United States

International Trade Commission 

AGOA: Trade and 

Investment Performance

Overview

April 2014 

Publication Number: 4461

Investigation Number: 332-542
United States International Trade Commission

Commissioners

Irving A. Williamson, Chairman

Shara L. Aranoff

Dean A. Pinkert

David S. Johanson

Meredith M. Broadbent

F. Scott Kieff

Robert B. Koopman

Director, Office of Operations

Karen Laney

Director, Office of Industries

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436
United States International Trade Commission

AGOA: Trade and 

Investment Performance

Overview

April 2014

Publication Number: 4461

Investigation Number: 332-542
United States International Trade Commission

This report was prepared principally by:

Project Leader

Joanna Bonarriva

joanna bonarriva@usitc.gov

Deputy Project Leader

Joanne Guth

joanne.guth@usitc.gov

Office of Industries

Brian Allen, Katherine Baldwin, Caitlin Blair, Laura Bloodgood,

Andrea Boron, David Coffin, Cindy Foreso, Dennis Fravel,

John Fry, Shannon Gaffney, Gerald Houck, Deborah McNay,

Doug Newman, Philip Stone, Alan Treat,

Karl Tsuji, and Marin Weaver

Office of Economics

John Benedetto, Nannette Christ, William Greene,

and Lin Jones 

Office of General Counsel

William Gearhart

Content Reviewers

Nannette Christ, Alan Fox, and John Giamalva 

Office of Analysis and Research Services

Robert Bauchspies, Russell Duncan, Peg Hausman, and

John Stephens

Administrative Support

Phyllis Boone, Monica Reed, and Wanda Tolson 

Help Desk and Customer Service Division

Under the direction of 

Jonathan Coleman, Chief

Agriculture and Fisheries Division
Abstract 

• This report describes, reviews, and analyzes the trade and investment performance of

beneficiary countries under the African Growth and Opportunity Act (AGOA) from 2000

to 2013. It also examines potential products for export to the United States or for

integration into regional and global supply chains and examines changes in the business

and investment climate in sub-Saharan Africa (SSA), as well as reciprocal trade

agreements between SSA and non-SSA partners and the relationship of these

agreements to the objectives of AGOA.

• The Commission found that U.S. imports from AGOA countries are dominated by

imports entering under AGOA, and that these imports accounted for about 70 percent

of all imports from AGOA countries during 2008–13. On average, crude petroleum

accounted for almost 90 percent of these imports throughout the period. Excluding

crude petroleum, U.S. imports under AGOA are concentrated in three sectors—

transportation equipment (primarily passenger motor vehicles from South Africa),

refined petroleum products, and apparel. These products accounted for 89 percent of

U.S. non-crude petroleum imports under AGOA in 2013.

• The report’s findings suggest that SSA participates in global supply chains (GSCs)

primarily in supplying raw materials and primary inputs because of its abundant natural

resources, including land, metals, and minerals. SSA involvement in manufacturing and

other value-added production activities is generally limited, consisting of semiprocessed

items or items with preferential access to third-country markets. Countries in SSA

generally have little participation in downstream GSC activities because of weaknesses

in production capacity, infrastructure and services, business environment, trade and

investment policies, and industry institutionalization (private and public sector linkages

and inter-industry coordination).

• The Commission found, however, that several SSA countries are using regional

integration, export diversification, and product value addition to implement economic

development strategies. In particular, Burundi, Ethiopia, and Zambia are developing

national strategies to increase export opportunities under AGOA. Supply-side

constraints are the main obstacles to increasing and diversifying AGOA exports.

• The report’s findings suggest that AGOA’s impact on foreign direct investment (FDI) has

been strongest in the apparel industry. Overall, the program’s trade benefits and

eligibility criteria appear to have motivated AGOA beneficiary countries to improve their

business and investment climates. AGOA has had a positive impact on FDI inflows,

particularly in the textile and apparel sector in Kenya, Lesotho, Mauritius, Swaziland,

and Botswana, and also in South Africa’s automotive industry. Some studies, however,

suggest that reciprocal trade agreements may have certain advantages over unilateral

trade preference programs such as AGOA.

1 

Table of Contents 

Abstract.................................................................................................................... 1

Acronyms............................................................................................................... 12

Country Associations.............................................................................................. 14

Executive Summary................................................................................................ 17

Major Findings and Observations.......................................................................................... 19

Chapter 1 Introduction .......................................................................................... 31

Purpose and Scope ................................................................................................................ 31

Approach and Sources of Information .................................................................................. 33

Organization of the Report.................................................................................................... 34

Summary of the AGOA Program............................................................................................ 34

Beneficiaries...................................................................................................................... 36

Trade Benefits under AGOA.............................................................................................. 38

Bibliography........................................................................................................................... 43

Chapter 2 U.S. Imports from AGOA Countries and the Role of AGOA ................... 45

Introduction ........................................................................................................................... 45

U.S. Imports from AGOA Countries....................................................................................... 45

U.S. Imports under AGOA...................................................................................................... 48

U.S. Imports of Crude Petroleum under AGOA ................................................................ 50

U.S. Imports under AGOA of Products Other than Crude Petroleum .............................. 51

U.S. Imports under AGOA by Beneficiary Country ........................................................... 53

AGOA Utilization by Beneficiary Country ......................................................................... 55

AGOA/GSP Growth Products............................................................................................ 56

Bibliography........................................................................................................................... 79

Chapter 3 Potential for SSA Integration into Regional and Global Supply 

Chains..................................................................................................................... 89

Introduction ........................................................................................................................... 89

Overview of Regional and Global Supply Chains................................................................... 90

SSA’s Participation in Regional and Global Supply Chains .................................................... 95

SSA Success Stories in GSC Participation............................................................................... 97

Botswana: Diamonds........................................................................................................ 98

Ghana: Cocoa .................................................................................................................. 100

Zambia: Meat Products................................................................................................... 102

3 
Southern Africa: Apparel ................................................................................................ 103

Potential Participation in Regional and Global Supply Chains: Review of the 

Literature ............................................................................................................................. 104

Agricultural Products and Foodstuffs............................................................................. 105

Leather and Leather Products ........................................................................................ 106

Textiles and Apparel ....................................................................................................... 107

Minerals Processing and Extractive Industries............................................................... 108

Bibliography......................................................................................................................... 110

Chapter 4 AGOA Country Export Potential to the United States..........................117

Introduction ......................................................................................................................... 117

Products with Export Potential for AGOA Countries: A Review of Published 

Research .............................................................................................................................. 117

Products Identified in National Export Development Strategies ................................... 117

Products Identified by the Commission.......................................................................... 121

Products Identified in the Economic Literature.............................................................. 123

Products That AGOA Countries Export and That the United States Principally 

Imports from Non-SSA Sources........................................................................................... 125

Identification of Products ............................................................................................... 125

Factors Affecting SSA Export Competitiveness in the U.S. Market ................................ 126

Case Studies.................................................................................................................... 130

Bibliography......................................................................................................................... 138

Chapter 5 Business Climate and Investment Trends in Sub-Saharan Africa .........145

Introduction ......................................................................................................................... 145

Changes in the SSA Business and Investment Climate........................................................ 146

Macroeconomic Variables.............................................................................................. 146

Governance ..................................................................................................................... 148

Business Regulatory Environment.................................................................................. 150

Trade and Investment Policy Regimes............................................................................ 151

Competitiveness ............................................................................................................. 153

Overview of SSA Investment Trends ................................................................................... 155

SSA Country Recipients of FDI ............................................................................................. 157

South Africa..................................................................................................................... 157

Nigeria............................................................................................................................. 160

Mauritius ......................................................................................................................... 161

SSA Country Sources of FDI ................................................................................................. 162

U.S. Investment in SSA.................................................................................................... 164

4 
EU Investment in SSA...................................................................................................... 168

Brazilian Investment in SSA............................................................................................. 171

Chinese Investment in SSA.............................................................................................. 173

Indian Investment in SSA ................................................................................................ 176

SSA Countries’ Investment in SSA................................................................................... 177

Investment in SSA by Industry............................................................................................. 177

Natural Resources (Petroleum, Metals, and Minerals) .................................................. 179

Agriculture ...................................................................................................................... 182

Infrastructure .................................................................................................................. 183

Manufacturing ................................................................................................................ 184

Textiles and Apparel ....................................................................................................... 185

Services ........................................................................................................................... 188

AGOA’s Impact on FDI Trends ............................................................................................. 189

Bibliography......................................................................................................................... 193

Chapter 6 Reciprocal Trade Agreements: A Comparison with Unilateral 

Trade Preference Programs..................................................................................199

Introduction ......................................................................................................................... 199

Unilateral Trade Preference Programs versus Reciprocal Trade Agreements.................... 200

Overview ......................................................................................................................... 200

Scope............................................................................................................................... 202

Temporary versus Permanent Nature ............................................................................ 203

Product and Country Eligibility ....................................................................................... 203

Modest Benefits of Unilateral Trade Preferences.......................................................... 205

Locking in Policy Reforms with Reciprocal Trade Agreements....................................... 207

Case Study 1: The United States and Mexico ...................................................................... 207

Case Study 2: The United States and Chile.......................................................................... 209

Case Study 3: EU and Chile .................................................................................................. 211

Case Study 4: The United States and Morocco ................................................................... 212

Reciprocal Trade Agreements in Sub-Saharan African Countries....................................... 213

Overview ......................................................................................................................... 213

Specific Agreements ....................................................................................................... 216

Bibliography......................................................................................................................... 223

Chapter 7 AGOA Trade Performance: A Review of the Literature ........................231

Utilization of AGOA Preferences ......................................................................................... 232

Utilization of Comparable Tariff Preference Regimes.................................................... 236

Role of AGOA in Increasing and Diversifying Exports.......................................................... 237

5 
Role of AGOA in Increasing Exports................................................................................ 238

Role of AGOA in Diversifying Exports ............................................................................. 246

Role of Other Unilateral Tariff Preference Programs in Increasing and 

Diversifying Exports............................................................................................................. 248

Role of Other Unilateral Tariff Preference Programs in Increasing Exports................... 249

Role of Other Unilateral Tariff Preference Programs in Diversifying Exports................ 255

Comparative Effectiveness of AGOA and Other Unilateral Preference Programs 

in Increasing and Diversifying Exports................................................................................. 257

Intensification ................................................................................................................. 258

Diversification ................................................................................................................. 261

Recommendations on How to Improve AGOA.................................................................... 263

Bibliography......................................................................................................................... 274

Appendix A Request Letter ...................................................................................281

Appendix B Federal Register notice ......................................................................287

Appendix C Calendar of Hearing Witnesses..........................................................293

Appendix D Positions of Interested Parties...........................................................299

Introduction ......................................................................................................................... 301

Embassy of the Republic of Madagascar............................................................................. 301

Embassy of the Republic of Mauritius................................................................................. 301

Embassy of the Republic of Cabo Verde.............................................................................. 302

Embassy of the Federal Democratic Republic of Ethiopia................................................... 303

Embassy of the Republic of Kenya....................................................................................... 304

Embassy of the Federal Republic of Nigeria........................................................................ 304

Embassy of the Republic of South Africa............................................................................. 305

African Coalition for Trade (ACT)......................................................................................... 306

African Cotton & Textile Industries Federation (ACTIF) ...................................................... 307

African Diplomatic Corps..................................................................................................... 308

American Apparel & Footwear Association (AAFA)............................................................. 308

American Automotive Policy Council (AAPC) ...................................................................... 309

Business Leadership South Africa (BLSA)............................................................................. 310

CBI Sugar Group and the Mauritius Sugar Syndicate .......................................................... 310

Coalition of Services Industries (CSI) ................................................................................... 311

The Common Market for Eastern and Southern Africa (COMESA)..................................... 311

Esquel Mauritius Ltd (EML).................................................................................................. 312

Ms. Katrin Kuhlmann ........................................................................................................... 313

Leading Women of Africa (LWA) ......................................................................................... 314

Manchester Trade................................................................................................................ 315

6 
Manganese Metal Company (MMC) ................................................................................... 316

National Chicken Council (NCC), USA Poultry and Egg Export Council (USAPEEC) ............. 316

National Foreign Trade Council (NFTC) ............................................................................... 317

National Pork Producers Council (NPPC)............................................................................. 318

Progressive Economy........................................................................................................... 319

Rocky Mountain District Export Council (RMDEC) .............................................................. 319

Dr. Witney Schneidman....................................................................................................... 320

U.S. Chamber of Commerce ................................................................................................ 321

United States Fashion Industry Association (USFIA) ........................................................... 322

Universal Leaf Tobacco Company, Inc. (Universal) ............................................................. 322

World Cocoa Foundation (WCF).......................................................................................... 323

Appendix E U.S. Imports under AGOA ..................................................................325

Appendix F Product Space Methodology and Data ..............................................329

Appendix G Business and Investment Data ..........................................................361

Appendix H EU-South Africa FTA Tariff Commitments .........................................383

Boxes 

Box 3.1 Why participation in GSCs is important for developing countries ................................. 92

Box 5.1 South Africa’s 2013 investment legislation................................................................... 153

Box 5.2 Vale’s FDI in sub-Saharan Africa ................................................................................... 172

Figures 

Figure ES.1 U.S. imports under AGOA, 2001–13.......................................................................... 19

Figure ES.2 U.S. imports under AGOA, excluding crude petroleum, 2001–13............................ 20

Figure ES.3 Cumulative FDI position in destination SSA countries, 2012.................................... 26

Figure 2.1 U.S. imports from AGOA countries, 2000–2013......................................................... 46

Figure 2.2 U.S. imports under AGOA, 2001–13 ........................................................................... 49

Figure 2.3 U.S. imports under AGOA, excluding crude petroleum, 2001–13.............................. 49

Figure 2.4 Share of U.S. imports from AGOA beneficiaries under AGOA, GSP, and other 

provisions excluding crude petroleum), by leading growth product, 2000–2013 ....................... 58

Figure 3.1 Example of a simple supply or value chain................................................................. 90

Figure 3.2 Diamond jewelry global value chain........................................................................... 99

Figure 3.3 Cocoa/chocolate global value chain ......................................................................... 101

Figure 3.4 Zambeef’s involvement in RSCs................................................................................ 102

Figure 3.5 South African apparel RSC ........................................................................................ 103

Figure 5.1 GCI and 12 pillar scores of sub-Saharan Africa, Latin America and the Caribbean, and 

Southeast Asia, 2012–13............................................................................................................. 154

Figure 5.2 The rankings of sub-Saharan African countries in global competitiveness index, 

2012–13 (lowest score = most competitive) .............................................................................. 155

Figure 5.3 FDI inflows to SSA, 2000–2012 ................................................................................. 156

Figure 5.4 FDI position in SSA countries, 2012 .......................................................................... 158

7 
Figure 5.5 FDI inflows to South Africa, by major source country .............................................. 158

Figure 5.6 FDI inflows to Nigeria, by major source country, 2007–11 (million $)..................... 161

Figure 5.7 FDI inflows to Mauritius, by major source country, 2007–11 (million $)................. 162

Figure 5.8 Shares of FDI inflows into SSA, 2003–07 vs. 2008–10, by source region ................. 163

Figure 5.9 Greenfield FDI projects and M&A deals by source, 2003–13................................... 164

Figure 5.10 U.S. direct investment position in AGOA countries, 2001–12................................ 166

Figure 5.11 U.S. greenfield FDI projects in SSA, 2003–13.......................................................... 168

Figure 5.12 EU FDI in SSA, 2001–12........................................................................................... 169

Figure 5.13 Greenfield projects in SSA, by EU member, 2003–13 ............................................ 170

Figure 5.14 Number of greenfield FDI projects in SSA, by sector, 2003–13.............................. 179

Figure 5.15 M&A deals in SSA, by industry, 2000–2013............................................................ 180

Figure 5.16 Number of foreign acquisitions in SSA agriculture, by 2000–2013 ........................ 183

Figure 5.17 Greenfield FDI projects and M&A deals in manufacturing, by source country, 2003–

13 ................................................................................................................................................ 186

Figure F.1 Angola: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 339

Figure F.2 Cameroon: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 340

Figure F.3 Chad: Product space and complexity metrics related to potentially competitive

products ...................................................................................................................................... 341

Figure F.4 Côte d’Ivoire: Product space and complexity metrics related to potentially 

competitive products.................................................................................................................. 342

Figure F.5 Republic of the Congo: Product space and complexity metrics related to potentially 

competitive products.................................................................................................................. 343

Figure F.6 Ethiopia: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 344

Figure F.7 Gabon: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 345

Figure F.8 Ghana: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 346

Figure F.9 Kenya: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 347

Figure F.10 Liberia: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 348

Figure F.11 Mali: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 349

Figure F.12 Mauritania: Product space and complexity metrics related to potentially 

competitive products.................................................................................................................. 350

Figure F.13 Mauritius: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 351

Figure F.14 Mozambique: Product space and complexity metrics related to potentially 

competitive products.................................................................................................................. 352

Figure F.15 Nigeria: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 353

8 
Figure F.16 Senegal: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 354

Figure F.17 South Africa: Product space and complexity metrics related to potentially 

competitive products.................................................................................................................. 355

Figure F.18 Tanzania: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 356

Figure F.19 Togo: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 357

Figure F.20 Uganda: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 358

Figure F.21 Zambia: Product space and complexity metrics related to potentially competitive 

products ...................................................................................................................................... 359

Tables

Table ES.1 Top ten U.S. imports from AGOA-eligible countries under AGOA/GSP (excluding 

crude petroleum) by leading growth product, 2000 and 2013 .................................................... 21

Table ES.2 Sectors with export potential in selected SSA countries ........................................... 23

Table 1.1 SSA countries’ eligibility for AGOA and AGOA textile and apparel provisions, 2001–13

....................................................................................................................................................... 39

Table 2.1 U.S. imports under AGOA, by duty treatments, 2001, 2005, and 2008–13 ................ 47

Table 3.1 Top five factors affecting the competitiveness of developing countries in GSCs, by 

sector ............................................................................................................................................ 94

Table 4.1 Products with export potential and factors affecting competitiveness in those sectors 

in selected SSA countries............................................................................................................ 118

Table 4.2 Selected products exported by AGOA countries and which the United States imports 

from non-AGOA countries, 2012a

............................................................................................... 126

Table 4.3 Select products that AGOA beneficiary countries export, but that the United States 

principally imports from non-AGOA countries, 2012 (million $)................................................ 131

Table 5.1 Economic indicators, by selected region.................................................................... 147

Table 5.2 The Worldwide Governance Indicators, and the number of SSA countries that 

improved over 2000–2012.......................................................................................................... 149

Table 5.3 SSA country improvements in doing business, 2006–13 ........................................... 152

Table 5.4 South Africa: Distribution of inward FDI position, by industry, 2001 and 2009 (million 

$) ................................................................................................................................................. 159

Table 5.5 Nigeria, selected greenfield FDI projects in the coal, oil, and natural gas sector, 2003–

13 ................................................................................................................................................ 160

Table 5.6 United States: FDI outflows to SSA, 2000–2012, and FDI position in 2012............... 165

Table 5.7 EU: Outward FDI position in SSA, 2001–12................................................................ 169

Table 5.8 Brazil: Outward FDI position, 2001–10 (billion $)...................................................... 171

Table 5.9 China: FDI outflows to SSA destinations, 2003–10 ................................................... 175

Table 5.10 Significant industry and country destinations for Chinese FDI in SSA, 2007 ........... 175

Table 5.11 India: FDI outflows, 1996–2010 ............................................................................... 176

9 
Table 5.12 Number of greenfield FDI projects and mergers and acquisition transactions in SSA 

by SSA-based investors, by selected industry, 2003–13............................................................. 178

Table 5.13 Number of greenfield FDI projects in SSA, by industry, 2003–13............................ 180

Table 5.14 Key Asian investment in SSA's downstream oil and gas industry............................ 181

Table 5.15 Greenfield FDI projects: Mining and oil and gas extraction vs. downstream activities, 

2003–13 ...................................................................................................................................... 181

Table 5.16 FDI transactions in SSA manufacturing, 2003–13.................................................... 185

Table 6.1 Principal differences between unilateral trade preference programs and reciprocal 

trade agreements ....................................................................................................................... 202

Table 6.2 Reciprocal trade agreements involving SSA countries (in force or provisional)........ 214

Table 6.3 Potential agreements under negotiation by SSA countries....................................... 216

Table 6.4 Status of EPA negotiations......................................................................................... 220

Table 7.1 Preference utilization rates of selected nonreciprocal preference regimes for which 

SSA countries are eligible, 2008.................................................................................................. 237

Table 7.2 Summary of the literature on the effectiveness of AGOA and other similar unilateral 

tariff preference programs......................................................................................................... 266

Table E.1 U.S. imports for consumption under AGOA (excluding crude petroleum), by 

beneficiary country, 2001, 2005, and 2008–13.......................................................................... 327

Table F.1 Angola: Potentially competitive products based on product space metric............... 339

Table F.2 Cameroon: Potentially competitive products based on product space metric ......... 340

Table F.3 Chad: Potentially competitive products based on product space metric.................. 341

Table F.4 Côte d’Ivoire: Potentially competitive products based on product space metric ..... 342

Table F.5 Republic of the Congo: Potentially competitive products based on product space 

metric .......................................................................................................................................... 343

