo requests that the Subcommittee consider two minor changes in the language of H.R. 4103. 

Section 7(c) would amend AGOA Section 112(d) 19 U.S.C. 3721(d), to make it 

clear that the use of imported collars or cuffs would not disqualify a garment otherwise eligible for the third-country fabric preference. This is a very welcome clarification. 

This clarification would not have been necessary had the agency responsible for 

implementing AGOA, United States Customs and Border Protection (‘‘CBP’’), interpreted AGOA in keeping with the clear purpose of the legislation. However, CBP 

88 

adopted an unnecessarily narrow interpretation of AGOA with the result that a variety of the types of garments an emerging apparel industry can be expected to 

produce have been denied the AGOA preference. The merchandise most directly affected by the narrow interpretation is polo shirts. CBP ruled that because the collar 

and cuff components were not fabric, polo shirts cut and sewn in AGOA with thirdcountry fabric were not eligible for the preference. The collars and cuffs typically 

were imported in rolls, but separated by various types of dividing lines. CBP ruled 

that these rolls were not considered fabric. This decision eliminated the ability of 

the lesser-developed AGOA countries to manufacture polo shirts because the collar 

and cuff must be produced from the same yarn dye lot and at the same time as the 

body fabric to ensure accurate color matches. 

This decision caused many importers to pull out of sub-Saharan Africa. This was 

a very unfortunate development and has retarded the development of the apparel 

industry in sub-Saharan Africa. Apparel industries do not begin by making complicated tailored garments. They begin with basic garments like polo shirts and 

move to more complicated, higher value added production. H.R. 4103 will eliminate 

this impediment to growth and development. 

The proposed change would eliminate future problems with respect to collars and 

cuffs. However, the manner in which the change is effected could have an adverse 

impact on the argument that polo shirts made with imported collars and cuffs qualify under subsection 112(b)(3)(B) as originally enacted. We strongly believe that the 

interpretation of the provision by CBP was overly narrow and inconsistent with the 

desire of Congress to encourage trade with the lesser-developed sub-Saharan African countries. ShopKo and others should not be denied the opportunity to make that 

argument. Accordingly, we ask that section 7(c) be revised to read as follows: 

(3) COLLARS AND CUFFS. An article otherwise eligible for preferential treatment under this section will not be ineligible for such treatment because the article 

incorporates collars and cuffs (cut or knit-to-shape) that were not produced in an 

eligible beneficiary sub-Saharan African country. 

This minor change will accomplish the same clarification as the current version 

of H.R. 4103. 

Section 8 makes certain provisions retroactive to the 2000 enactment of AGOA. 

This treatment is extended to apparel articles that meet the requirements of ‘‘Section 112(b) of the African Growth and Opportunity Act (as amended by section 3108 

of the Trade Act of 2002 and this Act).’’ 

Polo shirts made with imported collars and cuffs will meet the requirements of 

Section 112(b). However, the change that makes this possible is not an amendment 

to section 112(b). It is an amendment to section 112(d) which applies only to section 

112(b). 

The cuff and collar provision should be placed on the same footing as other clarifications of section 112(b) eligibility requirements. In order to ensure that the effective date provision is implemented correctly, we ask that section 8(d) be revised by 

adding at the end the following: 

and apparel articles that meet the requirements of section 112(b) after applying 

section 112(d)(3) as added by this Act. 

We believe that this revision will redress the disadvantage to which ShopKo and 

others were placed because of the erroneously narrow interpretation of the thirdcountry fabric provision of AGOA by CBP. 

ShopKo appreciates the opportunity to express its views on H.R. 4103 and urges 

prompt passage of this legislation. 

f 

[BY PERMISSION OF THE CHAIRMAN:] 

South African Textile Federation 

Bruma, South Africa 

April 27, 2004 

The Chief of Staff 

Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

WASHINGTON, D.C. 20515 

Dear Ms Giles, 

89 

In response to the Committee’s Advisory of April 20, 2004, the South African Textile Federation would like to make the following written submission on various 

amendments to the AGOA as contained in H.R. 4103, the ‘‘African Growth and Opportunity Acceleration Act of 2004. We cover the following aspects i.e. 

• The overall extension of AGOA until 2015; 

• Fixing interpretation issues encountered with the U.S. Dept. of Commerce; 

• The three year extension of 3rd country inputs for LDC’s; and 

• The extension of AGOA preferences to Sub Saharan African fabrics and made 

up textiles. 

If you require any clarification please do not hesitate reverting to us. 