Table F.6 Ethiopia: Potentially competitive products based on product space metric............. 344

Table F.7 Gabon: Potentially competitive products based on product space metric ............... 345

Table F.8 Ghana: Potentially competitive products based on product space metric ............... 346

Table F.9 Kenya: Potentially competitive products based on product space metric ................ 347

Table F.10 Liberia: Potentially competitive products based on product space metric ............. 348

Table F.11 Mali: Potentially competitive products based on product space metric................. 349

Table F.12 Mauritania: Potentially competitive products based on product space metric ...... 350

Table F.13 Mauritius: Potentially competitive products based on product space metric ........ 351

Table F.14 Mozambique: Potentially competitive products based on product space metric... 352

Table F.15 Nigeria: Potentially competitive products based on product space metric ............ 353

Table F.16 Senegal: Potentially competitive products based on product space metric ........... 354

Table F.17 South Africa: Potentially competitive products based on product space metric .... 355

Table F.18 Tanzania: Potentially competitive products based on product space metric.......... 356

Table F.19 Togo: Potentially competitive products based on product space metric................ 357

Table F.20 Uganda: Potentially competitive products based on product space metric ........... 358

Table F.21 Zambia: Potentially competitive products based on product space metric ............ 359

Table G.1 How SSA countries improved in governance in 2000–2012...................................... 363

Table G.2 Rankings of SSA countries in ease of doing business and the numbers of areas of 

improvement in 2006–13 ........................................................................................................... 365

10
Table G.3 The improvement in openness of trade and investment policy regime in SSA 

countries over 2000–2013.......................................................................................................... 367

Table G.4 The global ranking of SSA countries in Global Competitiveness Index and each pillar, 

2012–13 ...................................................................................................................................... 369

Table G.5 Number of new greenfield FDI projects by source country and year, 2003–13 ....... 370

Table G.6 Numbers of greenfield FDI projects and investing companies in SSA, by source 

country, 2003–13........................................................................................................................ 372

Table G.7 Number of greenfield FDI projects and investing companies in SSA, by destination 

country, 2001–13........................................................................................................................ 374

Table G.8 Number of greenfield FDI projects in SSA, by industry, 2003–13 ............................. 375

Table G.9 Number of M&A deals, by announced date and industry, 2000–13 ........................ 377

Table G.10 Number of M&A deals in SSA, by EU member acquirer and sector of target, 2000–

2013 ............................................................................................................................................ 378

Table G.11 FDI inflows to South Africa, by source country, 2004–11 (million$)....................... 378

Table G.12 China, number of greenfield FDI projects in SSA, by industry, 2003–12................. 379

Table G.13 India, selected M&A transactions in SSA................................................................. 380

Table G.14 India, number of greenfield FDI projects in SSA, by industry, 2003–13.................. 381

Table H.1 EU-South Africa tariff commitments: Industrial goods ............................................. 385

Table H.2 EU-South Africa tariff commitments: Agricultural goods.......................................... 387

Table H.3 EU-South Africa tariff commitments: Fisheries products.......................................... 389

11
Acronyms 

Acronyms Term

ACP African, Caribbean, and Pacific

AGOA African Growth and Opportunity Act

APHIS Animal and Plant Health Inspection Service, U.S. Department of Agriculture

ATC Agreement on Textiles and Clothing, World Trade Organization 

AVE ad valorem equivalent

BEA Bureau of Economic Analysis, U.S. Department of Commerce

BIT bilateral investment treaty

CAFTA-DR Dominican Republic-Central America-United States Free Trade Agreement

CAGR compound annual growth rate

CEMAC Economic and Monetary Community of Central Africa

CES constant elasticity of substitution

CGE computable general equilibrium

CN combined nomenclature

COCOBOD Ghana Cocoa Board

COMESA Common Market for Eastern and Southern Africa

CRIG Cocoa Research Institute of Ghana

DFQF duty-free/quota-free

DRC domestic resource cost

DTC Diamond Trading Company

EAC East African Community

EBA Everything But Arms (EU trade preference program) 

EC European Community

ECOWAS Economic Community of West African States

EFTA European Free Trade Association

EIU Economist Intelligence Unit

EPA economic partnership agreement

EPZ Export Processing Zone

ESA Eastern and Southern Africa

EU European Union

FDI foreign direct investment

FGI Fung Global Institute

FMD foot and mouth disease 

FTA free trade agreement

GAFTA Greater Arab Free Trade Area

GCI Global Competitiveness Index

GDP gross domestic product

GSC global supply chain

GSP Generalized System of Preferences

GVC global value chain

12
Acronyms Term

HS Harmonized System (international tariff nomenclature)

IMF International Monetary Fund

LAC Latin America and the Caribbean

LDBC lesser-developed beneficiary country (under AGOA)

LDBDC less-developed beneficiary developing country (under GSP)

LDC least-developed country

LPI Logistics Performance Index

M&A mergers and acquisitions

Mercosur South American Common Market

MFA Multi-Fiber Arrangement 

MFN most favored nation

MNC multinational company

MRA meta-regression analysis

NAFTA North American Free Trade Agreement 

NTR normal trade relations

NTU Nanyang Technological University

OECD Organisation for Economic Co-operation and Development

OPEC Organization of Petroleum Exporting Countries

PAFTA Pan-Arab Free Trade Area

PPML Pseudo-Poisson Maximum Likelihood

R&D research and development 

RCA revealed comparative advantage

ROOs rules of origin

RSC regional supply chain 

SACU Southern African Customs Union

SADC South African Development Community

SOE state-owned enterprise

SPS sanitary and phytosanitary

SSA sub-Saharan Africa

TBTs technical barriers to trade

TDCA European Community-South Africa Trade Development and Cooperation 

Agreement

TRQ Tariff-rate quota

UN United Nations

UNCTAD UN Conference on Trade and Development

UNECA UN Economic Commission for Africa

UNIDO UN Industrial Development Organization

13
Country Associations

Common Market for Eastern and Southern Africa (COMESA)

Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, 

Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, Zimbabwe

East African Community (EAC)

Burundi, Kenya, Rwanda, Tanzania, Uganda

Economic and Monetary Community of Central Africa (CEMAC)

Cameroon, Central African Republic, Chad, Equatorial Guinea, Gabon, Republic of the Congo

Economic Community of West African States (ECOWAS)

Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, 

Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo

European Free Trade Association (EFTA) 

Iceland, Liechtenstein, Norway, Switzerland

European Union (EU)

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, 

Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,

Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom

Greater Arab Free Trade Area (GAFTA)

Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, 

Sudan, Syria, Tunisia, United Arab Emirates, Yemen

North American Free Trade Agreement (NAFTA)

Canada, Mexico, United States

Pan-Arab Free Trade Area (PAFTA) 

Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Madagascar, Morocco, Oman, Palestinian 

Authority, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates, Yemen

14
South American Common Market

Argentina, Brazil, Paraguay, Uruguay, Venezuela

Southern African Customs Union (SACU)

Botswana, Lesotho, Namibia, South Africa, Swaziland

Southern African Development Community (SADC)

Angola, Botswana, Democratic Republic of the Congo, Lesotho, Madagascar, Malawi, Mauritius, 

Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe

15
Sub-Saharan Africa

16
Executive Summary

Introduction

The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000, by 

President Clinton as part of the Trade and Development Act of 2000.1 In a statement of policy in 

the Act, Congress expressed support for, inter alia, “encouraging increased trade and 

investment between the United States and sub-Saharan Africa,” “reducing tariff and nontariff 

barriers and other obstacles to sub-Saharan African and United States trade,” and “expanding 

United States assistance to sub-Saharan Africa’s regional integration efforts.”2 The statement of 

policy also expressed support for negotiating reciprocal and mutually beneficial trade 

agreements, strengthening and expanding the private sector, and facilitating the development 

of civil societies and political freedom.3 Authority to provide the principal trade preferences 

under AGOA is currently in effect through September 30, 2015.

Noting that the Administration is working with its partners in the region and Congress to renew 

and potentially modify AGOA, the United States Trade Representative (USTR), in a letter 

received on October 17, 2013, requested that the U.S. International Trade Commission 

(Commission or USITC) conduct four investigations and provide four reports on AGOA.4 The

present report focuses on AGOA’s trade performance, utilization, and competitiveness factors; 

AGOA’s effects on the business and investment climate in sub-Saharan Africa (SSA); and current 

or potential reciprocal trade agreements between SSA and non-SSA partners, as well as the 

relationship of these agreements to the objectives of AGOA. The USTR requested that the 

report cover the period 2000 through 2013.

1 Public Law 106-200, May 18, 2000, 114 Stat. 251. Provisions in the Act referred to as the African Growth and 

Opportunity Act are set out in Title I of the 2000 Act.

2 19 U.S.C. § 3702.

3 Ibid.

4 These reports are provided in response to a letter from the USTR dated September 30, 2013, requesting that the 

Commission provide four AGOA reports under section 332(g) of the Tariff Act of 1930. The four reports, and their 

investigation numbers, are (1) 332-542, AGOA: Trade and Investment Performance Overview; (2) 332-544, AGOA: 

Economic Effects of Providing Duty-Free Treatment for Imports; (3) 332-545, U.S. AGOA Rules of Origin: Possible 

Changes to Promote Regional Integration and Increase Exports to the United States; and (4) 332-546, EU-South 

Africa FTA: Impact on U.S. Exports to South Africa. A copy of the letter from the USTR is contained in appendix A. 

The Commission’s Federal Register notice announcing the institution of this investigation is contained in appendix 

B.

17
More specifically, the USTR asked for the USITC’s report to:

• Provide a review of the literature on the AGOA preference program, in terms of

expanding and diversifying the exports of AGOA beneficiary countries to the United

States, compared to preference programs offered by third parties such as the EU;

• Identify the non-crude petroleum sectors (i.e., manufacturing and agricultural) in

AGOA beneficiary countries in which exports to the United States, under AGOA and

under the U.S. Generalized System of Preferences program, have increased the

most, in absolute terms, since 2000, and identify the key factors behind this growth;

• Describe the main factors affecting AGOA trade in the principal non-crude

petroleum products that AGOA beneficiary countries export and that the United

States principally imports from non-sub-Saharan African sources;

• Based on a review of literature, identify products with potential for integration into

regional or global supply chains, and export potential to the United States under

AGOA, as well as factors that affect AGOA beneficiary countries’ competitiveness in

these sectors;

• Identify and describe changes, if any, in the business and investment climates in subSaharan African countries since 2000, including removal of barriers to domestic and

foreign investment;

• Describe U.S. goods and services-related investment trends in sub-Saharan African

countries since 2000 and compare these trends with investments by other countries

in sub-Saharan African countries, including investments by the EU, China, Brazil, and

India. Identify any links between these investment trends and the AGOA program;

• Provide a list of reciprocal trade agreements that sub-Saharan African countries

have completed or are under negotiation. For the reciprocal trade agreements that

have entered into force and, to the extent information is available in the case of

those that are pending or under negotiation, provide a brief description of areas

covered or likely to be covered under the agreements; identify U.S. sectors/products

impacted or potentially impacted, including any tariff differentials; and

• Provide examples of developing countries that have moved from unilateral trade

preferences to reciprocal trade agreements, and any effects of the change for the

developing country in terms of expansion and diversification of trade.

18 
Major Findings and Observations

U.S. Imports from AGOA Beneficiary Countries 

U.S. imports from AGOA countries are dominated by imports entering under AGOA. 

U.S. imports under AGOA accounted for about 70 percent of all imports from AGOA countries 

during 2008–13. Between 2001 and 2013, U.S. imports under AGOA increased by about 

10 percent per year, from $7.6 billion to $24.8 billion. On average, crude petroleum accounted 

for almost 90 percent of U.S. imports under AGOA during 2001–13, with a sharp decline in 2009 

because of the U.S. recession and volatility in the trend since then (figure ES.1). U.S. imports 

under AGOA of products other than crude petroleum increased steadily between 2001 and 

2008, declined in 2009 due to the recession, and gradually recovered during 2010–13 

(figure ES.2).

Figure ES.1 U.S. imports under AGOA, 2001–13

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Note: The data in this figure are based on the list of AGOA-eligible countries, which varies by year. For a complete list of AGOAeligible countries by year, see table 1.1.

19
Figure ES.2 U.S. imports under AGOA, excluding crude petroleum, 2001–13

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Note: The data in this figure are based on the list of AGOA-eligible countries, which varies by year. For a complete list of AGOAeligible countries by year, see table 1.1. “Agriculture” includes all agricultural products; “manufacturing” includes electronics, 

machinery, transportation equipment, chemicals, miscellaneous manufacturing, and special provisions items; “natural 

resources” includes energy products except crude petroleum, minerals and metals, and forest products; and “textiles/apparel” 

includes textiles, apparel, and footwear.

Excluding crude petroleum, U.S. imports under AGOA are concentrated in three sectors. 

Three sectors—transportation equipment, refined petroleum products, and apparel—

accounted for 89 percent of U.S. non-crude-petroleum imports under AGOA in 2013. The 

imports of transportation equipment primarily consisted of passenger motor vehicles from 

South Africa. About 88 percent of U.S. imports of refined petroleum products, such as distillate 

and residual fuel oils, were supplied by Nigeria and Angola. Major apparel suppliers in 2013 

were Lesotho, Kenya, and Mauritius. Although apparel continues to be an important U.S. 

import under AGOA, imports have declined gradually as a share of all U.S. AGOA imports since 

the expiration of the World Trade Organization (WTO) Agreement on Textiles and Clothing in 

2005. In 2005–13, the share of apparel imports decreased sharply, falling from 41 percent of 

U.S. non-crude-petroleum imports under AGOA in 2005 to 19 percent in 2013. Two countries—

South Africa and Nigeria—represented 73 percent of all U.S. non-crude-petroleum imports 

under AGOA in 2013.

20
A small number of products accounted for most of the growth in U.S. imports from AGOA 

beneficiary countries under AGOA and GSP provisions.

The top 10 growth leaders among non-crude-petroleum products imported under AGOA and 

GSP during 2000–2013 accounted for over 90 percent of the positive growth in value over the 

period (table ES.1). The leading product group––motor vehicles––supplied about one-third of 

the growth and totaled $2.1 billion in 2013. Refined petroleum products followed, accounting 

for one-quarter of the growth and totaling $1.3 billion in 2013. Other major growth products, in 

descending order, were apparel; ferroalloys; aluminum mill products; cocoa, chocolate, and 

confectionery; miscellaneous inorganic chemicals; certain organic chemicals; edible nuts; and 

citrus fruit.

Table ES.1 Top ten U.S. imports from AGOA-eligible countries under AGOA/GSP (excluding crude 

petroleum) by leading growth product, 2000 and 2013

Product 2000 2013

Absolute growth

2000–2013

Million $

Motor vehicles 0.0 2,115.7 2,115.7

Refined petroleum products 1.4 1,297.2 1,295.8

Apparel 0.7 907.4 906.7

Ferroalloys 171.7 530.4 358.7

Aluminum mill products 56.6 189.3 132.7

Cocoa, chocolate, and confectionery 4.4 122.8 118.4

Miscellaneous inorganic chemicals 79.3 175.9 96.6

Certain organic chemicals 17.4 103.1 85.7

Edible nuts 0.5 62.3 61.8

Citrus fruit 0.0 61.7 61.7

All other 350.0 617.1 267.1

Total 682.1 6,182.9 5,500.8

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Potential for SSA Integration into Regional and 

Global Supply Chains 

SSA countries’ participation in global supply chains can have a positive effect on their 

economies.

Regional and global supply chains are defined as cross-country production networks between 

multiple firms that supply interlinked economic activities necessary to bring a product from 

conception to consumption. Global supply chains (GSCs) and regional supply chains (RSCs) have 

spread rapidly over the past 30 years as technological advances in communications and 

transportation have enabled firms to take advantage of international cost differences. 

Integration into these chains by SSA countries can have a positive effect on their economic 

21
development by increasing the amount of value added locally, increasing employment and 

productivity, and raising per capita incomes.

Most SSA participation in GSCs is in upstream activities, particularly supplying raw 

materials and primary inputs. 

One of SSA’s strongest competitive advantages is its abundant natural resources, including land, 

metals, and minerals. As a result, SSA participates in GSCs chiefly by supplying raw materials 

and primary inputs. SSA involvement in manufacturing, and especially GSC manufacturing, is 

generally limited. Manufacturing in SSA is usually of semiprocessed items and/or of items that 

have preferential access to third-country markets—e.g., via AGOA for the U.S. market and via 

Everything But Arms (EBA) for the EU.

A number of factors affect the potential of SSA countries to participate in global and 

regional supply chains.

The Organisation for Economic Co-operation and Development (OECD) identified five broad 

categories of factors that affect SSA participation in GSCs and RSCs: production capacity, 

infrastructure and services, business environment, trade and investment policy, and industry 

institutionalization (private and public sector coordination and inter-industry linkages). 

Countries with low levels of participation in downstream GSC/RSC activities generally have 

weaknesses in all five areas, although the importance of these factors for developing countries 

varies by sector.

Despite generally low rates of participation in GSC/RSC downstream activities, certain SSA 

countries are moving to higher value-added production.

SSA countries have participated in GSCs and RSCs in agriculture and agroprocessing (e.g., 

vegetables and vegetable agroprocessing in Kenya, floriculture in Uganda and Kenya, and cocoa 

production and processing in Ghana); extractive industries (e.g., petroleum activities in Nigeria

and diamonds processing in Botswana); and manufacturing (e.g., automobile production in 

South Africa and apparel production in several countries). These successes may illuminate the 

trade policy and infrastructure changes SSA economies will need to make in order to increase 

their participation in higher-value added production and to become more integrated into GSCs.

A review of literature suggests that SSA sectors with the greatest potential to further integrate 

into RSCs and GSCs are (1) agricultural products and foodstuffs, (2) leather and leather 

products, (3) textiles and apparel, and (4) extractive natural resource products, such as ferrous, 

petrochemicals, and platinum group metals. 

22
SSA Export Potential to the United States 

Sources identified primarily agricultural products, handcrafts and woodcrafts, and leather 

and leather products as potential exports from AGOA countries to the United States. 

Although a wide range of products with export potential from AGOA countries to the United 

States were identified, most fall into the broad categories of agricultural products, handcrafts 

and woodcrafts, and leather and leather products (table ES.2). These products were identified 

in AGOA country national development strategies, previous Commission reports, and the 

economic literature. 

Table ES.2 Sectors with export potential in selected SSA countries

Country Products/sectors Source

Ethiopia Textiles and apparel, leather products and footwear, home 

furnishings, cut flowers

Ethiopia Growth and Transformation 

Plan, 2010/11–14/15; economic 

literature

Ghanaa Basketry and related straw products, woodcraft and furniture, 

cashew nuts, shea nuts and shea butter

USAID West Africa study, 2011

Malawi Oilseed products, sugar cane products, agroprocessing, light 

manufacturing 

Malawi National Export Strategy, 2013–

18 

Mauritius Jewelry, agroprocessing and seafood processing, light 

manufacturing, plastics, metal-based products, leather, 

handbags, fashion accessories

Mauritius National Export Strategy, 

2013 

Mozambique Food and industrial crops, horticulture, oilseeds, leather and 

leather products, wood products, jewelry, cashews, grapefruit, 

rice, potatoes, paprika, and bananas

Mozambique Country Assistance 

Strategy, 2011–15; World Bank report, 

2010 

Rwanda Horticulture, handcrafts, leather and leather products Rwanda National Export Strategy, 2011

Senegal Cotton, horticulture, cashews, mangoes, dairy products, 

bananas, woven textiles, fisheries, hibiscus tea, millet

World Bank report, 2010

Ugandab Horticulture, dairy products, cereals, pulses, oilseeds, 

ingredients for pharmaceuticals and cosmetic industries, 

handcrafts, toys, jewelry, leather products, woodcrafts

Uganda National Export Strategy, 2008–

12 

West Africa Cashews, peanuts, and shea nuts and shea butter ECOWAS, 2010

SSA-wide Bananas, cereal flours, corn, honey, coffee, cocoa, cotton, 

fruits, vegetables, cut flowers, cashews, sesame, shrimp and 

prawns, logs, hardwood lumber and wood products, 

petroleum products, liquefied natural gas, electricity, light 

industrial products, leather products, processed wood 

products, chemicals, aluminum, gold, copper, gemstones, 

cocoa butter and paste, prepared and preserved fish, acyclic 

alcohols, flat-rolled steel, liquefied natural gas, apparel, 

unwrought aluminum, wood veneer, shea butter, spices, 

tropical fruit, footwear, natural rubber, processed diamonds, 

textiles, wood furniture, peanuts

USITC, 2005; USITC, 2007; USITC, 2008; 

International Food and Agricultural 

Policy Council, 2010

Notes: a These sectors have been identified for West Africa more generally, including Burkina Faso and Mali. 

b Exports from 

these sectors are targeted mainly to regional markets, such as countries within the EAC. 

23
Products with export potential for AGOA countries benefit from factors that make them 

competitive in international markets. 

Several factors support production and make certain sectors in AGOA countries internationally 

competitive. For example, agricultural products with potential for export growth to the United 

States take advantage of favorable climates, fertile soils, abundant and low-cost labor, policies 

and programs that support the sector, and the development of farmer cooperatives and other 

organizations. In the handcraft and woodcraft sector, many SSA countries benefit from 

availability of abundant and distinctive raw materials (e.g., bamboo and clay), the prevalence of 

an artistic and creative culture, and supportive government policies. In the leather and leather 

products sector, certain AGOA countries benefit from an abundance of livestock herds, good 

climate and soil conditions that contribute to quality livestock and skins, and strong 

government support for the sector.

Despite these advantages, AGOA countries face many impediments to export growth. 

Many factors weaken AGOA countries’ ability to compete in global markets, including limited 

skilled labor, low levels of technological innovation, lack of scale economies, and high-cost and 

unreliable energy. Weak transportation infrastructure (especially poor rural roads and 

inefficient port facilities), and burdensome customs procedures, also harm the cost 

competitiveness of many potentially exportable products from SSA. Challenges meeting foreign 

standards restrict trade as well, especially the difficulties SSA agricultural producers have in 

complying with foreign sanitary and phytosanitary (SPS) requirements.

There is a range of products that the United States imports principally from non-SSA 

countries, even though these products are also produced—and exported elsewhere—by 

SSA countries. 

Sectors where AGOA exports and U.S. imports are both large, yet there is little bilateral trade, 

may have export potential to the United States under AGOA. These are sectors where AGOA 

countries are viewed as globally competitive by third countries, as well as where there is strong 

import demand in the United States. Major product categories that met these criteria in 2012 

were fresh, chilled, and frozen fish, horticultural products (including cut flowers, bananas, and 

tropical fruit), sugar, certain apparel (e.g., T-shirts and sweaters), and gold. 

24
Multiple factors explain the limited bilateral trade between AGOA countries and the 

United States for certain products. 

In many cases, higher transport costs to the U.S. market relative to other markets are too much 

to overcome, especially in light of the distance and the lack of efficient trade linkages to the 

U.S. market from SSA. Also, SSA exports are often uncompetitive in the U.S. market without 

tariff preferences. Even where SSA exports have such preferences, the margin of the 

preferences is shrinking or disappearing as more countries supplying the U.S. market receive 

duty-free access through reciprocal trade agreements. In some cases, AGOA exporters are 

precluded from claiming preferences because of an inability to meet AGOA rules of origin or 

because of volume restrictions for certain products under the program. Other factors, such as 

historic commercial ties to other markets, difficulties meeting U.S. SPS requirements, and 

rapidly rising demand for raw materials in other markets, particularly China, coupled with 

foreign direct investment in SSA in extractive industries, also limit exports from AGOA countries 

to the United States.

Business Climate and Investment Trends in SSA 

The business and investment climate in SSA has improved noticeably since 2000, but 

progress has been uneven among countries. 

The improved business and investment climate since 2000 can be attributed to better 

macroeconomic conditions, sounder governance, a less burdensome regulatory environment, 

and a more open trade and investment regime overall. At the same time, SSA remains a highly 

challenging place to do business, especially when compared with other emerging economies. 

Issues that continue to discourage investment in SSA countries include poor investor 

protection, slow removal of investment barriers, and insufficient infrastructure. Of the 49 SSA 

countries Rwanda, Sierra Leone, and Burundi (AGOA beneficiary countries) are among the best 

performers, making improvements across most measures. South Sudan and Djibouti (also 

AGOA beneficiaries) as well as Somalia and Eritrea (which have never been AGOA beneficiaries), 

are among the worst performers.

South Africa and Nigeria are by far the largest destinations for foreign direct investment 

(FDI) in SSA.

In 2012, South Africa and Nigeria accounted for more than half of all FDI in SSA (figure ES.3). FDI 

in South Africa is split roughly evenly between mining, manufacturing, and services, particularly 

financial services. The largest share of FDI inflows to Nigeria likely goes to the petroleum sector, 

although precise data are not available. The SSA countries experiencing the fastest FDI growth 

25
over 2000–2012 were Somalia, Comoros, Niger, and the Central African Republic, all starting 

from a very low base. Larger SSA economies experiencing particularly fast FDI growth in recent 

years included the Democratic Republic of the Congo, Mozambique, and Ghana. Important 

industry destinations for FDI in recent years include natural resources (petroleum and mineral 

extraction and downstream processing), certain manufacturing industries (textiles and apparel, 

footwear, automotive, and consumer products), infrastructure, and certain services (financial 

services and telecommunications).

The EU is the largest source of FDI in SSA, followed by the United States. 

The EU countries with the most greenfield FDI projects in SSA were the United Kingdom, 

Germany, France, and Portugal. FDI inflows from the EU as a whole accounted for almost twothirds of total SSA FDI during 2003–07, but dropped to one-half in 2008–10. In contrast, the 

average U.S. share of FDI inflows increased from 7 percent (2003–07) to 12 percent of the total 

(2008–10); the share of Chinese inflows increased from 3 percent to 8 percent; and inflows 

from other sources (including India, Japan, Canada, the United Arab Emirates, Australia, Brazil, 

and other SSA countries) increased from 16 percent to 30 percent for the same periods. The 

largest SSA investors in other SSA countries were South Africa and Kenya.

Figure ES.3 Cumulative FDI position in destination SSA countries, 2012

Source: UNCTAD, UNCTADStat database (accessed October 29, 2013).

26
The number of new FDI projects in SSA countries in the service sector is on the rise. 

In the past, much of the FDI in SSA was focused on natural resource extraction, including 

mining, petroleum and natural gas extraction, and renewable energy. This pattern is changing, 

however: during 2007–12 the number of new FDI projects focused on resources declined, while 

the number of projects in the services and manufacturing sectors increased. Natural resources 

contributed to less than one-third of Africa’s GDP growth between 2000 and 2012, with the 

service sector growing particularly fast as a share of GDP.

AGOA’s impact on FDI has been strongest in the apparel industry. 

Although it is difficult to quantify AGOA’s direct and indirect effects on FDI trends, the 

program’s trade benefits and eligibility criteria appear to have motivated SSA countries, 

particularly AGOA beneficiary countries, to improve their business and investment climates. 

Moreover, AGOA has had a positive impact on FDI inflows, particularly in the textile and apparel 

sector in Kenya, Lesotho, Mauritius, Swaziland, and Botswana, and also in South Africa’s 

automotive industry. However, observers have noted that the uncertainties associated with the 

short-term renewals of the program, and the changing eligibility of particular AGOA beneficiary 

countries, have limited AGOA’s impact in attracting new investment to SSA. 

SSA Reciprocal Trade Agreements 

Reciprocal trade agreements differ in many ways from unilateral trade preference 

programs. 

Unilateral trade preference programs imply a one-way flow of benefits, while reciprocal trade 

agreements generally involve a negotiated accord between countries in which each incurs 

benefits and obligations, generally for an indefinite period of time. In addition, the scope of 

reciprocal agreements is generally broader, addressing not only tariff reductions but also 

nontariff measures (NTMs) and other conditions relating to trade in goods and services such as 

quotas, customs procedures, and administrative policies. Unilateral trade preferences are 

generally temporary and can be removed with little warning, while reciprocal agreements 

establish more permanent trading rules, which are gradually codified into the laws of the 

member countries. According to the economic literature, unilateral programs tend to provide 

only modest benefits to beneficiaries because NTMs (such as administrative compliance costs 

and the transaction costs associated with rules of origin) are mostly not addressed. Further, 

dozens of bilateral, regional, and multilateral trade agreements have been signed over the last 

20 years, lowering tariffs between trading partners and reducing the tariff advantages that 

beneficiary countries receive under unilateral preference programs. On the other hand, many 

27
reciprocal trade agreements encourage economic restructuring that ultimately promotes a 

more efficient use of resources and more permanent trading relationships. 

The North American Free Trade Agreement (NAFTA) and U.S. free trade agreements with 

Chile and Morocco highlight some advantages of reciprocal agreements over unilateral 

ones. 

Mexico’s participation in NAFTA negotiations can be viewed as the means chosen by the 

Mexican government to anchor policy commitments it had already made, both at home and 

abroad. In addition, NAFTA membership encouraged the government to make structural 

reforms in the economy. Mexico’s experience with NAFTA implies that SSA countries, too, can 

use reciprocal trade agreements as a stimulus to enact economic reforms and compete 

globally. Such reforms may have many impacts, but one of the most important is to provide 

investors with the economic certainty needed to increase FDI. Chile’s 2004 free trade 

agreement (FTA) with the United States had many such reforms, including lowered tariffs, 

codified rules for FDI, new protections for investors, and forums to address certain NTMs. Both 

average annual FDI inflows into Chile as well as exports more than doubled in the years 

following the implementation of the FTA. Morocco is another case in point: since it signed an 

FTA with the United States in 2004, both U.S. exports to Morocco and FDI in Morocco have 

increased significantly and Morocco’s exports to the United States have more than doubled. 

These trends are likely linked to trade and investment rules imbedded in the agreement. 

Morocco is also the first country in North Africa to conclude a bilateral trade facilitation 

agreement with the United States, building on the FTA. Trade facilitation agreements between 

nations and FDI linkages can be enhanced with reciprocal trade agreements in effect.

SSA countries, often as regional blocs, have pursued reciprocal trade agreements with 

non-SSA partners—many with asymmetrical provisions. 

An important aspect of many of these trade agreements is regional integration of SSA 

countries. For example, the economic partnership agreements (EPAs) between the European 

Commission and African states and regions have African regional integration as an explicit goal. 

Similarly, the FTA between the European Free Trade Association (EFTA), a small European bloc, 

and the Southern African Customs Union (SACU) incorporates bilateral agricultural 

arrangements concluded with three of the EFTA states separately as well as the SACU states 

collectively. These agreements generally allow SSA partners to reduce tariffs over a longer 

period of time than the non-SSA partners. For example, under the EFTA-SACU FTA, EFTA tariff 

reductions or elimination took place immediately on the date of entry into force (in May 2008), 

while SACU tariff reductions or elimination will be complete by January 2015. Similarly, EPAs 

between the EU and SSA countries specify that EU tariff reductions are immediate and that 

28
African countries’ reductions are to be phased in over many years—as many as 25 years for 

some products and countries. 

Summary of the Economic Literature on AGOA 

Trade Performance

The findings of studies estimating AGOA’s impact on exports from SSA vary, ranging from 

broad positive effects to no effect, or to positive effects only in certain sectors. 

Due to differences in study methodology, time periods assessed, and level of product 

aggregation, studies assessing the effect of AGOA on total exports found either that AGOA had 

no effect or else that the effects, while positive, were generally small. Another set of studies 

that looked at AGOA’s effect on exports by disaggregated product categories found that AGOA 

helped to increase SSA exports of some products, but not others. For example, numerous 

investigations concluded that AGOA led to increased beneficiary country exports of apparel, 

with many emphasizing that increased apparel exports were largely due to AGOA’s rules of 

origin for apparel (particularly the third-country fabric provision), which are more liberal than 

those of many other U.S. preference programs. 

The literature on AGOA’s role in export diversification supports the hypothesis that for 

nonenergy exports, AGOA was modestly successful in generating new product export 

flows. 

More than a decade after the program’s implementation, most U.S. imports under AGOA 

continue to be energy products. However, the literature concludes that AGOA has helped to 

generate exports of new products in several nonenergy product categories, including apparel, 

agriculture, and manufactures (e.g., plastics and miscellaneous chemical products). Again, there 

is some evidence to suggest that the diversification of apparel exports is largely due to more 

liberal rules of origin. Although the number of nonenergy products exported has increased, 

many of these new exports occurred in product groups that represented only a small share of a 

country’s total exports.

Studies analyzing the effects of other unilateral trade preference programs on SSA 

exports had mixed results: some found increased exports, some found no effect, and 

some found effects only for certain sectors. 

Most studies analyzing the effects of other unilateral trade preference programs on SSA exports 

have dealt with the effects of EU trade preferences. Again, because of differences in study 

methodology, time period assessed, and level of product aggregation, studies analyzing total 

29
exports had mixed results: some suggested that preferences increased exports, while others 

found that preferences had a negative relationship with exports. Studies analyzing more 

disaggregated trade flows generally concluded that EU preferences had a positive effect on 

developing country export flows, but these effects varied by country and product sector. With 

respect to export diversification, EU programs were found to have increased the number of 

products exported in some sectors, while leading to greater export concentration in others. 

Aside from EU preferences, one analysis of China’s trade preference program found that the 

program likely generated higher SSA exports for only one product category—“other primary 

products.” This includes beverages, tobacco, oils and fats, and mineral fuels.

Studies comparing EU and U.S. unilateral preference programs found that EU programs 

were generally more effective at increasing beneficiary country exports; U.S. programs, at 

diversifying beneficiary country exports. 

While comparative analyses concluded that both U.S. and EU trade preferences helped to 

increase beneficiary country export flows, in general EU preferences had a greater effect on the 

value of exports. At the same time, the trade-generating effects of preferences depended 

greatly on the sector and beneficiary country in question. U.S. preferences were found to be 

more effective at increasing SSA apparel exports than EU preferences, but EU preferences were 

more effective at increasing SSA agricultural exports. At the same time, U.S. preferences were 

found to be more likely overall to generate an export of a new product than EU preferences, 

and U.S. preferences were found to increase the probability of exporting new products in more 

sectors than EU preferences.

Although AGOA has helped generate additional SSA exports in some sectors, the 

literature concluded that the program could be further improved. 

The literature offered several recommendations on how AGOA could be improved, based 

largely on results of empirical investigations. These recommendations covered changes to the 

program itself, including making AGOA permanent, extending AGOA to offer full dutyfree/quota-free access to the U.S. market, and further relaxing AGOA’s rules of origin. Other 

recommendations involved further assistance that the United States could offer that would 

help beneficiaries better take advantage of AGOA preferences, such as providing greater trade 

facilitation assistance, offering more capacity-building to help beneficiaries better comply with 

SPS rules, and promoting U.S. foreign direct investment in Africa. Finally, the literature 

identifies actions that beneficiary countries could take on their own that would improve their 

ability to take advantage of AGOA preferences, including reducing tariffs on imports of 

intermediate goods, investments in transportation infrastructure, improved rule of law, and 

improved protection of intellectual property rights.

30
Chapter 1

Introduction 

Purpose and Scope

The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000, by 

President Clinton as part of the Trade and Development Act of 2000.5 In a statement of policy in 

the Act, Congress expressed support for, inter alia, “encouraging increased trade and 

investment between the United States and sub-Saharan Africa,” “reducing tariff and nontariff 

barriers and other obstacles to sub-Saharan African and United States trade,” and “expanding 

United States assistance to sub-Saharan Africa’s regional integration efforts.”6 The statement of 

policy also expressed support for negotiating reciprocal and mutually beneficial trade 

agreements, strengthening and expanding the private sector, and facilitating the development 

of civil societies and political freedom.7 Authority to provide the principal trade preferences 

under AGOA is currently in effect through September 30, 2015.

Noting that the Administration is working with its partners in sub-Saharan Africa (SSA) and in 

Congress to renew and potentially modify AGOA, the United States Trade Representative 

(USTR), in a letter received on October 17, 2013, requested that the U.S. International Trade 

Commission (Commission or USITC) conduct four investigations and provide four reports 

concerning AGOA.8 This report—the first listed of the four—focuses on AGOA’s trade 

performance, utilization, and competitiveness factors; AGOA’s effects on the business and 

investment climate in sub-Saharan Africa; and current or potential reciprocal trade agreements 

5 Public Law 106-200, May 18, 2000, 114 Stat. 251. Provisions in the Act referred to as the African Growth and 

Opportunity Act are set out in Title I of the 2000 Act.

6 19 U.S.C. § 3702.

7 Ibid.

8 These reports are provided in response to a letter dated September 30, 2013 (received October 17, 2013), from 

the USTR, requesting that the Commission provide four AGOA reports under section 332(g) of the Tariff Act of 

1930 (19 U.S.C. § 1332(g)). The four reports, and their investigation numbers, are (1) 332-542, AGOA: Trade and 

Investment Performance Overview; (2) 332-544, AGOA: Economic Effects of Providing Duty-Free Treatment for 

Imports; (3) 332-545, U.S. AGOA Rules of Origin: Possible Changes to Promote Regional Integration and Increase 

Exports to the United States; and (4) 332-546, EU-South Africa FTA: Impact on U.S. Exports to South Africa. A copy 

of the letter from the USTR appears in appendix A. The Commission’s Federal Register notice announcing the 

institution of these investigations appears in appendix B.

31

 
between SSA and non-SSA partners, along with the relationship of these agreements to the 

objectives of AGOA. The USTR requested that the report cover the period 2000 through 2013.9

More specifically, the USTR asked for the USITC’s report to:

• Provide a review of the literature on the AGOA preference program, particularly 

studies exploring whether AGOA has succeeded in expanding and diversifying the 

exports of AGOA beneficiary countries to the United States, compared to preference 

programs offered by third parties such as the European Union (EU);

• Identify the non-crude petroleum sectors (i.e., manufacturing and agricultural) in 

AGOA beneficiary countries in which exports to the United States under AGOA and 

under the U.S. Generalized System of Preferences (GSP) program have increased the 

most, in absolute terms, since 2000, and identify the key factors behind this growth;

• Describe the main factors affecting AGOA trade in the principal non-crude 

petroleum products that AGOA beneficiary countries export and that the United 

States principally imports from non-SSA sources;

• Based on a literature review, identify products with potential for integration into 

regional or global supply chains and export potential to the United States under 

AGOA, as well as factors that affect AGOA beneficiary countries’ competitiveness in 

these products; 

• Identify and describe changes, if any, in the business and investment climates in SSA 

countries since 2000, including removal of barriers to domestic and foreign 

investment; 

• Describe U.S. investment trends related to goods and services in SSA countries since 

2000, and compare these trends with investments by other countries in SSA 

countries, including investments by the EU, China, Brazil, and India. Identify any links 

between these investment trends and the AGOA program;

• Provide a list of reciprocal trade agreements that SSA countries have completed or 

that are under negotiation. For the reciprocal trade agreements that have entered 

into force and, to the extent information is available, for those that are pending or 

under negotiation, provide a brief description of areas covered or likely to be 

9 It should be noted that the terms “sub-Saharan African country” and “beneficiary sub-Saharan African country,” 

and variations of each term, have different statutory meanings. AGOA defines the term “sub-Saharan African 

country” to mean the 49 countries listed in 19 U.S.C. § 3706, including South Sudan, which was added in 2012. 

AGOA defines the term “beneficiary sub-Saharan African country” to mean a country listed in 19 U.S.C. § 3706 that 

the President has determined is eligible for such designation under 19 U.S.C. § 2466a(a). In this report, the terms 

“AGOA beneficiary country” and “AGOA country” are used to identify an SSA country that has been designated 

eligible to receive AGOA preferences.

32

 
covered under the agreements, and identify U.S. sectors/products impacted or 

potentially impacted, including those affected by any tariff differentials; and

• Provide examples of developing countries that have moved from unilateral trade 

preferences to reciprocal trade agreements, and any effects of the change for the 

developing country in terms of expansion and diversification of trade.

As requested by USTR, the report covers SSA countries, as defined in AGOA, and where 

applicable, those AGOA beneficiary countries that are designated as lesser-developed 

beneficiary countries (LDBCs).

Approach and Sources of Information

In response to USTR’s request, the Commission based this report on an analysis of trade and 

investment data, a review of the relevant literature (including previous Commission reports on 

SSA countries and AGOA), and information obtained from industry sources through telephone 

interviews and local field interviews. In addition, the report includes information drawn from a 

public hearing held by the Commission on January 14, 2014,10 and written submissions received 

in response to a notice published in the Federal Register.

11 

The trade data used in this report to examine the trends in exports from AGOA beneficiary 

countries came from official statistics of the U.S. Department of Commerce as well as from the 

Global Trade Atlas database. To describe investment trends in SSA countries, foreign direct 

investment (FDI) data were largely drawn from UNCTADStat, the interactive database of the

United Nations Conference on Trade and Development (UNCTAD); Eurostat and other foreigngovernment data sources; databases maintained by the U.S. Bureau of Economic Analysis 

(BEA); the Financial Times’ FDI Markets database; and the Bureau van Dijk’s Zephyr database. 

Other sources of information for the report included academic literature and publications from 

U.S. and foreign governments; regional organizations in SSA countries, such as the Common 

Market for Eastern and Southern Africa (COMESA) and the African Development Bank; and 

international institutions, including the International Monetary Fund (IMF), the Organisation for 

Economic Co-operation and Development (OECD), the World Bank, the World Trade 

Organization (WTO), and United Nations agencies, such as UNCTAD, the United Nations 

Economic Commission for Africa (UNECA), and the United Nations Industrial Development 

Organization (UNIDO).

10 See appendix C for a list of hearing participants. 11 See appendix D for summaries of the positions of interested parties.