Kind regards, 

Yours sincerely 

B. Brink 

Executive Director 

SUBMISSION ON PROPOSED AMENDMENTS TO THE AGOA 

AS CONTAINED IN THE ‘‘AGOA ACCELERATION ACT OF 2004’’ 

1. AGOA Beyond 2008 

The continuation of AGOA beyond 2008 and specifically to 2015 is fully supported 

as this will create more certainty and a more secure investment climate in sub Saharan Africa. 

2. Interpretation Issues on the Rules of Origin 

It is our contention that any moves to amend the existing rules of origin on qualifying apparel will be seriously detrimental to the textile sector both in the U.S. and 

in sub Saharan Africa. To amend the rule so that it is made applicable only to the 

essential component of a garment will largely benefit the big exporting countries in 

the Far East. 

An amendment that should be made to the rules of origin is that permitting a 

mixture of USA and SSA yarn and fabric origin in qualifying apparel. This should 

not however be extended to third country inputs. 

3. Three Year Extension of 3rd Country Inputs for LDC’s 

We had previously proposed in our submission of January 30, 2004 that if it was 

found necessary to conditionally extend the termination date of the special rule, that 

this should be on a phased down basis over a period of two years, with two thirds 

of LDC exporter’s fabric usage to be permitted in year one, one third to be permitted 

in year two and with no allowance thereafter. 

However in a spirit of compromise, we have revised our position and now lend 

our support to the proposal that the special rule for LDC countries be extended for 

a last and final three years with only one half of 3rd country inputs being allowed 

in year three. 

This will enable apparel exporters and yarn and fabric suppliers to establish and 

strike input supply alliances. 

Any extension to this period of validity would hold serious consequences for the 

development of the textile industry in sub Saharan Africa (SSA). The reason for the 

initial four year exemption window on the general rules of origin was to convey a 

very strong message to all concerned that it is the aim of the Trade & Development 

Act (TDA) for a textile industry embracing fibre manufacture, yarn spinning and 

fabric weaving and knitting and finishing to be invested in, developed and expanded 

within SSA. Clearly these investments have been slow to develop given the uncertainty of whether the special rule would be extended or not. It must be made crystal 

clear this time that the proposed extension of three years is the final extension. 

Unless there is considerable investment in the textile industry within SSA, AGOA 

will have missed its most important long-term goal, the industrial development of 

Africa. 

As a further suggestion, more reliance should be placed on short supply provisions 

for yarn and fabric not produced in the USA or sub Saharan Africa. We believe that 

under the Act, the President is authorized to proclaim duty-free and quota-free benefits for apparel that is both cut (or knit-to-shape) and sewn or otherwise assembled 

in beneficiary countries from fabric or yarn not formed in the United States or a 

beneficiary country, if the President has determined that such yarns or fabrics canVerDate Aug 04 2004 01:11 Aug 20, 2005 Jkt 099684 PO 00000 Frm 00093 Fmt 6633 Sfmt 6621 E:\HR\OC\A684.XXX A684
90 

not be supplied by the domestic industry in commercial quantities in a timely manner. An alternative or additional solution would be a system of selected availability 

whereby fabric sourcing flexibility would be introduced. This would encourage the 

use of U.S. and regional products by facilitating timely amendments to the list of 

items that are not available in those markets which would be eligible as qualifying 

inputs 

4. Extension of Preferential Entry under AGOA to Yarn, Fabrics and Made Up 

Textiles 

In order to maximize the benefit to sub Saharan Africa’s (SSA) fledgling textile 

and apparel industries it is strongly suggested that preferential duty free entry be 

extended to yarn fabrics and to made up textiles (chapter 63 of the Harmonised tariff). 

It is crucial to provide as much assistance as possible to the yarn, fabric and made 

up textile sector of SSA ahead of the termination of the Agreement on Textiles and 

Clothing at the end of 2004. For without this small advantage given to SSA, China 

will effectively put paid to any industrial growth and development in SSA. 

We have sounded out the American Textile Manufacturers’ Institute on this extension of preferential entry to yarn, fabrics and made up textiles and they ‘‘would 

not have too much of a problem’’. Additionally we would point out that South Africa 

as the major yarn and fabric producer in SSA would scarcely be able to export $50 

million of yarn or fabric, or about 0,1% of U.S. textile mill shipments. 

f 

Statement of Jeff Posner, USI Sportswear, New York, New York 

Good afternoon. My name is Jeff Posner and I am the President of USI Sportswear, a New York based company that supplies sweaters to such companies as Pendleton Woolen Mills, Woolrich, Incorporated, Eddie Bauer, J.C. Penny, Syms and 

others. I am accompanied by Arthur Bodek of Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, Customs Counsel to USI Sportswear. I am here today to raise my 

voice in support of the passage of HR 4103, particularly Section 8 which would 

make retroactive certain enhancements in the AGOA program. 