33

 
Organization of the Report

The remainder of this chapter summarizes the AGOA program and describes beneficiaries and 

trade benefits under the program. Chapter 2 analyzes U.S. imports from AGOA beneficiary 

countries, identifies U.S. imports under AGOA and the GSP that increased the most in absolute 

terms since 2000, and discusses the factors behind this growth. Chapter 3 broadly examines the 

potential for SSA products to integrate into regional and global supply chains, describes current 

examples of SSA participation in these supply chains, and highlights other products with 

potential for integrating into these supply chains. Chapter 4 explores the SSA products with the 

greatest potential for exports to the United States, and identifies and analyzes products that 

SSA countries export but that the United States imports from other sources. Chapter 5 

describes the business climate and investment trends in SSA, while chapter 6 provides a list and 

brief description of reciprocal trade agreements that SSA countries have completed or that are 

under negotiation. Chapter 6 also gives examples of developing countries that have moved 

from unilateral trade preferences to reciprocal trade agreements. Finally, chapter 7 offers a 

review of economic literature on AGOA that seeks to assess the program’s success in expanding 

and diversifying exports to the United States, compared to preference programs offered by 

third countries.

There are 8 appendixes to this report. Appendix A contains a copy of the request letter from 

USTR, and appendix B reproduces the Federal Register notice announcing the institution of 

these investigations. Appendix C has a copy of the hearing schedule, and appendix D contains a 

summary of the positions of interested parties. Appendices E through H include statistical and 

text tables and figures that are referenced throughout the report. 

Summary of the AGOA Program

AGOA authorizes the President to (1) designate an SSA country as a beneficiary SSA country if 

the President determines the country meets the eligibility requirements set forth by the 

authorizing legislation, and (2) grant certain unilateral trade benefits to designated beneficiary 

SSA countries.12 In addition to authorizing the benefits, the Act established a U.S.-SSA Trade 

and Economic Cooperation Forum (AGOA Forum) to foster close economic ties between the 

United States and sub-Saharan Africa.13 

12 The President’s authority to designate an SSA country as a beneficiary SSA country is set forth at 19 U.S.C. § 

2466a(a), 19 U.S.C. § 3703.

13 19 U.S.C. § 3704.

34

 
AGOA also amended title V of the Trade Act of 1974 to extend additional benefits under the 

U.S. GSP program to beneficiary SSA countries, initially through September 30, 2008, and by 

authorizing the President to provide duty-free treatment for certain articles otherwise excluded 

from duty-free treatment under the GSP.14 AGOA also provided duty-free treatment for certain 

textile and apparel articles. It did so under two provisions: (1) the Act’s textile and apparel 

provisions (section 112) initially through September 30, 2008, and (2) a special rule for lesserdeveloped countries, which is also referred to as the “third-country fabric provision” because it 

allows beneficiary countries to use non-U.S., non-AGOA fabric (section 112(b)(3)(B)) in making 

apparel for export under AGOA, initially through September 30, 2004.15 

Several major amendments have been made to AGOA since its enactment:

• On August 6, 2002, President Bush signed into law the Trade Act of 2002 (Public Law 

107-210). The AGOA-related provisions in the 2002 Act, referred to as AGOA II, 

clarified and expanded the eligibility of products under the textile and apparel 

provisions. It also increased the cap on U.S. imports of apparel articles made with 

regional fabric or yarns. 

• On July 12, 2004, President Bush signed into law the AGOA Acceleration Act of 2004 

(Public Law 108-274), known as AGOA III. AGOA III extended preferential trade 

treatment to AGOA beneficiary countries through September 30, 2015; extended 

the third-country fabric provision through September 30, 2007; and provided 

additional Congressional guidance to the Administration on how to administer the 

textile and apparel provisions of the bill.16 The 2004 amendments also expanded the 

definition of “lesser developed beneficiary sub-Saharan African country” to 

specifically include Botswana and Namibia, making them eligible for the thirdcountry fabric provision. 17 However, AGOA III reduced the cap on U.S. imports of 

apparel articles made with third-country fabric or yarns.18 

• On December 20, 2006, President Bush signed into law the Africa Investment 

Incentive Act of 2006 (Public Law 109-432), known as AGOA IV. AGOA IV extended 

14 Section 111(a) of the Trade and Development Act of 2000 (114 Stat. 257) added section 506A to title V of the 

Trade Act of 1974, codified at 19 U.S.C. § 2466a.

15 The current AGOA provisions providing preferential treatment for certain textiles and apparel are codified at 19 

U.S.C. § 3721.

16 The AGOA Acceleration Act of 2004 (Pub. L. 108-274). 17 As amended in 2004, AGOA defined the term “lesser-developed beneficiary sub-Saharan African country” to 

mean “a beneficiary sub-Saharan African country that had a per capita gross national product of less than $1,500 in 

1998, as measured by the International Bank for Reconstruction and Development.” Botswana and Namibia do not 

qualify under this definition. See 19 U.S.C. § 3721, historical and statutory notes. For a list of LDBCs under AGOA, 

see table 1.1.

18 Before AGOA III, U.S. imports of apparel articles made with third-country fabric or yarns were subject to a cap, 

which was higher than what was specified in AGOA III. However, these caps have never been reached. 

35

 
the third-country fabric provision through September 30, 2012; increased the cap on 

U.S. imports of apparel articles made with third-country fabric or yarns for the oneyear period beginning October 1, 2006, to 3.5 percent of all apparel articles 

imported into the United States in the preceding 12-month period; added an 

“abundant supply” provision;19 designated certain denim articles as being in 

abundant supply; and added a textile provision for lesser-developed countries.20

• On October 16, 2008, President Bush signed into law an amendment to the AGOA 

textile and apparel provisions as section 3 of the Andean Trade Preference Extension 

Act (Public Law 110-436). The amendment continued to designate Botswana and 

Namibia as lesser-developed beneficiary SSA countries, and extended the 

designation to Mauritius.21 It also revoked the abundant supply provision.22

• On August 10, 2012, President Obama signed into law amendments to AGOA (Public 

Law 112-163) that added South Sudan to the list of SSA countries, and extended the 

third-country fabric provision to September 30, 2015.23

Beneficiaries 

AGOA Beneficiaries

The President is authorized to designate an SSA country as an eligible AGOA country if he 

determines that the country meets the eligibility criteria for designation as a beneficiary 

developing country under the U.S. GSP law and certain additional eligibility requirements 

under AGOA.24 With regard to the AGOA eligibility requirements, the President must determine 

that the country: (1) has established, or is making continual progress toward establishing, a 

market-based economy, the rule of law, the elimination of barriers to U.S. trade and 

investment, poverty reduction, protection of internationally recognized worker rights, and 

efforts to combat corruption; (2) does not engage in activities that undermine U.S. national 

security or foreign policy interests; and (3) does not engage in gross violations of internationally 

19 AGOA IV amended section 112(c) of AGOA, providing for Commission investigations and determinations 

concerning whether fabric or yarn produced in beneficiary SSA countries was available in commercial quantities or 

“abundant supply” for use by lesser developed beneficiary sub-Saharan African countries in the production of 

apparel. The amendment specifically noted that certain denim fabric was available in the region. For more 

information about the abundant supply provision, including the Commission’s investigations and determinations, 

see USITC, Commercial Availability of Fabric and Yarns in AGOA Countries, 2007. 20 The Africa Investment Incentive Act of 2006 (Pub. L. 109-432). 21 Miscellaneous Trade and Technical Corrections Act of 2004 (Pub. L. 108-429) amended AGOA and designated 

Mauritius as a lesser-developed beneficiary sub-Saharan country; however, AGOA IV did not continue to grant 

Mauritius this status.

22 The Andean Trade Preference Extension Act, section 3 (Pub. L. 110-436). 23 19 U.S.C. § 2466a(a). 24 For a list of the requirements, see 19 U.S.C. § 3703(a).

36

 
recognized human rights or provide support for acts of international terrorism.25 The President 

must terminate the designation of a country if he determines that an eligible SSA country is not 

making continual progress in meeting these requirements.26

AGOA defines “sub-Saharan Africa” to refer to 49 SSA countries, including South Sudan, added 

in 2012.27 In his initial proclamation on October 2, 2000, after AGOA was enacted, President 

Clinton designated 34 SSA countries as AGOA-eligible countries.28 The President is required to 

monitor, review, and report to Congress annually on the progress of each of the 49 countries in 

meeting the AGOA eligibility requirements in order to determine the current or potential 

eligibility of each country to be designated as a beneficiary.29 Table 1.1 shows that the 

President, in 2013, determined that 39 of 49 potentially eligible countries in SSA were eligible 

for AGOA benefits.30 

Textile and Apparel Beneficiaries

SSA countries determined to be eligible for AGOA benefits do not automatically qualify as 

eligible for preferences under the textile and apparel provisions. To be eligible for trade 

preferences under the textile and apparel provisions, AGOA beneficiary countries must have in

place an effective visa system31 to prevent unlawful transshipments and the use of counterfeit 

documents, as well as effective enforcement and verification procedures, and be separately 

designated to receive this tariff treatment.32 In 2013, 27 AGOA beneficiary countries also 

qualified for the general textile and apparel provisions (table 1.1).

AGOA beneficiary countries that had a per capita gross national product of less than $1,500 a 

year in 1998, as measured by the World Bank, are accorded the status of LDBCs.33 These 

countries may be eligible for additional preferential treatment for “lesser-developed 

25 19 U.S.C. § 3703(a). 26 19 U.S.C. § 3703(b). 27 19 U.S.C. § 3706. 28 Presidential Proclamation 7350, October 2, 2000. 29 19 U.S.C. § 2466a(a)(2). 30 USITC, “Harmonized Tariff Schedule of the United States (2013)” (accessed March 11, 2013). 31 19 U.S.C. § 3722(a)(1)(A). A visa system is a government-industry process that demonstrates that the goods for 

which benefits are claimed were in fact produced in an eligible SSA country or countries according to the rules of 

origin that must be met to claim those benefits. USTR, “African Growth and Opportunity Act Implementation 

Guide,” October 2000, 8.

32 19 U.S.C. § 3722(a)(1). The designated countries are listed in subchapter XIX of chapter 98 of the Harmonized 

Tariff Schedule of the United States (HTS), in which the treatment of textiles and apparel is set forth. See also 

USDOC, OTEXA, “Trade Preference Programs: AGOA” (accessed on November 27, 2013).

33 19 U.S.C. § 3721(c)(3)(A). In 2013, there were 39 AGOA eligible countries. The three AGOA beneficiary countries 

without LDBC status were Gabon, Seychelles, and South Africa.

37

 
countries”—under the third-country fabric provision and the textile provision described 

below—on the condition that such countries meet the textile and apparel provisions’ 

requirements mentioned above. In 2013, 26 AGOA beneficiary countries were eligible for these 

additional textile and apparel benefits for LDBCs, including the third-country fabric provision. 

Although Botswana, Namibia, and Mauritius had a per capita gross national product of more 

than $1,500 in 1998, they are currently accorded AGOA LDBC status by statute.34 South Africa is 

the only country that is eligible for trade benefits under the textile and apparel provisions, but 

not for AGOA LDBC trade benefits (table 1.1).

Trade Benefits under AGOA 

Almost all products of AGOA beneficiary countries may enter the United States duty-free, either 

under AGOA, GSP, or a non-preference zero rate of duty. The latter duty rate applies to any 

country with which the United States has normal trade relations (NTR), formerly known as 

most-favored-nation status.35

AGOA and GSP 

AGOA builds on the U.S. GSP program, a trade program designed to promote economic growth 

in developing countries.36 The tariff benefits provided by AGOA include all products covered by 

the GSP.37 Moreover, AGOA authorizes the President to grant duty free treatment to certain 

articles that are normally excluded from such treatment under the GSP if the President 

determines that such articles are not import-sensitive in the context of imports from 

beneficiary SSA countries.38 Import-sensitive articles under GSP consist of watches; certain

electronic articles; certain steel articles; footwear, handbags, luggage, flat goods, work gloves, 

and leather wearing apparel; certain semi-manufactured and manufactured glass products; and 

any other articles that the President determines to be import-sensitive in the context of the 

GSP.39As a result, very few products of AGOA beneficiary countries remain ineligible for duty34 19 U.S.C. § 3721(c)(3). See table 1.1. 35 See chapter 2 for more information about trade under these programs. Also, see USTR, 2008 Comprehensive 

Report, May 2008, 22. 36 USTR, “Generalized System of Preferences (GSP)” (accessed on November 20, 2013). 37 Designated beneficiary countries (whether or not least developing (LDBCD)) for GSP are listed in HTS general 

note 4; for AGOA as a whole, in HTS general note 16; and for the textiles, apparel, and luggage benefits, in U.S. 

note 1 and 2(d) of subchapter XIX of HTS chapter 98 (the latter note lists LDBDC beneficiaries). AGOA benefits 

provided in the HTS by means of GSP duty-free entry continue in effect for AGOA beneficiary countries during 

lapses in the GSP program.

38 19 U.S.C. § 2466a(b)(1). 39 19 U.S.C. § 2463(b). See also USDHS, CBP, The African Growth and Opportunity Act, August 2003, 3.

38

 
Table 1.1 SSA countries’ eligibility for AGOA and AGOA textile and apparel provisions, 2001–13

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Angola X X X X X X X X X X

Benin X X X X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b

Botswana X a X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Burkina Faso X X a ,b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Burundi X X X X X X X X

Cameroon X X a ,b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Cabo Verde X X a ,b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a ,b X a ,b X a ,b X a ,b 

Central African Republic X X X

Chad X X X X X X a ,b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Comoros X X X X X X

Congo, Dem. Rep. X X X X X X X X

Congo, Rep. X X X X X X X X X X X X X

Côte d`Ivoire X X a , b X a , b X X X a , b

Djibouti X X X X X X X X X X X X X

Equatorial Guinea

Eritrea X X X

Ethiopia X a ,b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Gabon X X X X X X X X X X X X X

Gambia X X X X X X a , b X a , b X a , b X a , b X a , b X a , b

Ghana X X a ,b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Guinea X X X X X X X X X X X X

Guinea-Bissau X X X X X X X X X X X X

Kenya X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Lesotho X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Liberia X X X X X a ,b X a ,b X a ,b

Madagascar X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Malawi X a, b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Mali X X X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Mauritania X X X X X X X X X X X

Mauritius X a X a X a X a, b X a, b X a, b X a X a , b X a ,b X a , b X a , b X a , b X a , b

Mozambique X X a, b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Namibia X a X a ,b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Niger X X X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a, b X a ,b X a ,b

Nigeria X X X X a, b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Rwanda X X X a, b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

São Tomé and Príncipe X X X X X X X X X X X X X

Senegal X X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a ,b X a ,b

Seychelles X X X X X X X X X X X X X

Sierra Leone X X X X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Somalia

South Africa X a X a X a X a X a X a X a X a X a X a X a X a X a 

South Sudan X

Sudan

Swaziland X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Tanzania X X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b X a ,b

Togo X X X X X X

Uganda X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Zambia X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b X a , b

Zimbabwe

Source: USITC DataWeb/USDOC (accessed November 26, 2013), USDOC/OTEXA (accessed November 26, 2013), various 

Federal Register notices, and various Presidential Proclamations.

Note: X: Eligible for AGOA; a

: Eligible for AGOA textile and apparel provisions; b: Eligible for additional AGOA textile and apparel 

benefits for LDBCs. 

39
free treatment. Ineligible products currently include certain steel products, canned apricots and 

peaches, dried garlic, frozen fruit, and some leather and glass products.40

In 2012, qualifying goods from AGOA beneficiary countries were eligible to enter duty free 

under approximately 6,800 tariff lines (defined at the 8-digit level in the Harmonized Tariff 

Schedule of the United States, or HTS).41 Of these, approximately 3,500 tariff lines were already 

covered by GSP, 1,500 tariff lines were already covered by GSP for least-developed beneficiary

developing countries (LDBDCs),42 and 1,800 tariff lines were covered exclusively by AGOA.43

Unlike GSP, for sugar, tobacco, peanuts, beef, and some dairy products where U.S. tariff rate 

quotas exist, AGOA beneficiary countries can export to the United States duty free within the 

allocated quota, although the shipments above the applicable quantitative limit are subject to 

the prevailing NTR over-quota duties.44 

Although a large portion of AGOA-eligible items also qualify under the GSP, AGOA adds a 

number of other benefits—in particular, that it does not lapse if the GSP program experiences 

what have become frequent periodic expirations and lapses. Also, U.S. imports under AGOA are 

not subject to the GSP’s competitive need limitations and GSP’s country-income graduation 

requirements.45 

Rules of Origin

The duty-free treatment provided by AGOA is subject to rules of origin requirements, which are 

the same as under GSP except for the textile and apparel provisions.46 For non-apparel/textile 

items, the product must be imported directly from an AGOA beneficiary country into the 

customs territory of the United States, and must be the growth, product, or manufacture of an 

AGOA beneficiary country. Moreover, certain costs may not be less than 35 percent of the 

appraised value of the article at the time it enters the United States.47 These costs are the sum 

of (a) the cost or value of the materials produced in one or more AGOA beneficiary countries or 

former AGOA beneficiary countries, plus (b) the direct costs of processing operations 

performed in those countries. Up to 15 percentage points of that 35 percent may be derived 

40 USITC DataWeb/USDOC (accessed on December 31, 2013). 41 This figure does not include imports under the tariff lines representing the special AGOA apparel and textile 

provisions.

42 In 2013, GSP LDBDCs included 30 sub-Saharan African countries; 25 of them were AGOA beneficiary countries. 43 USITC DataWeb/USDOC (accessed on November 20, 2013). 44 USTR, 2008 Comprehensive Report, May 2008, 22. 45 19 U.S.C. § 2463(c)(2)(D). 46 19 U.S.C. § 2466a(b)(2). 47 19 U.S.C. § 2463(a)(2).

40

 
from U.S. parts or materials used to produce the product in a beneficiary SSA country or 

countries.48 For qualifying AGOA textile and apparel products, the rules of origin requirements 

vary with the product. 

AGOA Textile and Apparel Provisions

AGOA’s textile and apparel provisions took effect on October 1, 2000, providing duty-free and 

quota-free treatment for certain eligible textile and apparel articles made in beneficiary SSA 

countries.49 Like the other AGOA preferences, the textile and apparel provisions are scheduled 

to expire on September 30, 2015.50 

Eligible textile and apparel articles must be made in qualifying SSA countries, and include:

• apparel made with U.S. yarns and fabrics; 

• apparel made with SSA (regional) yarns and fabrics, subject to a cap;

• apparel made with yarns and fabrics not produced in commercial quantities in the 

United States; 

• certain cashmere and merino wool sweaters; and

• eligible hand-loomed, handmade, or folklore articles, and ethnic printed fabrics.51

The Third-Country Fabric Provision

Under a special rule for lesser-developed countries, certain AGOA countries with LDBC status 

have access to additional preferential treatment in the form of duty-free access for apparel 

articles made from yarns and fabric originating anywhere in the world, subject to a cap.52 This 

special rule is also referred to as the third-country fabric provision, and expires on

September 30, 2015.53

48 USTR, “The African Growth and Opportunity Act Implementation Guide,” October 2000, 13. 49 Before the Multi-Fiber Arrangement expired on January 1, 2005, the United States imposed quotas on the 

amount of textiles and garments that could be imported from developing countries. The textile and apparel 

articles imported under AGOA were exempted from such quota restrictions, although some are subject to a cap. 50 19 U.S.C. § 3721(g). 51 19 U.S.C. § 3721(b). 52 19 U.S.C. § 3721(c)(1). As noted above, U.S. imports of apparel made with third-country fabric are subject to a 

cap. However, in practice, the cap has never been reached, nor have trade levels come near to reaching the limits 

under the provision.

53 19 U.S.C. § 3721(c)(1)(B).

41

 
Textile Provision for Lesser-Developed Countries 

AGOA IV added a textile provision for lesser-developed countries, which extends preferential 

treatment to textiles and textile articles54 originating entirely in beneficiary AGOA LDBCs. 

Beneficiary countries must meet the textile and apparel benefit eligibility requirements and 

incorporate textiles and textile articles into their visa systems.

Cap and Surge Mechanism

The duty-free cap on U.S. imports of apparel from AGOA beneficiary countries is filled on a firstcome, first-served basis. If during any year the cap is met, the relevant apparel products from 

AGOA beneficiary countries may still enter the United States; however, they will be assessed 

the prevailing NTR duty rate (column 1-general rates set forth in the HTS) at the time of entry.55

To date, the cap has never been reached. 

In addition to the cap on apparel imports, AGOA includes a surge mechanism to protect U.S. 

industries from surges in apparel imports. AGOA requires the Secretary of Commerce to 

monitor apparel imports made of regional and third-country yarns and fabrics on a monthly 

basis to guard against disruptive import surges. If increased imports are determined to cause or 

threaten serious damage to the U.S. apparel industry, the President shall suspend the duty-free 

treatment for the article(s) in question.56 To date, the surge mechanism has not been invoked.

54 Applied to textile and textile articles classifiable under chapters 50 through 60, or chapter 63 of the HTS. 19 

U.S.C. § 3721(b)(8). 55 USTR, “The African Growth and Opportunity Act Implementation Guide,” October 2000. 56 19 U.S.C. § 3721(b)(3)(B).

42

 
Bibliography

Cornell University. Legal Information Institute. “19 CFR 10.178a—Special Duty-Free Treatment 

for Sub-Saharan African Countries.” http://www.law.cornell.edu/cfr/text/19/10.178a

(accessed December 5, 2013).

U.S. Department of Commerce (USDOC). Office of Textiles and Apparel (OTEXA). “Trade 

Preference Programs: The African Growth and Opportunity Act (AGOA).” 

http://web.ita.doc.gov/tacgi/eamain.nsf/d511529a12d016de852573930057380b/1e854

88eb01fd2fd852573940049047d?OpenDocument (accessed November 26, 2013).

U.S. Department of Commerce (USDOC). International Trade Administration (ITA). “African 

Growth and Opportunity Act.” http://trade.gov/agoa/index.asp (accessed on 

November 20, 2013).

U.S. Department of Homeland Security (USDHS). Customs and Border Protection (CBP). The 

African Growth and Opportunity Act. “What Every Member of the Trade Community 

Should Know About. . .” series. Informed Compliance publications, August 2003. 

http://otexa.ita.doc.gov/agoa-cbtpa/icp065.pdf. 

U.S. International Trade Commission (USITC). Commercial Availability of Fabric and Yarns in 

AGOA Countries: Certain Denim. USITC Publication 3950. Washington, DC: USITC, 2007.

United States Trade Representative (USTR). “African Growth and Opportunity Act (AGOA).” 

http://www.ustr.gov/trade-topics/trade-development/preference-programs/africangrowth-and-opportunity-act-agoa (accessed on November 20, 2013).

———. “The African Growth and Opportunity Act Implementation Guide,” October 2000. 

http://www.ustr.gov/archive/assets/Trade_Development/Preference_Programs/AGOA/

AGOA_Implementation_Guide/asset_upload_file505_6510.pdf. 

———. 2008 Comprehensive Report on U.S. Trade and Investment Policy toward sub-Saharan 

Africa and Implementation of the African Growth and Opportunity Act, May 2008. 

http://www.ustr.gov/sites/default/files/asset_upload_file203_14905.pdf. 

———. “Generalized System of Preferences (GSP).” http://www.ustr.gov/trade-topics/tradedevelopment/preference-programs/generalized-system-preference-gsp (accessed on 

November 20, 2013).

43

Chapter 2

U.S. Imports from AGOA Countries and 

the Role of AGOA 

Introduction

This chapter provides an overview of U.S. merchandise imports from designated AGOA 

beneficiary countries and discusses the role of AGOA in their trade with the United States. The 

overview covers the period 2000 to the present, although it focuses on 2008–13, the most 

recent six-year period for which data are available.57 Trade data presented for 2000–2013 are 

based on the list of countries eligible for trade preferences under AGOA, which varies by year, 

as described in chapter 1.58 

The first half of the chapter analyzes U.S. imports under AGOA by sector and by AGOA 

beneficiary country (hereafter “AGOA country”), and describes the importance of U.S. imports 

under AGOA as a share of total imports from AGOA countries. The second half of the chapter 

identifies the U.S. imports from AGOA countries that increased the most since 2000 under 

AGOA and the U.S. Generalized System of Preferences (GSP), and examines the factors behind 

this growth.

U.S. Imports from AGOA Countries

Total U.S. imports from AGOA countries grew at an average annual rate of 6.7 percent between 

2000 and 2013, rising from $16.5 billion in 2000 to $38.2 billion in 2013 (figure 2.1).59 Growth 

was most pronounced in the earlier part of this period: during 2000–2008, the value of U.S. 

imports from AGOA countries increased almost fivefold, reaching a record of close to $80 billion 

in 2008. Since then, U.S. imports from AGOA countries have fluctuated sharply.

The trend in total U.S. imports from AGOA countries closely tracks the trend in crude petroleum 

imports, which accounted for about 70 percent of total import value over this time period. The 

value of U.S. crude petroleum imports rose on average 14.6 percent annually between 2000 

and 2013, although such imports became highly volatile after 2008. Both the quantity and price 

57 Although AGOA was signed into law in May 2000, the first U.S. imports to enter under AGOA were recorded in 

2001.

58 Table 1.1 provides a comprehensive list of AGOA-eligible countries by year. 59 “U.S. imports from AGOA countries” refers to U.S. imports from AGOA-eligible countries in a given year, 

regardless of whether beneficiaries claimed preference for any products in that year.

45
Figure 2.1 U.S. imports from AGOA countries, 2000–2013

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Note: AGOA eligibility varies by year, and the list of AGOA countries is unique for each year. Table 1.1 provides a comprehensive 

list of AGOA eligibility by beneficiary country and year between 2000 and 2013.

of U.S. imports of crude petroleum fell sharply in 2009 following the economic recession. These 

recovered in 2010 and 2011 as crude petroleum prices strengthened, but dropped again in 

2012 and 2013 in response to weak U.S. demand and higher U.S. domestic production. The 

value of U.S. imports of all other products from AGOA countries increased between 2000 and 

2013 at 1.7 percent annually. Imports of these products dipped in 2009 in response to the weak 

U.S. economy, but recovered to a record $20 billion in 2011 before falling again in 2012 and 

2013. Chief among non-crude petroleum imports are motor vehicles, refined petroleum 

products, apparel, ferroalloys, and certain agricultural products.

The vast majority of U.S. imports from AGOA countries enter duty free, either under preference 

programs or under NTR (normal trade relations) duty-free tariff lines. U.S. imports from AGOA 

countries are dominated by imports entering under AGOA; between 2008 and 2013, U.S. 

imports under AGOA made up 70 percent of the value of all U.S. imports from AGOA countries 

(table 2.1). Other U.S. imports from AGOA countries also entered duty free under GSP; such 

imports represented about 8 percent of all imports over 2008–13.60 Altogether, duty-free U.S. 

imports under AGOA, GSP, and NTR represented 94 percent of all U.S. imports from countries 

60 Including GSP for least-developed beneficiary developing countries, or LDBDCs. GSP LDBDCs are different from 

AGOA lesser-developed beneficiary sub-Saharan African countries (also abbreviated as LDBCs). See chapter 1 for 

more information.

46
eligible for AGOA preferences during 2008–13. Major imports under GSP in 2013 included crude

petroleum (from least-developed beneficiary developing countries, or LDBDCs); ferroalloys; 

aluminum plates, sheets, and strips; and cocoa paste. Major imports entering duty free under 

NTR included platinum, diamonds, cocoa beans, natural rubber, and acyclic hydrocarbons.

Program 2001 2005 2008 2009 2010 2011 2012 2013

Million $

NTR

Dutiable 3,231.4 696.1 1,822.4 2,019.6 3,957.8 4,101.1 4,332.3 3,471.5

Duty-free 4,886.1 6,037.4 9,312.3 5,781.7 8,857.5 10,655.2 8,188.0 7,873.1

AGOA 7,579.2 32,743.1 56,373.7 28,050.3 38,664.8 51,883.1 32,747.7 24,797.9

GSP 586.9 5,403.3 9,885.2 5,659.0 5,605.1 1,956.8 2,144.2 2,017.9

Othera 41.3 57.5 96.6 70.3 41.3 42.8 44.5 47.7

Total 16,324.8 44,937.4 77,490.1 41,580.9 57,126.6 68,638.9 47,456.6 38,208.1

% of total

NTR

Dutiable 19.8 1.5 2.4 4.9 6.9 6.0 9.1 9.1

Duty-free 29.9 13.4 12.0 13.9 15.5 15.5 17.3 20.6

AGOA 46.4 72.9 72.7 67.5 67.7 75.6 69.0 64.9

GSP 3.6 12.0 12.8 13.6 9.8 2.9 4.5 5.3

Othera 0.3 0.1 0.1 0.2 0.1 0.1 0.1 0.1

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Notes: a “Other” includes imports under other programs, such as the Civil Aircraft Agreement. AGOA eligibility varies by year, 

and the list of AGOA countries is unique for each year. Table 1.1 provides a comprehensive list of AGOA eligibility by 

beneficiary country and year between 2000 and 2013.

During 2001–08, duty-free U.S. imports from AGOA beneficiary countries grew under both 

preference programs as well as under NTR. However, in 2009, imports fell in all three categories 

because of the economic recession in the United States. Whereas duty free imports under 

AGOA and NTR rebounded in 2010 and 2011, imports under GSP dropped, primarily reflecting a 

sharp decline in imports of crude petroleum under GSP (for LDBDCs) from $8.1 billion in 2008 to 

$0.3 billion in 2011.61 In 2012, U.S. imports under GSP went up slightly as imports of crude 

petroleum from GSP LDBDCs rose, while duty-free imports under AGOA and NTR fell sharply in 

2012 and again in 2013. U.S. imports under AGOA fell because of a large decline in crude 

petroleum imports, especially from Nigeria. Duty-free imports under NTR also dropped because 

of significant declines in some NTR-free imports, such as platinum, diamonds, and petroleum 

gases and other gaseous hydrocarbons.

61 Authorization for the GSP program lapsed on December 31, 2010, causing duties to be applied starting on 

January 1, 2011 until its reauthorization on November 5, 2011. However, duties were subsequently refunded 

retroactively.

47

Table 2.1 U.S. imports for consumption from AGOA countries, by special import program and rate 

provision status, 2001, 2005, and 2008–13 
Duties are collected on some U.S. imports from AGOA beneficiary countries. In 2013, 

9.1 percent of U.S. imports from AGOA countries entered dutiable under NTR. In addition, 

duties were collected on some imports that were eligible for duty-free treatment under AGOA, 

including certain crude and non-crude petroleum products. Of the total $12.9 million in import 

duties that AGOA beneficiary countries paid in 2012, about $10.8 million were collected on 

AGOA-eligible products.62 Various factors may have contributed to this phenomenon; for 

example, these exports may not have met rules of origin requirements (e.g., tuna loins), 

exporters may not have submitted the required documents and/or requested preferential 

treatment, or shippers may have received refunds for duties paid at a later time.

U.S. Imports under AGOA

U.S. imports under AGOA63 increased from $7.6 billion in 2001 to $24.8 billion in 2013, and 

while volatile, grew roughly 10 percent annually on average (figure 2.2). During 2001–13, crude 

petroleum accounted for almost 90 percent of U.S. imports under AGOA.64 U.S. imports under 

AGOA of products other than crude petroleum grew from $1 billion to almost $5 billion over 

this period (figure 2.3). U.S. imports under AGOA of manufactured goods, including electronics, 

machinery, transportation equipment, chemicals, and miscellaneous manufactured goods, 

experienced the largest growth after crude petroleum, increasing from $0.2 billion in 2001 to 

$2.2 billion in 2013. Imports of natural resources products under AGOA increased by $1.1 billion 

since 2001 (primarily made up of refined petroleum products) to reach $1.4 billion in 2013. 

Although U.S. imports of textiles and apparel under AGOA increased from 2001 to 2013, the 

value of these imports fell from a peak of $1.6 billion in 2004 to $0.9 billion in 2013. U.S. 

imports of agricultural products under AGOA rose slowly, remaining below $262 million 

annually.

62 The United States imported $39.2 billion from AGOA countries under those tariff lines that were eligible for 

AGOA or GSP preferences in 2012. However, not all of these imports entered under AGOA or GSP. About 88.9 

percent of these eligible imports, or $34.9 billion, entered the United States under AGOA and GSP (see table 2.1). 

About 0.1 percent, or $0.04 billion, entered the United States either NTR duty-free or under other duty-free 

programs. The remaining 11.0 percent, or $4.3 billion, entered the United States dutiable under NTR, and about 

$10.8 million of import duties were collected on these imports. USITC DataWeb /USDOC. 63 “U.S. imports under AGOA” refers to U.S. imports from AGOA beneficiary countries for which AGOA preference 

is claimed.

64 Out of a potential 6,757 HTS 8-digit tariff lines that are eligible for duty-free treatment under AGOA and GSP, 

AGOA countries exported to the United States under just 1,655 tariff lines in 2012. USITC DataWeb/USDOC.

48

 
Figure 2.2 U.S. imports under AGOA, 2001–13

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Note: The data in this figure are based on the list of AGOA-eligible countries, which varies by year. For a complete list of AGOAeligible countries by year, see table 1.1.

Figure 2.3 U.S. imports under AGOA, excluding crude petroleum, 2001–13

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Note: The data in this figure are based on the list of AGOA-eligible countries, which varies by year. For a complete list of AGOAeligible countries by year, see table 1.1. “Agriculture” includes all agricultural products; “manufacturing” includes electronics, 

machinery, transportation equipment, chemicals, miscellaneous manufacturing, and special provisions items; “natural 

resources” includes energy products (except crude petroleum), minerals and metals, and forest products; and 

“textiles/apparel” includes textiles, apparel, and footwear.

49
U.S. Imports of Crude Petroleum under AGOA 

Imports of crude petroleum under AGOA rose steadily during 2001–08, and then fluctuated 

sharply each year until 2013 (figure 2.2).

65 The growth in the value of crude petroleum imports 

under AGOA between 2001 and 2008 resulted from a combination of rising crude petroleum 

prices and growing global demand. Between 2001 and 2008, the average unit value of U.S. 

crude petroleum imports from AGOA countries rose from $25.54 per barrel to $103.28 per 

barrel, increasing roughly 22 percent annually on average. This trend reflected rising global 

demand (especially in emerging markets) and supply controls established by the Organization 

of Petroleum Exporting Countries (OPEC). In the same time frame, U.S. demand for crude 

petroleum also increased: the volume of U.S. imports from AGOA almost doubled, rising from 

256 million barrels in 2001 to 496 million barrels in 2008 (close to 10 percent annually on 

average). As a result, the value of U.S. crude petroleum imports under AGOA increased 

34 percent annually on average, rising from $6.5 billion in 2001 to $51.2 billion in 2008.

After 2008, U.S. imports of crude petroleum under AGOA entered a period of instability.66 First, 

imports fell over 50 percent in 2009, dropping to $24.9 billion from $51.2 billion the previous 

year. This decline is associated with the economic downturn in the United States, which 

significantly curbed the U.S. demand for petroleum. At the same time, crude petroleum prices 

plummeted in response to plentiful global supplies, in part caused by a breakdown in discipline 

by certain OPEC members who failed to limit their production to OPEC-set levels.67 Between 

2009 and 2011, however, the value of U.S. imports of crude petroleum recovered quickly, 

mostly due to stronger petroleum prices as the per-barrel price of U.S. crude petroleum 

imports from AGOA countries rose from $64.40 to $112.90 over that period. Higher crude 

petroleum prices resulted from rising demand, reflecting the improvement in the global 

economy.

Finally, 2012 and 2013 again saw significant drops in U.S. imports of crude petroleum under 

AGOA, which fell to $20.0 billion in 2013 from $47.4 billion in 2011. This drop followed the 

65 Crude petroleum is classified under HS2709 and subject to 5.25–10.5 cent duties per barrel (or 0.1 percent ad 

valorem equivalent) under NTR. U.S. imports of crude petroleum under AGOA are eligible for duty-free treatment. 

The leading AGOA country exporters of crude petroleum to the United States in 2013 were Nigeria ($9.9 billion), 

Angola ($5.9 billion), Chad ($2.4 billion), Gabon ($0.9 billion), and Congo, Rep. ($0.9 billion). 66 Several factors contributed to the volatility of crude petroleum prices during this period. These include OPEC 

production and price limits; supply disruptions in Nigeria due to continued civil unrest; strikes in Angola and 

Nigeria by crude petroleum field workers over working conditions and pay; geopolitical tensions associated with 

events in Iran; increased demand in countries such as India and China; and the embargo on Syrian crude 

petroleum. Makan, “Oil Price Held High by Supply Disruptions,” August 9, 2013; Reed, “OPEC, Foreseeing No Glut, 

Keeps Oil Production,” December 4, 2013; U.S. Department of Energy, Energy Information Administration, “Shortterm Energy Outlook,” December 10, 2013.

67 U.S. Department of Energy, Energy Information Administration, “What Drives Crude Prices?” January 8, 2014.

50

 
increase in U.S. domestic crude production, coupled with lower domestic demand for 

petroleum products that reflected the continued weakness of the U.S. economy. In addition, 

production disruptions in Nigeria were reflected in a sharp drop in exports of Nigerian crude 

petroleum to the United States: these exports fell from $30.2 billion in 2011 to $9.9 billion in 

2013.68

U.S. Imports under AGOA of Products Other than 

Crude Petroleum 

U.S. imports under AGOA of products other than crude petroleum grew considerably in the 12 

years following AGOA’s launch, from $1 billion in 2001 to $4.8 billion in 2013 (table 2.2). These 

imports were highly concentrated in three sectors—transportation equipment, refined 

petroleum products, and apparel—accounting for about 89 percent of total U.S. imports under 

AGOA during 2001–13. U.S. imports under AGOA of agricultural products and of minerals and 

metals each accounted for an additional 5 percent share in this period. 

Transportation equipment made up 44 percent of the value of U.S. non-crude petroleum 

imports under AGOA in 2013, and motor vehicles accounted for almost all of the imports in this 

sector. In 2001, U.S. imports of motor vehicles under AGOA totaled $238 million. In the 

following years, imports increased by about 20 percent annually, reaching a record $2.1 billion 

in 2013. U.S. imports of motor vehicles under AGOA consisted almost exclusively of passenger 

vehicle imports from South Africa, but also included $2.6 million in chassis and bodies from 

South Africa in 2013.

The United States has imported a variety of refined petroleum products under AGOA, mostly 

distillate and residual fuel oils and naphthas.69 In 2013, refined petroleum products accounted 

for 26 percent ($1.2 billion) of U.S. imports under AGOA. Nigeria was the primary supplier, 

accounting for 76 percent of such imports, followed by Angola (12 percent). In addition, there 

were occasional small shipments under AGOA of low-octane gasolines and blend stocks from 

Cameroon, Chad, Gabon, and Ghana.

68 U.S. Department of Energy, Energy Information Administration, “Petroleum Supply Monthly,” January 30, 2014; 

Oil and Gas Journal, “EIA: U.S. to Approach Highest Petroleum Production Level,” December 23, 2013.

69 Naphthas are petroleum fractions similar to gasolines and kerosenes used in solvents and paint thinners or as a 

raw material in the production of organic chemicals.

51

 
Table 2.2 U.S. imports under AGOA (excluding crude petroleum) by sector; 2001, 2005, and 2008–13

Sector 2001 2005 2008 2009 2010 2011 2012 2013

Million $

Transportation equipment 241.2 138.1 1,821.3 1,369.3 1,538.7 2,040.6 1,928.7 2,121.2 

Motor vehicles 238.0 134.3 1,811.6 1,366.1 1,532.1 2,032.7 1,919.2 2,115.7 

Refined petroleum products 278.9 1,625.8 1,550.4 513.9 621.5 1,063.4 1,348.0 1,236.1 

Textiles and apparel 355.9 1,419.0 1,137.0 914.2 726.9 855.3 814.8 907.6

Apparel 355.9 1,419.0 1,136.9 914.0 726.9 855.0 814.5 907.1 

Agricultural products 59.0 151.7 162.1 168.0 222.2 220.0 247.6 261.6 

Citrus fruit 19.8 46.3 40.9 38.3 48.8 43.9 50.5 61.6 

Edible nuts 7.3 26.6 15.9 18.9 44.2 53.6 64.5 58.0 

Wine and certain other fermented

beverages 

4.1 27.4 30.3 26.5 29.8 30.7 45.1 51.8 

Unmanufactured tobacco 8.2 5.6 11.9 28.9 32.3 39.9 40.8 36.8 

Ethyl alcohol for nonbeverage purposes 11.4 19.4 23.5 17.4 22.9 17.0 17.0 16.8 

Fruit and vegetable juices 0.8 4.6 11.0 13.5 13.4 11.8 10.8 8.1 

Minerals and metals 91.2 73.6 370.3 95.6 146.2 212.7 221.3 202.9 

Ferroalloys 28.1 62.8 367.4 87.4 141.9 204.5 197.4 180.0 

Certain base metals and chemical 

elements 

0.0 10.0 2.7 6.0 4.2 8.0 23.7 22.7 

Chemicals and related products 3.8 44.7 78.0 41.2 44.4 52.7 63.3 62.3 

Miscellaneous chemicals and specialties 0.0 32.7 73.8 38.1 40.5 47.5 54.4 60.7 

Footwear 0.2 1.9 0.7 0.5 0.4 0.8 7.3 19.8 

Miscellaneous manufactures 0.3 3.8 3.7 2.0 4.1 3.3 2.8 2.6 

Forest products 0.1 0.2 0.1 0.1 0.0 0.1 0.1 0.1 

Electronic products 0.0 0.1 0.0 0.2 0.0 0.1 0.0 0.0 

Machinery 0.0 0.3 0.3 0.1 0.0 0.0 0.0 0.0 

Total 1,030.6 3,459.2 5,123.8 3,105.2 3,304.5 4,449.0 4,634.0 4,814.1 

% of total

Transportation equipment 23.4 4.0 35.5 44.1 46.6 45.9 41.6 44.1 

Refined petroleum products 27.1 47.0 30.3 16.6 18.8 23.9 29.1 25.7 

Textiles and apparel 34.5 41.0 22.2 29.4 22.0 19.2 17.6 18.8 

Agricultural products 5.7 4.4 3.2 5.4 6.7 4.9 5.3 5.4 

Minerals and metals 8.8 2.1 7.2 3.1 4.4 4.8 4.8 4.2 

All other 0.4 1.5 1.6 1.4 1.5 1.3 1.6 1.8 

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Source: USITC DataWeb/USDOC (accessed February 18, 2014). 