USI Sportswear has always been a very strong proponent of the AGOA program. 

In fact, for approximately 17 years, my company has been manufacturing sweaters 

in Africa, specifically, in Mauritius, Madagascar and South Africa, for the American 

market. Typically, the manufacture of our sweaters utilizes African yarn, African 

knitting and African assembly. If there ever was a type of company that the AGOA 

legislation was intended to encourage, it is USI Sportswear. 

Notwithstanding the above, a misinterpretation of the AGOA legislation by the 

U.S. Customs Service has served to deny AGOA benefits for our merchandise. This 

misinterpretation has frustrated the intent of the Congress in passing the AGOA 

and has resulted in enormous economic harm to our company. 

I specifically refer to AGOA Preference Group D, codified at subheading 

9819.11.09 of the tariff schedule. As initially drafted, the provision extended AGOA 

treatment to garments ‘‘wholly assembled in one or more [AGOA] countries from 

fabric wholly formed in one or more [AGOA] countries from yarn originating in either the United States or one or more [AGOA] countries. . . .’’ As our sweaters were 

typically wholly manufactured in Mauritius all the way back to the spinning of the 

yarn, the products were certified by the Mauritius government, and entered under 

the AGOA program, consistent with the requirements of the program. 

Much to our surprise, U.S. Customs denied AGOA treatment for these sweaters 

claiming that they were knit to shape and therefore not made from ‘‘fabric’’. As interpreted by Customs, if two otherwise identical sweaters were wholly manufactured 

in Africa from African yarn, AGOA eligibility would be denied to garments that 

were knit to shape (on the theory that there was no fabric) and granted to sweaters 

that were not knit to shape. The determination of whether a sweater is knit to 

shape largely turns on extremely esoteric factors such as the degree to which one 

can discern the shape of a component based on lines formed during the knitting. 

In addition to being inconsistent with prior precedent, this Customs interpretation 

is completely at odds with the intent of Congress in passing the AGOA. 

Indeed, on March 6, 2001, a letter on this point was sent to the Secretary of the 

Treasury by Representatives Bill Thomas, Philip Crane, Charles Rangel, Robert 

Matsui, Jim McDermott, Dave Camp, Jim Ramstad, Philip English and Jennifer 

Dunn. In this letter, the aforementioned representatives pointed out that: 

• The Customs interpretation is wrong; 

91 

• It violates legislative intent; and 

• ‘‘threatens to seriously undermine the viability of AGOA.’’ 

The Congressional views expressed in the March 6th letter were ignored. 

In part for this reason, Congress passed the AGOA II legislation specifically referring to knit to shape sweaters. In its report, the House Ways and Means Committee 

observed that it was forced to take its action because of the Customs misinterpretation, even though, as reflected in the report, ‘‘the Committee believes that the 

AGOA . . . language stated clearly that knit to shape apparel articles are to receive 

benefits. . . .’’. 

While the AGOA II legislation should have been the last chapter that had to be 

written on this subject, unfortunately it was not as Customs would only apply 

AGOA benefits to knit to shape sweaters on a prospective basis. This, despite the 

fact that the legislative history indicated that the so-called AGOA II legislative fix 

was merely a clarification of what the law had already provided. 

Thus, the passage of HR 4103, particularly Section 8 that would make the AGOA 

II knit to shape benefits retroactive to the beginning of the AGOA program, would 

finally give full effect to the Congressional intent on this point. 

Accordingly, USI Sportswear wholeheartedly supports the passage of HR 4103. 

Thank you for your time. 

f 

YKK Southern Africa, Ltd. 

Bryanston, Johannesburg 

April 30, 2004 

Chairman Philip Crane 

Trade Subcommittee 

Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth House Office Building 

Washington, D.C. 20515 

H.R. 4130 

PLEASE ANNOUNCE AGOA III ENACTMENT (Every Day Counts!) 

The performance of AGOA indicates that the Bill has had an excellent influence 

on the economies of participating countries. AGOA created a platform for our people 

to up skill themselves and earn a living on a continent that is rife with unemployment. Thank you USA! 

However, the reticence of AGOA LDC extension has already resulted in order cancellations. 

As a result of this, and exacerbated by the unfair strength of the East, we have 

seen many well established clothing manufacturers close their doors. 

We are therefore very grateful for the introduction of the AGOA Acceleration 

Committee to expedite the earliest official statement that AGOA III will be enacted. What a difference even a day would make! 

Many thanks and kind regards, 

Ian Rheeder 

Marketing Manager 

Æ