Note: The data in this table are based on the list of AGOA-eligible countries, which varies by year. For a complete list of AGOA 

eligible countries by year, see table 1.1.

Apparel was the leading non-petroleum product category imported under AGOA at the 

beginning of the program, but has dropped in rank and value since then.

70 The United States 

imported apparel valued at $907 million under AGOA in 2013; Slacks and trousers (“bottoms”), 

men’s cotton woven shirts, and knit tops were the largest categories of U.S. apparel imports 

under AGOA in 2013, and roughly two-thirds of apparel imports were cotton products. Lesotho, 

Kenya, and Mauritius were the largest suppliers, accounting for 90 percent of imports in 2013.

70 Textiles make up a small share of U.S. imports under AGOA.

52

 
U.S. agricultural imports under AGOA accounted for about 5 percent of the value of all noncrude petroleum imports in 2013, a share that has been fairly constant since the beginning of 

the program. In 2013, agricultural imports reached $262 million, the highest level during 2001–

13. Citrus fruit ($62 million), edible nuts ($58 million), wine ($52 million), and unmanufactured 

tobacco ($37 million) were the major categories of agricultural products imported in 2013, with 

imports of edible nuts and wine recording the fastest growth. U.S. imports of wine and 

unmanufactured tobacco under AGOA have grown steadily since 2001, while imports of citrus 

fruit peaked at $63 million in 2006 and have averaged $49 million per year in the past five 

years. U.S. imports of edible nuts under AGOA fluctuated until 2007, then increased during 

2008–13, climbing by 265 percent over that six-year period. Edible nuts imports consisted 

primarily of shelled macadamia nuts from Kenya, Malawi, and South Africa and other shelled 

nuts from South Africa. Nearly all U.S. imports of both citrus fruit and wine under AGOA came 

from South Africa, and 96 percent of U.S. unmanufactured tobacco imports under AGOA were 

sourced from Malawi in 2013.71

The value of U.S. minerals and metals imports under AGOA grew from $91 million in 2001 to 

$203 million in 2013, accounting for 4 percent of the value of all U.S. imports under AGOA. The 

great majority of these imports of minerals and metals—$180 million worth—were standard 

ferromanganese from South Africa, an iron alloy that the United States imports to meet 

domestic demand for use in steel production. Unwrought manganese flake (often used in 

aluminum, welding, and other products) from South Africa accounted for an additional 

$23 million of U.S. mineral and metal imports under AGOA in 2013. Other mineral and metal 

imports amounted to about $0.2 million in 2013 and were primarily glassware and ceramic 

household products, 91 percent of which came from South Africa. 

U.S. Imports under AGOA by Beneficiary Country 

Just two countries, South Africa and Nigeria, represented 73 percent of all U.S. noncrude 

petroleum imports under AGOA in 2013; South Africa accounted for 54 percent and Nigeria for 

20 percent (table 2.3). These two countries have been consistently large users of the AGOA 

program, primarily due to the size of South Africa's manufacturing sector and Nigeria’s 

petroleum production. U.S. imports under AGOA from South Africa totaled $2.6 billion in 2013, 

of which $2.1 billion were motor vehicles, specifically automobiles. Ferromanganese also 

accounts for a large share of U.S. imports under AGOA from South Africa, totaling $180 million 

71 A U.S. tariff-rate quota of 12,000 metric tons is applied to tobacco imports from Malawi. The quota fill rate was 

about 70 percent on average during 2008–12. No other AGOA-eligible country is allocated a quota. U.S. Customs 

and Border Protection, “Historical Tariff-Rate Quota/Tariff Preference Level Fill Rates,” (accessed February 25, 

2014).

53

 
Table 2.3 U.S. imports under AGOA (excluding crude petroleum) by country 2001, 2005, and 2008–13

Country 2001 2005 2008 2009 2010 2011 2012 2013

Million $

South Africa 417.3 455.3 2,427.7 1,642.9 1,902.1 2 ,458.2 2,384.1 2,578.2

Nigeria 191.4 1,194.9 1,294.1 394.6 551.1 828.4 934.0 942.1

Kenya 55.1 272.1 252.2 205.0 220.6 288.3 287.7 336.5

Lesotho 129.5 388.3 338.8 277.0 280.3 314.3 300.6 320.8

Mauritius 38.9 146.8 97.3 98.7 117.9 156.0 160.0 187.9

Congo, Rep. 37.1 109.5 27.5 19.1 0.0 9.8 40.3 144.3

Angola 0.0 99.6 96.1 38.1 0.0 0.0 216.7 96.4

All other 161.3 792.7 590.1 429.8 232.5 394.1 310.4 207.4

Total 1,030.6 3,459.2 5,123.8 3,105.2 3,304.5 4,449.0 4,634.0 4,814.1

% of total

South Africa 40.5 13.2 47.4 52.9 57.6 55.3 51.4 53.6

Nigeria 18.6 34.5 25.3 12.7 16.7 18.6 20.2 19.6

Kenya 5.3 7.9 4.9 6.6 6.7 6.5 6.2 7.0

Lesotho 12.6 11.2 6.6 8.9 8.5 7.1 6.5 6.7

Mauritius 3.8 4.2 1.9 3.2 3.6 3.5 3.5 3.9

Congo, Rep. 3.6 3.2 0.5 0.6 0.0 0.2 0.9 3.0

Angola 0.0 2.9 1.9 1.2 0.0 0.0 4.7 2.0

All other 15.6 22.9 11.5 13.8 7.0 8.9 6.7 4.3

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Note: The data in this table are based on the list of AGOA-eligible countries, which varies by year. For a complete list of AGOAeligible countries by year, see table 1.1.

in 2013. Other major U.S. imports from South Africa under AGOA include chemicals, citrus fruit, 

wine and other fermented beverages, macadamia nuts, and base metals and chemical elements 

(primarily unwrought manganese flake). In 2013, the United States imported $941 million in 

refined petroleum products from Nigeria under AGOA. Other major U.S. imports under AGOA 

from Nigeria in 2013 were hides, skins, and leathers ($0.9 million).

Other major sources of imports under the AGOA program include Kenya, Lesotho, Mauritius, 

the Republic of the Congo, and Angola. In 2013, U.S. imports under AGOA from Lesotho, the 

Republic of the Congo, and Angola each consisted of single product categories: over 

$321 million in apparel products from Lesotho, $144 million in refined petroleum products from 

the Republic of the Congo, and $96 million in refined petroleum products (exclusively distillate 

and residual fuel oil derived from petroleum or oils from bituminous minerals) from Angola. 

The primary imports from Kenya under AGOA were apparel ($305 million in 2013); other major 

imports from Kenya were edible nuts ($24 million), cut flowers ($3 million), fruit and vegetable 

juices ($1 million), and sporting goods ($1 million). Major imports from Mauritius under AGOA 

included apparel ($187 million) and cereals ($0.5 million). Non-crude U.S. imports under AGOA 

by beneficiary country can be found in appendix E. 

54
AGOA Utilization by Beneficiary Country 

AGOA utilization, defined as U.S. imports under AGOA from a beneficiary country as a share of 

total U.S. imports from that country, was 65 percent in 2013 for trade in all products and across 

all countries (table 2.4).72 In 2013, AGOA utilization (for all products) exceeded 90 percent for 

only three beneficiary countries: Chad (99 percent), Swaziland (92 percent), and Nigeria 

(91 percent). The utilization rate exceeded 80 percent for an additional three countries: Gabon, 

Lesotho, and the Republic of the Congo. Meanwhile, South Africa, the largest source for U.S. 

imports under AGOA, had a utilization rate of just 31 percent in 2013. Also, 24 out of the 39 

beneficiary countries in 2013 reported utilization rates of 10 percent or less, and 21 countries 

had utilization rates of 1 percent or less. Low utilization rates can stem from many different 

factors. For example, 12 countries with exports to the United States had no exports under 

AGOA. Also, countries supplying mostly products that are already duty free under NTR or under 

GSP have low utilization rates.

When crude petroleum imports are excluded from the calculation, the overall utilization rate 

falls to 31 percent. This difference in utilization rates indicates the importance of AGOA 

preferences for U.S. imports of crude petroleum from the region. For example, the utilization 

rate for Nigeria drops from 91 percent to 50 percent when crude petroleum is excluded from 

the calculation, and for Angola it drops from 67 percent to 11 percent. Of total U.S. imports 

from Chad, only crude petroleum receives AGOA preferences, so its utilization rate falls to 

0 percent when crude petroleum is not considered.

72 For this discussion, utilization rates were calculated as the ratio of U.S. imports that claimed AGOA preferences 

to total U.S. imports from an AGOA country, regardless of whether those products were eligible for AGOA 

preferences. Another way of assessing AGOA utilization is to calculate the ratio of AGOA country exports that claim 

AGOA preferences to that AGOA country’s exports of products eligible for the AGOA program. For an assessment 

of AGOA utilization calculated this way, see chapter 7.

55

 
Table 2.4 AGOA utilization rates, including and excluding crude petroleum, by beneficiary country, 2013

(%)

Country Utilization rate 

including all 

products

Utilization rate 

excluding crude 

petroleum

Country Utilization rate 

including all 

products

Utilization rate 

excluding crude 

petroleum

Angola 67.4 11.0 Malawi 73.7 73.7

Benin 0.0 0.0 Mauritania 0.0 0.0 

Botswana 2.1 2.1 Mauritius 55.6 55.6

Burkina Faso 0.1 0.1 Mozambique 1.8 1.8 

Burundi 0.0 0.0 Namibia 0.0 0.0

Cameroon 13.3 13.3 Niger a a 

Cape Verde 6.9 6.9 Nigeria 90.6 50.2

Chad 99.4 0.0 Rwanda a a 

Comoros 0.0 0.0 São Tomé and Príncipe 0.0 0.0 

Congo, Rep. 82.2 39.4 Senegal 0.1 0.1

Côte d`Ivoire a a Seychelles 0.0 0.0 

Djibouti 0.0 0.0 Sierra Leone 0.0 0.0 

Ethiopia 16.4 16.4 South Africa 30.7 30.7

Gabon 88.5 12.6 South Sudan 0.0 0.0

Gambia 0.0 0.0 Swaziland 91.6 91.6

Ghana 0.9 1.1 Tanzania 14.7 14.7

Guinea a a Togo 0.0 0.0 

Kenya 77.9 77.9 Uganda 0.1 0.1

Lesotho 89.4 89.4 Zambia a a 

Liberia 0.0 0.0 Overall 64.9 30.6

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Notes: a = Less than 0.05. 

AGOA/GSP Growth Products 

During 2000–2013, a relatively small number of products accounted for the bulk of the growth 

in value, in absolute terms, of U.S. imports from AGOA beneficiaries under AGOA and GSP 

provisions.73 Since AGOA was established as a program for SSA countries that builds on GSP, 

this section analyzes absolute growth in U.S. imports under both programs together. Table 2.5 

presents a ranking of the top 25 “growth product” groups.

73 This growth represents the absolute difference between the value of imports in 2000 and 2013 and does not 

reflect nonlinear variations during the period.

56

 
Table 2.5 U.S. imports from AGOA-eligible countries under AGOA and GSP (excluding crude petroleum), 

by leading growth product, 2000–2013

Product 2000 2005 2010 2013

Absolute 

growth 

2000–2013

Compound 

annual 

growth 

rate 

2000–2013

Million $ Percent

Motor vehicles 0.0 134.3 1,532.1 2,115.7 2,115.7 a

Refined petroleum products 1.4 1,784.3 621.5 1,297.2 1,295.8 76.6

Apparel 0.7 1,419.7 727.2 907.4 906.7 81.2

Ferroalloys 171.7 277.2 596.0 530.4 358.7 9.9

Aluminum mill products 56.6 153.9 160.2 189.3 132.7 10.6

Cocoa, chocolate, and confectionery 4.4 2.4 67.3 122.8 118.4 31.9

Miscellaneous inorganic chemicals 79.3 164.0 180.1 175.9 96.6 6.9

Certain organic chemicals 17.4 62.4 100.5 103.1 85.7 16.0

Edible nuts 0.5 30.7 48.8 62.3 61.8 48.7

Citrus fruit 0.0 46.4 48.8 61.7 61.7 a

Wine and certain other fermented beverages 0.1 32.1 38.6 61.4 61.3 68.6

Miscellaneous chemicals and specialties 0.2 32.9 40.8 60.7 60.6 64.7

Copper and related articles 7.6 6.6 7.3 57.8 50.2 18.4

Internal combustion piston engines, other than for aircraft 2.3 35.6 40.7 25.3 23.0 22.2

Certain base metals and chemical elements 0.2 10.6 5.5 23.0 22.8 46.0

Footwear 0.0 1.9 0.4 20.0 20.0 a

Ethyl alcohol for nonbeverage purposes 0.0 19.4 22.9 16.8 16.8 a

Prepared or preserved vegetables, mushrooms, and olives 1.1 5.2 11.2 16.5 15.3 25.0

Unmanufactured tobacco 24.1 36.2 37.2 37.7 13.6 3.8

Precious jewelry and related articles 22.4 56.0 24.3 33.5 11.1 3.4

Optical goods, including ophthalmic goods 3.3 7.3 15.5 12.4 9.1 11.6

Dried fruit other than tropical 0.0 2.4 10.1 8.7 8.7 a

Ships, tugs, pleasure boats, and similar vessels 5.1 11.2 16.3 13.0 7.9 8.1

Electric sound and visual signaling apparatus 0.6 2.7 0.1 7.6 7.1 24.3

Fruit and vegetable juices 1.4 4.9 13.4 8.4 6.9 15.8

All other 281.6 382.7 299.0 214.3 –67.3 a

Total 682.1 4,722.7 4,665.5 6,182.9 5,500.8 20.2

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Note: 

a 

= Not applicable.

Not all products in these groups actually entered the United States under AGOA and/or GSP provisions; indeed, as 

shown in figure 2.4, the share of total U.S. imports from AGOA-eligible partners that entered under these 

provisions varied significantly from group to group during 2000–2013. These shares are determined largely by the 

duty status of non-AGOA/GSP products in a particular product group. For example, most of the U.S. imports from 

AGOA beneficiaries of products included in the cocoa, chocolate, and confectionery group consists of cocoa beans, 

which have a NTR duty rate of free and therefore do not enter under AGOA or GSP provisions. In contrast, most 

U.S. imports of products in the motor vehicles product group did enter under a trade preference program (under 

AGOA, in this case, because these goods are not GSP eligible). 

57
Figure 2.4 Share of U.S. imports from AGOA beneficiaries under AGOA, GSP, and other provisions 

excluding crude petroleum), by leading growth product, 2000–2013

Source: USITC DataWeb/USDOC (accessed February 18, 2014). 

The following section profiles each of the top 10 product groups in terms of the absolute 

growth of U.S. imports from AGOA beneficiaries under AGOA and GSP provisions during 2000–

2013.74 Each profile provides a description of the items in the product group; shows the shares 

of U.S. imports of these products under AGOA and GSP provisions in 2013; presents data on 

U.S. imports from AGOA beneficiaries under AGOA and GSP provisions, by major products and 

AGOA suppliers during 2008–13; and identifies key factors that contributed to growth during 

the period.

74 The order of profiles presented below is based on the amount of absolute growth in the value of U.S. imports 

from AGOA beneficiary countries between 2000 and 2013, beginning with the highest-growth group.

58

 
Motor vehicles 

This product group includes passenger vehicles with 

the primary purpose of transporting people, rather 

than goods. These products include cars, sportutility vehicles, and minivans, but not pickup trucks. 

This category also includes bodies for such vehicles, 

which made up less than one-half of 1 percent of 

imports in this category in 2013. The vast majority 

of motor vehicles imported into the United States 

under AGOA/GSP were from South Africa. These 

were primarily luxury cars produced by BMW and 

Mercedes. Nonpreferential U.S. imports in this 

category are subject to an NTR duty rate of 2.5 

percent ad valorem.

Motor vehicles: U.S. imports under AGOA and GSP, 

2013 (share by value) 

Source: USITC DataWeb/USDOC (accessed

February 26, 2014).

Motor Vehicles: Leading U.S. imports under AGOA and GSP, by product and key suppliers, 

2000, 2005, 2008–13 (million $)

Product category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Vehicles for the transport 

of persons (8703)

South Africa 0 123 1,804 1,363 1,529 2,030 1,914 2,113 

All other motor vehicles imported under 

AGOA/GSP

0 11 7 3 3 3 5 3

Total motor vehicles imported under 

AGOA/GSP

0 134 1,812 1,366 1,532 2,033 1,919 2,116

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals.

59
Major Factors in the 

Growth of Motor Vehicle 

Imports under AGOA/GSP

A South African government program of 

incentives for the motor vehicle industry helped 

to increase South African exports of motor 

vehicles, including to the United States. Before 

1995, South Africa had an established motor 

vehicle industry, but very little trade in passenger 

vehicles, with only $110 million in exports and 

nearly $377 million in imports. However, the 

Motor Industry Development Programme (MIDP)–

–launched in 1995 and extended in 2013 as the 

Automotive Production and Development 

Programme (APDP)––created substantial 

incentives to invest in the South African motor 

vehicle industry and to produce both for export 

and for the domestic market. As a result, total 

South African imports and exports of passenger 

vehicles, excluding pickup trucks, increased 

significantly; exports to all markets reached nearly 

$3.3 billion in 2013, while imports reached nearly 

$5.5 billion. 

The MIDP was designed to help South Africa’s 

motor vehicle industry adjust to trade 

liberalization by offering incentives to rationalize 

production into a smaller range of products and 

gain economies of scale by increasing exports. To 

achieve these goals, the MIDP gradually reduced 

tariffs on imports of vehicles and components; 

imposed an export-import scheme that allowed 

vehicle and components exporters to earn 

tradable credits to offset duties on imported 

vehicles and components; offered a duty 

drawback program for exporters that provided 

import duty rebates for components and 

intermediate inputs used in exported vehicles; 

and provided a duty-free allowance on imported 

components of 27 percent of the value of vehicles 

produced for the domestic market. 

In addition, the MIDP created an investment 

subsidy that offered import duty credits equal to 

20 percent of the value of qualifying investments 

in buildings, plant and machinery, and tooling, 

over a five-year period. Since the implementation 

of the MIDP, substantial investments have been 

made in the South African motor vehicle industry. 

The MIDP’s duty offsets encouraged global 

manufacturers, including BMW, Daimler, Ford, 

Toyota, and Volkswagen, to produce vehicles in 

South Africa for export, and to use the offsets 

earned by these exports to import other vehicles 

into South Africa. MIDP support for investments 

helped trigger over $300 million in investments 

from BMW and Daimler in vehicle manufacturing 

in South Africa.

Imports from car makers BMW and Daimler are 

the primary reason U.S. imports from South Africa 

increased from zero in 2000 to over $2.1 billion in 

2013. Duty-free entry to the United States under 

AGOA was likely an important factor in BMW’s 

decision to begin exporting passenger vehicles 

from South Africa to the United States in 2001 and 

Daimler’s decision to export cars from South 

Africa to the United States in late 2007. However, 

Daimler has announced plans to produce the 

same car type it currently produces in South Africa 

in the United States in 2014, which would likely 

eliminate or significantly reduce Daimler’s exports 

of passenger vehicles from South Africa to the 

United States.

Sources: BMW South Africa website, 

http://www.bmwplant.co.za/Content/frame_content.jsp

@ cont=http 3a 2f 2fhaf0gau02~5.htm (accessed 

January 13, 2014); Borgenheimer, “Motor Industry 

Development Program in South Africa,” November 30, 

2010; GTIS, Global Trade Atlas (accessed January 24, 

2014); Hartzenburg and Muradzikwa, “Transfer of 

Technology for Successful Integration,” 2002; Itano, “U.S. 

Pact Lifts South Africa Car Exports,” July 9, 2003; 

Mercedes-Benz website http://www.mercedesbenzsa.co.za/corporate-structure/mercedes-benz-south 

africa/manufacturing-plant/ (accessed November 21, 

2013); Pitot, “The End of MIDP” (accessed December 30, 

2013); USITC DataWeb/USDOC (accessed November 26, 

2013, and January 3, 2014). 

60
Refined petroleum products

The products in this group are processed from crude 

petroleum; they include gasolines, kerosene, distillates, 

liquefied petroleum gas, asphalt, lubricating oils, diesel 

fuels, and residual fuel oils, among others. The primary 

refined petroleum products imported under AGOA are 

distillate and residual fuel oils and naphthas. The 

distillate fuel oils include diesel fuels and no. 1, no. 2, 

and no. 4 fuel oils, which are used primarily for space 

heating and electric power generation. Residual fuel 

oils, known as no. 5 and no. 6 fuel oils, are used for 

electric power production, space heating, vessel 

bunkering, and various industrial purposes. Naphthas 

are light distillates, blended with other materials to 

produce high-grade motor gasoline or jet fuel and also 

used as solvents and petrochemical feedstocks. Nigeria 

and Angola are the primary AGOA-eligible suppliers of 

U.S. imports of petroleum products; both are members 

of the Organization of Petroleum Exporting Countries 

(OPEC). The NTR rates of duty for refined petroleum 

products are about 0.04 percent ad valorem. 

Refined petroleum products: U.S. imports under 

AGOA and GSP, 2013 (share by value)

Source: USITC DataWeb/USDOC (accessed

February 26, 2014).

Refined Petroleum Products: Leading U.S. imports under AGOA and GSP, by product and key 

suppliers, 2000, 2005, and 2008–13 (million $)

Product category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Naphthas 

(2710.12.25) 

Nigeria 0 320 645 258 357 561 533 645 

All other AGOA 

beneficiaries

0 78 14 3 0 55 21 0 

Subtotal 0 398 659 261 357 616 554 645

Distillate and residual 

fuel oils (2710.19.06)

Angola 0 182 333 38 0 0 276 158

Nigeria 0 753 511 48 32 76 114 170

Cameroon 0 69 73 45 69 137 59 36

All other AGOA 

beneficiaries

1 261 73 34 0 18 63 163

Subtotal 1 1,265 990 165 101 231 512 527

All other refined petroleum products 

imported under AGOA

0 121 138 88 164 216 341 125

Total refined petroleum products imported 

under AGOA

a

1 1,784 1,787 514 622 1,063 1,407 1,297

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. a U.S. import data show a small shipment of refined petroleum products 

from Benin to the United States in 2000. This is likely a misclassification, as Benin had no refinery capacity during 2000–2013. 

This shipment may have originated in Nigeria, the only AGOA-eligible country with refineries capable of producing goods for 

export in 2000.

Naphthas, 

50% 

Distillate

and 

residual 

fuel oils, 

41% 

All other, 

10% 

61
Major Factors in the

Growth of Refined 

Petroleum Product 

Imports under AGOA/GSP

Rising, though volatile, prices for crude 

petroleum, the feedstock used by refineries to 

produce refined petroleum products, contributed 

to the increase in value of U.S. imports of 

petroleum products from AGOA-eligible countries 

during 2000–2013, despite a decline in the 

quantity of these imports over the same period 

(see below). 

The average price of U.S. imports of crude 

petroleum products from AGOA-eligible countries 

(primarily Nigeria and Angola) increased from 

$23 per barrel in 2000 to $128 in 2013. The 

volatility of crude petroleum prices in this period 

is the result of OPEC production and price limits, 

supply disruptions in Nigeria due to continued civil 

unrest, strikes in Angola and Nigeria by crude 

petroleum field workers over working conditions, 

tensions between the West and Iran, increased 

demand in countries such as India and China, and 

an embargo on Syrian crude petroleum.

By value, U.S. imports of refined petroleum 

products from AGOA-eligible countries peaked in 

2005, reaching a record high of $1.8 billion, then 

fell through the rest of the period to $1.3 billion in 

2013—still much higher than the $279 million in 

2001. While the value of U.S. imports of these 

goods from AGOA-eligible countries showed an 

overall increase during 2000–2013, the quantity 

declined from 12.8 million barrels in 2000 to 

10 million barrels in 2013. 

During 2000–2013, Nigeria was a net importer of 

refined petroleum products. Although Nigeria has 

four refineries, their capacity utilization rate 

hovers around 16–18 percent. These rates are 

low due to operational failures, fires, and 

sabotage, mainly of pipelines leading from the 

wellhead to the refineries. The four refineries 

have a combined crude petroleum distillation 

capacity of 445,000 barrels per day, an amount 

which could satisfy Nigerian demand for these 

products if the refineries operated at full or nearfull capacity. 

Angola has a single refinery, built in 1955 by 

Petrofina (a Belgian energy company that is now a 

subsidiary of Total). With a capacity of 39,000 

barrels per day, this refinery cannot process the 

heavy crudes produced in Angola, only the lighter 

crudes that are imported. Consumption of refined 

petroleum products in Angola remains low due to 

low levels of economic development. Thus 

Angolan production is mainly exported, primarily 

to the United States and the EU. Angola currently 

accounts for less than 0.5 percent of total U.S. 

imports of refined petroleum products. 

Sources: Oil and Gas Journal, “Worldwide Refining 

Capacities Report,” December 2, 2013; U.S. Department of 

Energy, Country Analysis Brief: Angola, February 5, 2014; 

U.S. Department of Energy, Country Analysis Brief: Nigeria, 

December 30, 2013.

62
Apparel

This product group includes a wide range of knit, 

woven, and other apparel, such as suits, coats, tops, 

trousers, underwear and nightwear, dresses, ski 

apparel, and swimwear. The largest categories of 

U.S. apparel imports under AGOA in 2013 were 

“bottoms,” including men’s trousers. Roughly twothirds of total U.S. apparel imports under AGOA 

were cotton products. Lesotho, Kenya, Mauritius, 

and Swaziland accounted for the vast majority of all 

U.S. imports under AGOA in 2013. The NTR rates of 

duty for these goods range from 2.6 to 32 percent 

ad valorem.

Apparel: U.S. imports under AGOA and GSP, 2013 

(share by value)

Source: USITC DataWeb/USDOC (accessed February 26, 

2014). 

Apparel: Leading U.S. imports under AGOA and GSP, by product and key suppliers, 2000, 2005, 

and 2008–13 (million $)

Product category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Bottoms (6103.43, 

6104.62, 6104.63, 

6203.42, 6204.62, 

6204.63) 

Lesotho 0 195 170 142 161 191 186 191

Kenya 0 197 164 120 111 134 147 154

Swaziland 0 75 65 52 44 37 31 21

All other AGOA 

Beneficiaries

0 214 161 137 40 37 27 27

Subtotal 0 680 560 450 356 399 389 393

Shirts (6105.10, 

6105.20, 6109.10, 

6109.90, 6205.20)

Mauritius 0 85 69 63 76 117 130 153

Lesotho 0 25 40 39 39 53 53 55

Kenya 0 15 16 10 8 26 25 40

All other AGOA 

Beneficiaries

0 55 61 42 10 15 15 15

Subtotal 0 179 186 154 133 212 224 263

Sweaters (6110.20, 

6110.30) 

Lesotho 0 137 101 70 54 48 42 48

Kenya 0 19 36 35 46 45 35 53

Swaziland 0 45 33 24 29 16 12 9

All other AGOA 

Beneficiaries

0 173 68 52 21 27 14 17

Subtotal 0 374 238 181 151 137 103 126

All other apparel products imported under AGOA <1 <1 187 154 129 87 108 99

Total apparel products imported under AGOA <1 1,420 1,137 914 727 855 815 907

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014) 

Note: Due to rounding, sums may not match totals. 

Bottoms, 

43% 

Shirts, 

29% 

All other, 

14% 

Sweaters & 

sweatshirts, 

14% 

63
Major Factors in the 

Growth of U.S. Apparel 

Imports under AGOA/GSP 

Duty-free access to the U.S. market under AGOA,

combined with a liberal rule of origin for apparel 

for certain lesser-developed beneficiary countries 

(LDBCs), was a major factor in the growth of U.S. 

apparel imports from AGOA countries. Rapid 

growth occurred mainly from 2000 to 2005, when 

U.S. imports under preferences grew from 

$726,000 to $1.4 billion. Investors from quotaconstrained suppliers, such as China and Taiwan, 

invested in factories in AGOA countries to take 

advantage of the quota-free access to the U.S. 

market. In addition to the duty-free, quota-free 

U.S. market access, certain AGOA beneficiaries 

received a special third-country fabric exemption, 

which allowed AGOA countries to use fabric 

sourced from anywhere and still qualify for AGOA 

preferences. Over 93 percent of U.S. imports of 

apparel (by value) under AGOA entered under this 

“third-country fabric provision” in 2013.

The end of developed-country textile and apparel 

import quotas in 2005 undermined U.S. apparel 

imports from AGOA countries. Before 2005, 

quotas limited the amount of lower-cost apparel 

from quota countries that could enter the U.S. 

and other developed-country markets, while 

AGOA beneficiaries had quota-free access to the 

U.S. market. After 2005, U.S. imports of apparel 

under AGOA fell, in part from the rise in U.S. 

market shares of Asian apparel suppliers that 

obtained new quota-free access to the U.S. 

market and displaced less competitive AGOA 

country suppliers. Some Asian investors with 

apparel facilities in AGOA countries closed them 

after 2005. During 2005–13, U.S. imports of 

apparel under AGOA decreased on average by 

7 percent per year, to $907 million in 2013. 

Uncertainly caused by last-minute and short-term 

renewals of the AGOA third-country fabric 

provision may have also contributed to the 

decline in U.S. apparel imports under AGOA since 

2005, since buyers place orders for apparel 6–12 

months in advance. In addition, the provision has 

been renewed for periods of only three to four 

years, which industry sources state does not 

provide the certainty needed to make new 

investments or place new or increased orders in 

the region.

Sources: USITC, Sub-Saharan Africa: Factors Affecting 

Trade Patterns, 2007; DOC, ITA, OTEXA, “U.S. Imports 

under Trade Preference Programs” (accessed February 3, 

2014); USITC Data Web/USDOC (accessed November 26, 

2013); GTIS, Global Trade Atlas database (accessed March 

7, 2014); USITC, hearing transcript, January 14, 2014, 9, 20 

(testimony of Somduth Soborun, ambassador of Mauritius 

to the United States); ACTIF, “Impact of AGOA on the 

Textile Industry,” November 2010; ACTIF, 

“Competitiveness of the SSA Textile Sector,” 2010.

64
Ferroalloys

Products in this group are alloys of various metals 

and iron that are used in steelmaking and other 

ferrous metallurgy. Alloying elements are needed 

to achieve desired physical properties in finished 

steel products. The principal ferroalloys imported 

from AGOA-eligible countries are ferromanganese, 

silicomanganese, and ferrochromium. Because of 

its abundance of suitable ore and well-developed 

infrastructure, South Africa is a major world 

producer and exporter of these alloys and is the 

only AGOA beneficiary country with the current 

capability to produce them. NTR duty rates for 

these ferroalloys range from 1.5 to 3.9 percent ad 

valorem.

Ferroalloys: U.S. imports under AGOA and GSP, 2013 

(share by value)

Source: USITC DataWeb/USDOC (accessed February 6, 

2014). 

Ferroalloys: Leading U.S. imports under AGOA and GSP, by product and key suppliers, 2000, 

2005, 2008–13 (million $)

Product category (2012 HTS 

code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Ferromanganese (7202.11, 

7202.19) 

South Africa 20 98 446 114 195 246 238 205

Zambia 0 0 0 0 1 0 0 0

Subtotal 20 98 446 114 196 246 238 205

Silicomanganese (7202.30) South Africa 44 61 283 60 145 161 133 60

Ferrochromium (7202.41, 

7202.49) 

South Africa 94 118 308 103 254 247 228 264

Ferrosilicon (7202.21) South Africa 14 0 0 <1 <1 2 6 1

Total ferroalloy imports under AGOA 172 277 1,037 277 596 656 605 530

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. 

Ferromanganese, 

39% 

Silicomanganese, 

11% 

Ferrochromium, 

50% 

65
Major Factors in the 

Growth in Ferroalloy 

Imports under AGOA/GSP 

Higher prices and volume growth contributed to

the rise in the value of U.S. imports of 

ferrochromium and ferromanganese from South 

Africa during 2000–2013. The average unit values 

of these ferroalloys increased by 150 percent and 

128 percent, respectively, over the period, and 

the quantities increased by 11 percent and 

41 percent, respectively. Higher prices reflected 

stronger global demand for these alloys as global 

steel production grew rapidly–– 89 percent by 

volume during 2000–2013. Prices for these 

ferroalloys peaked in 2008 and fell throughout the 

rest of the period, but still stayed above their 

prices from the early 2000s.

Rising prices also accounted for the increased 

value of U.S. imports of silicomanganese from 

South Africa during 2000–2013, as a 138 percent 

increase in the average unit value of these imports 

more than offset a 42 percent drop in their 

quantity. Supply factors in South Africa 

contributed to the drop in the volume of 

silicomanganese imports. The production of 

ferroalloys depends on the availability of suitable 

ore and of large amounts of competitively priced 

electricity. Production of ferroalloys in South 

Africa has been hampered in recent years by 

restrictions on the availability of electricity, as the 

state energy group, Eskom, negotiated 

agreements with the ferroalloy producers to buy 

back previously contracted supplies of electricity. 

This disruption has resulted in reduced production 

and some furnaces being shut down. The quantity 

of U.S. imports of silicomanganese from South 

Africa declined by 63 percent from 2008 through 

2013. 

During the same period, as global steel production 

increased rapidly, steel production in the United 

States declined from a peak level of 102 million 

metric tons in 2000 to 87 million metric tons in 

2013. Because the United States relies on imports 

of these ferroalloys to meet domestic demand for 

steel production, this decline in steel production 

lowered U.S. demand for imports of certain 

ferroalloys during the period. 

Sources: USITC DataWeb/USDOC (accessed November 20, 

2013, and November 26, 2013); World Steel Association, 

Crude Steel Production, 1980–2012 (accessed January 24, 

2014); International Manganese Institute, About Mn: 

Production (accessed January 24, 2014); American Metal 

Market, January 2008–November 2013.

66
Aluminum mill products 

Products in this group are rolled, extruded, or 

drawn from unwrought forms of aluminum or 

aluminum alloys into various forms, such as bars, 

wires, sheets, and pipes. Aluminum mill products 

are intermediate inputs for a wide range of 

downstream finished products in the construction, 

electric power, electronic equipment, machinery, 

packaging, and transportation equipment sectors. 

The vast majority of aluminum mill products 

imported into the United States under AGOA/GSP 

are aluminum plates, sheets, and strips from South 

Africa. NTR duty rates for these products range 

from 2.7 to 6.5 percent ad valorem.

Aluminum mill products: U.S. imports under AGOA 

and GSP, 2013 (share by value)

Source: USITC DataWeb/USDOC (accessed February 26, 

2014). 

Aluminum mill products: Leading U.S. imports under AGOA and GSP, by product and key 

suppliers, 2000, 2005, 2008–13 (thousand $)

Product category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Plates, sheets, and 

strips (7606)

Ghana 2,309 0 0 0 0 0 0 0

South 

Africa

50,302 150,920 155,246 97,452 156,849 190,428 195,778 188,793

Subtotal 52,611 150,920 155,246 97,452 156,849 190,428 195,778 188,793

All other aluminum mill product 

imports under AGOA

 3,993 2,938 3,133 1,574 3,395 4,748 4,867 502

Total aluminum mill product 

imports under AGOA

56,604 153,857 158,379 99,025 160,243 195,175 200,645 189,295

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. 

Plates, 

sheets, 

and 

strips, 

100% 

67
Major Factors in the 

Growth of Aluminum Mill 

Products under AGOA/GSP

Higher prices and volume growth contributed to 

the increased value of U.S. imports from South 

Africa during 2000–2013. The volume of U.S. 

imports of aluminum plates, sheets, and strips 

from South Africa under AGOA/GSP provisions 

rose strongly, growing by 37,643 metric tons 

(174.2 percent) between 2000 and 2013. 

However, the value of these imports rose even 

more strongly, growing by $138.5 million 

(275 percent). London Metal Exchange (LME) 

prices for unwrought aluminum have risen 

significantly (by about $650–$700 per metric ton) 

since the mid-2000s, due principally to expanding 

global demand, particularly from China. 

U.S. demand for aluminum plates, sheets, and 

strips is driven by the various downstream 

aluminum-consuming industries (e.g., aerospace, 

appliances, construction, packaging, and 

transportation). During 2000–2013, the share of 

domestic consumption of these flat-rolled 

aluminum products accounted for by U.S. imports 

from all sources rose from 13 percent to 

16 percent. 

Before the AGOA program began, South Africa 

was well positioned to capitalize on AGOA 

provisions to export high-quality aluminum mill 

products to the U.S. market because it (1) was a 

long-established roller and extruder of aluminum, 

(2) has ready access to both domestically smelted 

unwrought aluminum and domestically generated 

aluminum waste and scrap as feedstock, and (3) 

has the largest and most sophisticated aluminum 

industry in sub-Saharan Africa. 

In addition, Hulett Aluminium (Hulamin), South 

Africa’s sole producer of aluminum flat-rolled 

products, upgraded its production capabilities and 

expanded capacity at its melting and rolling 

facilities during 1999–2000, reportedly to meet 

growing domestic and global demand for plate 

products. These investments enabled Hulamin to 

quadruple its sales volumes to 200,000 metric 

tons annually by summer 2006; diversify and 

enhance its product mix; reduce its per-unit 

production costs; and increase exports of its 

higher-quality/higher-value output. Further 

facility upgrades and expansions undertaken 

during 2006–09 were expected to raise Hulamin’s 

potential annualized sales volumes to 250,000 

metric tons.

Sources: AFSA, “Aluminum Industry in SA, Overview,” n.d.; 

AMM.com, “Pricing,” n.d.; Hulamin, “Hulett Alumium to 

Expand Capacity,” October 11, 2006; Hulamin, “Hulett 

Corporate—History,” 

http://www.hulamin.co.za/about_hulamin/history.htm; 

Hulamin, “Hulett Rolled Products—Home” 

http://www.hulaminrolledproducts.co.za; Hulamin, 

“Official Opening of Rolled Products Expansion,” 

December 11, 2009; Metal Bulletin, “Hulett Aluminum to 

Boost Rolled Product Output by 9%,” February 21, 2005; 

Metal Bulletin, “Hulett Aluminium to Raise Rolling Capacity 

by 20%,” October 12, 2006; Metal Bulletin, “Hulett Invests 

for Growth,” January 11, 2001; WBMS, “Aluminum, U.S.A., 

2. Semi Manufactures,” December 2003–December 2012.

68
Cocoa, chocolate, and confectionery 

Cocoa products are derived from cocoa beans, 

which are processed into intermediate products 

including paste, butter, and powder. Final products 

include chocolate and other food preparations 

containing cocoa products. The principal products 

imported under AGOA are cocoa paste and powder 

from Côte d’Ivoire and Ghana. The NTR duty rates 

for cocoa paste and cocoa powder covered by 

preferences for AGOA countries are less than 0.5 

percent ad valorem.

Cocoa, chocolate, and confectionery: U.S. imports 

under AGOA and GSP, 2013 (share by value)

Source: USITC DataWeb/USDOC (accessed February 26, 

2014). 

Note: Chocolate and confectionery made up less than 1 

percent of imports.

Cocoa, Chocolate, and Confectionery Products: Leading U.S. imports under AGOA and GSP, by 

product and key suppliers, 2000, 2005, and 2008–13 (thousand $)

Product 

category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Cocoa paste 

(1803.20) 

Côte d’Ivoire 0 0 0 0 0 42,745 83,785 71,818

Cameroon 2,646 19 5,571 10,753 30,428 35,960 32,594 21,104

All other AGOA 

beneficiaries

1,260 1,056 1,194 717 3,129 1,310 503 774

Subtotal 3,906 1,075 6,765 11,470 33,557 80,015 116,883 93,697

Cocoa powder 

(1805.00) 

Ghana 48 36 235 7,548 32,943 29,136 31,445 16,813

Côte d’Ivoire 0 0 0 0 0 5,384 9,964 11,716

Nigeria 0 0 0 4 0 0 0 0

Subtotal 48 36 235 7,552 32,943 34,520 41,409 28,529

Chocolate and 

confectionery 

products 

(1806, 1704)

South Africa 313 1,045 307 434 696 654 794 221

All other AGOA 

beneficiaries 

 144 224 31 73 66 63 77 327

Subtotal 457 1,268 338 507 761 717 871 549

Total cocoa, chocolate, and 

confectionery imports under 

AGOA

4,410 2,379 7,338 19,529 67,262 115,252 159,163 122,775

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. 

Cocoa 

paste, 

76% 

Cocoa 

powder, 

23% 

69
Major Factors in the 

Growth in Cocoa Product 

Imports under AGOA/GSP

Rising U.S. and global demand for cocoacontaining products bolstered demand for cocoa 

paste and powder. Rising global incomes were 

major factors in the cocoa product demand 

increase, as was recognition of its health benefits. 

U.S. producers source intermediate cocoa 

products from a variety of origins, including AGOA 

countries. 

U.S. imports of cocoa, chocolate, and 

confectionery from AGOA-eligible partners under 

AGOA/GSP provisions rose substantially during 

2000–2013, from 5,546 metric tons (valued at 

$4.4 million) in 2000, to 37,516 metric tons 

(valued at $122.8 million) in 2013. The rise in 

import values outpaced quantity increases for the 

various cocoa products, largely the result of cocoa 

bean price increases during the period.

The growth in demand for cocoa-containing 

products has contributed to an increase in global 

cocoa bean and product prices. According to 

International Cocoa Organization data, the 

average monthly price for cocoa beans rose from 

about $1,500 per metric ton in January 2005 to 

about $2,400 per metric ton in December 2012. 

Prices exceeded $3,500 per metric ton some 

months in 2010, largely the result of supply 

disruptions caused by civil strife in Côte d’Ivoire. 

Concerns about supply risk in Côte d’Ivoire, by far 

the world’s leading producer of cocoa beans, have 

been long-standing and persistent. Other factors 

contributing to the long-term rise in cocoa 

product prices include improvements in quality (at 

the farm level, in transportation, and in storage) 

and the establishment of sustainability and social 

programs related to cocoa production. For 

example, the industry in Ghana is directed by the 

state cocoa board, COCOBOD, which implemented 

measures to improve product quality, increase 

farm yields, and raise farm gate prices.

Cocoa bean processing capacity in certain AGOA 

countries has increased. Some AGOA country 

governments have prioritized their cocoa 

industries and introduced incentives to facilitate 

the development and expansion of downstream 

value-added cocoa processing. Major 

transnational cocoa firms, such as Archer Daniels 

Midland, Cargill, and Barry Callebaut, as well as 

local operators, have established and expanded 

cocoa-processing facilities in the region, with the 

greatest concentration in Côte d’Ivoire and Ghana. 

Cocoa-processing capacity has risen by 50 percent 

in Côte d’Ivoire during 2008–12 and by 

250 percent in Ghana during 2005–12. Africa has 

accounted for an increasing share of global cocoa 

processing in recent years, from 14 percent in 

2005/06 to an estimated 19 percent in 2012/13. 

Despite this growth, AGOA cocoa product 

industries are facing increasing competition from 

growing processing capacity in Asia (Indonesia) 

and Latin America (Brazil).

Sources: Callebaut, “Barry Callebaut Inaugurates Second 

Cocoa Bean Processing Line,” February 8, 2007; Cargill, 

“Cargill Celebrates Five Years in Ghana,” November 5, 

2013; George, “Structure and Competition,” November 21, 

2012; Financial Times, “Processing Capacity Grinds Cocoa 

Industry,” December 17, 2012; ICCO, Annual Report; ICCO, 

Quarterly Bulletin of Cocoa Statistics; ICCO, “Statistics,” 

http://www.icco.org/; TCC, Cocoa Barometer 2009, 2009; 

TCC, Cocoa Barometer 2010, 2010; TCC, Cocoa Barometer 

2012, 2012.

70
Miscellaneous inorganic chemicals 

Inorganic chemicals in this group include elemental 

metals, such as silicon, and simple compounds of these 

metals and oxygen, sulfur, nitrogen, or chlorine. They 

are used as inputs in the production of a wide variety of 

precursor chemical products, which are then used to 

make consumer goods, energy storage and generation 

devices, and electronics, among other things. Although 

a variety of inorganic chemicals are imported into the 

United States from AGOA beneficiary countries, the 

primary chemicals are silicon metal, manganese dioxide, 

and vanadium oxides and hydroxides. Silicon metal is 

used in the production process for lubricants and resins. 

Manganese dioxide is used primarily in producing drycell batteries, and vanadium oxides and hydroxides are 

used as an upstream catalyst in the production process 

for fertilizer. NTR rates of duty for these inorganic 

chemicals range from 4.7 to 5.5 percent ad valorem.

Miscellaneous inorganic chemicals: U.S. imports under 

AGOA and GSP, 2013 (share by value)

Source: USITC DataWeb/USDOC (accessed February 26, 2014).

Miscellaneous Inorganic Chemicals: Leading U.S. imports under AGOA and GSP, by product and 

key suppliers, 2000, 2005, and 2008–13 (million $)

Product category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Silicon, containing by weight 

less than 99.99 percent of 

silicon (2804.69)

South Africa 31 51 89 54 83 114 97 86

Manganese dioxide 

(2820.10)

South Africa 17 0 19 29 36 45 33 27

Vanadium oxides and 

hydroxides (2825.30)

South Africa 6 42 34 8 22 32 24 19

Certain miscellaneous 

carbides (2849.90)

South Africa 11 57 48 10 28 31 20 25

Other miscellaneous 

inorganic chemicals

South Africa 14 15 14 8 10 31 43 20

All other AGOA 

beneficiaries 

0 0 0 <1 0 <1 <1 <1

Subtotal 14 15 14 8 10 31 43 20

Total miscellaneous inorganic chemicals imports 

under AGOA

79 164 205 109 180 252 216 176

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. 

Silicon, 49%

Manganese 

dioxide, 15%

Vanadium 

oxides and 

hydroxides, 

11%

Certain misc. 

carbides, 14%

All other, 11%

71
Major Factors in the 

Growth of Miscellaneous 

Inorganic Chemical 

Imports under AGOA/GSP

Higher prices accounted for the increase in the 

value of U.S. imports of silicon metal 

(metallurgical or chemical grade) from South 

Africa during 2000–2013, since import volumes 

declined irregularly over the period. From 2000 to 

2013, the quantity of silicon metal imported from 

South Africa fell by 16 percent, but the average 

unit value rose almost 150 percent, from 

$1,090 per metric ton to almost $2,700 per metric 

ton. South Africa is estimated to be the sixthlargest producer and fourth-largest exporter of 

silicon metal in the world, but is the largest among 

AGOA countries. U.S. producers of chemicals such 

as silanes and silicones are the primary consumers 

of silicon metal, with the U.S. aluminum casting 

industry being the second-largest. U.S. 

consumption of silicon metal is influenced by the 

demand for downstream chemical products, such 

as certain rubbers, resins, and lubricants, and for 

airplane and automobile aluminum parts.

Higher prices and volume growth contributed to 

the increase in the value of U.S. imports of 

manganese dioxide from South Africa during 

2000–2013. The quantity imported from South 

Africa rose by 7 percent over the period, but the 

average unit value rose more––from $1,408 per 

metric ton in 2000 to $2,046 per metric ton in 

2013, or by 45 percent. South Africa has the 

world’s largest identified manganese deposits 

(about 75 percent of the global total) and is the 

world’s largest exporter of manganese ore, from 

which manganese dioxide is produced. It is the 

second-largest global exporter of manganese 

dioxide, behind China. The United States must 

import to meet domestic demand, primarily from 

dry cell battery makers. Increases in demand for 

batteries during 2000–2013, as well as for 

manganese dioxide, have been small but 

consistent from year to year.

Volume growth and much higher prices 

contributed to the increase in U.S. imports of 

vanadium oxides and hydroxides from South 

Africa during 2000–2013. The quantity of 

vanadium oxides and hydroxides imported from 

South Africa grew 12 percent over the period, but 

the average unit value grew much more––from 

$4,739 per metric ton in 2000 to just more than 

$13,000 per metric ton in 2013, or by 176 percent. 

South Africa is the world’s second-largest

producer of vanadium, behind China, and 

available data shows that South African vanadium 

production increased significantly during 2000–

2012 (almost 30 percent). South Africa is the 

third-largest global exporter of vanadium oxides 

and hydroxides, behind China and Russia. Makers 

of sulfuric acid are the primary U.S. consumers of 

vanadium oxides and hydroxides. Demand for 

sulfuric acid is influenced by the demand for 

fertilizer, which fluctuates based on economic 

factors in the agricultural sector.

Sources: USITC DataWeb/USDOC (accessed January 2014); 

BIT Fondel, “Silicon Metal,” February 7, 2014.; CPM Group, 

“Manganese Market Outlook,” February 2012; SEMI, 

“Metallurgical-Grade Silicon Making Inroads in PV,” 

February 4, 2014; Shakhashiri, “Chemical of the Week: 

Phosphoric Acid, H3PO4,” February 6, 2008; Shakhashiri, 

“Chemical of the Week: Sulfuric Acid, H2SO4,” 

September 17, 2007; Suresh, “Sulfuric Acid,” July 2012; 

Suresh, Schlag, and Inoguchi, “Inorganic Color Pigments,” 

February 2011; USDOI, USGS, Mineral Commodity 

Summaries: Manganese, January 2013; USDOI, USGS, 

Mineral Commodity Summaries: Silicon, January 2013; 

USDOI, USGS, “Silicon,” December 2013; USDOI, USGS, 

Mineral Commodity Summaries: Vanadium, January 2013; 

USDOI, USGS; “Vanadium,” October 2013; USITC, 

Electrolytic Manganese Dioxide from Australia and China, 

2008; USITC, Shifts in U.S. Merchandise Trade 2006, 2007; 

Westbrook Resources, “(Si) Atomic Number 14,” n.d., 

http://www.wbrl.co.uk/silicon-metal.html (accessed 

February 7, 2014). 

72
Certain organic chemicals 

The organic chemicals in this group are used as 

inputs in the production of a variety of products, 

including adhesives, coatings, dyes and pigments, 

pharmaceuticals, plastics, and rubber. Although a 

wide variety of organic chemicals are imported into 

the United States from AGOA beneficiary countries, 

the primary chemicals imported under the 

AGOA/GSP programs are methyl ethyl ketone 

(MEK) and nonaromatic esters of acrylic acid. MEK 

is used as a solvent in adhesives and coatings, while 

nonaromatic esters of acrylic acid are used in the 

production of paints, coatings, adhesives, plastic 

sheet, and other products. The NTR rates of duty 

for MEK and nonaromatic esters of acrylic acid are 

3.1 and 3.7 percent ad valorem, respectively.

Certain organic chemicals: U.S. imports under AGOA 

and GSP, 2013 (share by value)

Source: USITC DataWeb/USDOC (accessed February 26, 

2014). 

Certain Organic Chemicals: Leading U.S. imports under AGOA and GSP, by product and key 

suppliers, 2000, 2005, and 2008–13 (million $)

Product category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Methyl ethyl ketone 

(2914.12.00)

South Africa 3 10 13 10 25 39 29 33

Nonaromatic esters of acrylic 

acid (2916.12.50)

South Africa 0 21 27 14 25 26 20 19

All other certain organic chemicals imported 

under AGOA

14 32 43 29 50 55 53 51

Total certain organic chemicals imports under 

AGOA

17 62 84 53 101 120 102 103

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. 

Methyl 

ethyl 

ketone, 

32% 

Nonaromatic 

esters of 

acrylic acid, 

19% 

All other, 

50% 

73
Major Factors in the 

Growth of Certain Organic 

Chemical Imports under 

AGOA/GSP 

The value of organic chemical imports of this type 

grew faster than the quantity of such imports over 

the period, primarily due to higher unit values 

resulting from increased costs of crude petroleum 

and other feedstocks. For example, while the 

volume of U.S. MEK imports from South Africa 

during 2000–2013 grew from 6,800 to 

23,200 metric tons, or 242 percent, value grew by 

865 percent.

U.S. demand for nonaromatic esters of acrylic acid 

by paints and coatings industries grew during 

2000–2013 due to increases in demand for 

downstream products, such as architectural paints 

and coatings, and automotive lacquers. 

Decreased U.S. production of MEK during 2000–

2013 stimulated a rise in MEK imports from 

various countries, including AGOA beneficiary 

South Africa. Two U.S. MEK production plants 

were shuttered in 2004 and 2008. Although U.S. 

imports of MEK grew during 2000–2013, overall 

U.S. demand for MEK fell due to a variety of 

factors, including increased use of powder-based 

and water-based coatings. Many users also 

switched to higher solids concentrations to reduce 

solvent usage because organic solvents such as 

MEK contribute to air and water pollution.

South African production of organic chemicals in 

this group grew over 2000–2013. A major 

production facility was opened in 2004 by Sasol, a 

South African company, to take advantage of 

South Africa’s abundant coal resources as a lowcost feedstock in the production of certain organic 

chemicals, including nonaromatic esters of acrylic 

acid. 

Sources: Chemical Week, “Sasol Starts Up Acrylates 

Complex,” April 7/14, 2004, 40; Chemical Week, “Shell 

Closes Louisiana MEK Plant,” September 29/October 6, 

2004, 62; Greiner and Funada, “Methyl Ethyl Ketone 

(MEK),” 2012, 11, 13; Glauser, “Acrylic Acid, Acrylate 

Esters and Superabsorbent Polymers,” 2012, 20; USITC 

DataWeb/USDOC (accessed December 2013–March 2014).

74
Edible nuts 

The United States imports various edible nuts from 

AGOA-eligible countries, including cashews, 

macadamia nuts, kola nuts, peanuts, pecans, and 

nut mixtures. However, cashews, the most heavily 

imported nut category from AGOA-eligible 

countries, are duty free under NTR. The vast 

majority of edible nuts imported under AGOA/GSP 

are macadamia nuts from Kenya, South Africa, and 

Malawi. NTR duty rates for macadamia nuts are less 

than 0.5 percent ad valorem.

Edible nuts: U.S. imports under AGOA and GSP, 2013 

(share by value)

Source: USITC DataWeb/USDOC (accessed February 26, 

2014). 

Edible Nuts: Leading U.S. imports under AGOA and GSP, by product and key suppliers, 2000, 

2005, and 2008–13 (thousand $)

Product category 

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Macadamia nuts 

(0802.61, 0802.62)

Kenya 0 4,355 2,856 3,634 15,328 23,573 29,756 24,516

South Africa 0 18,328 9,726 11,620 20,339 19,787 26,217 26,954

Malawi 61 5,128 2,112 1,931 4,869 4,898 4,222 3,093

Swaziland 0 0 0 0 120 179 170 0

Mozambique 67 158 129 0 184 0 0 0

Subtotal 127 27,969 14,823 17,185 40,840 48,438 60,366 54,563

All other edible nuts imported under 

AGOA

404 2,687 6,861 4,137 7,923 7,810 9,357 7,787

Total edible nut imports under 

AGOA

532 30,656 21,684 21,322 48,763 56,248 69,722 62,350

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. 

Macadamia 

nuts, 

88% 

All other, 

12% 

75
Major Factors in the 

Growth of Edible Nut 

Imports under AGOA/GSP

In terms of both value and volume, U.S. imports of 

edible nuts under AGOA/GSP provisions registered 

a dramatic rise since the implementation of 

AGOA, from 117 metric tons (valued at $532,000) 

in 2000 to 5,161 metric tons (valued at $62.3 

million) in 2013. Most of this rise was accounted 

for by imports of macadamia nuts, which 

accounted for 88 percent of the value of imports 

of edible nuts under AGOA/GSP in 2013. The rise 

in value exceeded the growth in quantity over the 

period; unit values increased by 165 percent, 

driven by demand.

U.S. and global demand for macadamia nuts has 

been growing owing to the health benefits 

attributed to edible nuts, including macadamias. 

Intermittent weather-related supply constraints 

on Australian production, the traditional leading 

global exporter, during 2000–2013 contributed to 

an increase in both the quantity and value of 

exports of macadamia nuts from AGOA countries. 

Currently, the principal AGOA exporters are South 

Africa, which is the leading global producer of inshell and shelled macadamia nuts combined; 

Kenya, a relative newcomer to the macadamia nut 

trade; and Malawi, which is expected to 

substantially increase exports in the coming years.

The growth of the South African macadamia nut 

industry has been aided mainly by the industryfunded South African Macadamia Growers’ 

Association (SAMAC). Export competitiveness in 

South Africa has been enhanced by SAMAC’s focus 

on improving quality, as many growers and 

processing facilities have attained accreditation 

under quality control programs. In addition, the 

largest South African macadamia nut company, 

Green Farms Nut Company, entered a joint 

venture in 2010 with the Australian producer 

Suncoast Gold and formed the world’s largest 

macadamia nut marketing company, Green & 

Gold Macadamias. Another South African 

producer, Stahmann Farms Enterprises, joined the 

venture in October 2012.

A substantial rise in production and exports in 

Kenya has been attributable mainly to a 

combination of expanded acreage, quality 

improvement, international certifications, and 

value chain enhancement.

The Malawi government targeted the macadamia 

nut industry for development in the mid-1990s 

and received assistance from the African 

Development Bank.

Sources: ADF, “Macadamia Smallholder Development 

Project,” April 2009; BIF, Equal Exchange, and Irish Aid, 

Malawian Macadamias 2010–2020; Farmer’s Weekly, 

“Making a Mountain out of Macadamias,” February 11, 

2013; Equatorial Nut Processors, “About Us,” 2013; 

Equatorial Nut Processors, “Our Certifications,” 2013; 

GTIS, Global Trade Atlas database; International Nut & 

Dried Fruit, Global Statistical Review 2007–2012 (accessed 

February 11, 2014); Horticultural Crops Development 

Authority, “Macadamia,” February 21, 2014; Mbora, 

Jamnadass, and Lillesø, Growing High Priority Fruits and 

Nuts in Kenya, n.d.; Republic of South Africa, DAFF, A 

Profile of the South African Macadamia, 2012; Republic of 

South Africa, DAFF, National Agricultural Marketing 

Council, International Trade Probe, March 2013; South 

African Macadamia Nut Growers’ Association, “Overview 

of the South African Macadamia Industry” (accessed 

January 30, 2014); Ten Senses, “Fair Trade Products,” 

2011; Twin, “Developing the Macadamia Sector in Malawi” 

(accessed February 19, 2014); USAID, Kenya National 

AGOA Strategy, June 2012; USDA, FAS, Kenya: Macadamia 

Annual Report, October 1, 2009; USAID, “Ten Senses Africa 

Ltd.,” February 21, 2014; USDA, FAS, Republic of South 

Africa: Tree Nuts Annual, November 20, 2009.

76
Citrus fruit 

Various fresh citrus fruits are imported from AGOAeligible countries, including oranges, lemons, and 

grapefruit. The majority of citrus fruit imported 

under AGOA are navel oranges from South Africa. 

Fresh oranges are not eligible for duty-free 

treatment under GSP. NTR duty rates for fresh 

oranges are 2 percent ad valorem.

Citrus fruit: U.S. imports under AGOA and GSP, 2013 

(share by value)

Source: USITC DataWeb/USDOC (accessed February 26, 

2014). 

Citrus Fruit: Leading U.S. imports under AGOA and GSP, by product and key suppliers, 2000, 

2005, and 2008–13 (million $)

Product category

(2012 HTS code) Supplier 2000 2005 2008 2009 2010 2011 2012 2013

Oranges (0805.10) South Africa 0 31 34 31 39 38 40 51

All other citrus fruit imported under AGOA 0 15 7 8 10 6 11 11

Total citrus fruit imports under AGOA 0 46 41 38 49 44 51 62

Source: USITC DataWeb/USDOC (accessed November 26, 2013, and February 26, 2014).

Note: Due to rounding, sums may not match totals. 

Oranges, 

82% 

All other, 

18% 

77
Major Factors in the 

Growth of Citrus Fruit

Imports under AGOA/GSP

Growth in the value of U.S. imports of oranges has 

been driven by increases in both import quantity 

and price. Despite rising import volume, the 

United States is only South Africa’s sixth-largest 

export market for oranges, behind the EU, Russia, 

and several Middle Eastern countries. South Africa 

ranks as the world’s second-largest exporter of 

citrus fruit after Spain and is the largest Southern 

Hemisphere exporter, capitalizing on its 

production niche as an off-season supplier for 

Northern Hemisphere markets. 

Agricultural market deregulation in South Africa in 

the 1990s resulted in increased citrus plantings 

and more exports. South African citrus was 

approved for export to the United States in 1997. 

Duty-free status under AGOA in 2001 allowed 

South African producers to get a foothold in the 

U.S. market at a time when the only major 

Southern Hemisphere competitor, Australia, did 

not have preferential access for oranges. Today, 

nearly all U.S. orange imports from major 

Southern Hemisphere producers (including 

Australia, Chile, South Africa, and Peru) enter 

duty-free under FTAs or AGOA, so the South 

African industry considers AGOA preferences vital 

to its continued success in the U.S. market.

The South African citrus industry has worked 

closely with importers and U.S. government 

agencies to make sure that their products meet 

U.S. market standards. South African citrus is 

eligible for preclearance from USDA’s Animal and 

Plant Health Inspection Service (APHIS), under 

which exports are inspected and treated before 

leaving South Africa, expediting the clearance of 

the product on arrival at the U.S. port of entry. 

The South African industry has also received 

foreign direct investment from U.S. companies 

like Sunkist to help increase exports to growing 

markets. The industry has adapted to increased 

global competition by planting varieties popular in 

export markets and improving quality through 

better management practices.

Demand factors have also helped drive increased 

U.S. imports of South African oranges. The United 

States is a large producer of oranges for fresh 

consumption, but domestic production supplies 

the bulk of the market only from about November 

through June; off-season imports from mostly 

Southern Hemisphere suppliers dominate during 

July–October. U.S. consumer demand for these 

off-season citrus imports—also referred to as 

“summer citrus”—is growing. Since 2000, total 

orange imports have grown more than 

150 percent, with more than 80 percent of this 

total volume arriving in the July–October window. 

As the largest Southern Hemisphere exporter, 

South Africa has positioned itself as one of the 

United States’ primary off-season citrus sources. 

In fact, the Western Cape Citrus Producers Forum 

has developed and implemented a marketing 

campaign specifically targeting the U.S. summer 

citrus market. Major U.S. retailers including 

Walmart, Costco, and Whole Foods all source fruit 

from South Africa.

Sources: GTIS, Global Trade Atlas database (accessed 

March 3, 2014); Freshful-SHAFFE Secretariat, “Minutes,” 

April 22, 2013; Western Cape Citrus Producers Forum, 

“Summer Citrus,” 2013; USDA, FAS, South Africa: Citrus 

Annual Report, May 15, 1999; USDA, FAS, Republic of 

South Africa: Citrus Annual, May 24, 2002; USDA, FAS, 

Republic of South Africa: Citrus Annual, December 14, 

2012; USDA, FAS, Republic of South Africa: Citrus Annual, 

December 20, 2013; USDA, FAS, PSD database (accessed 

March 3, 20114); Nelson, “South African Citrus,” May 4, 

2012; Nelson, “South Africa Ships,” December 3, 2013; 

Wilkinson, “King Citrus,” July 8, 2013; USDA, NASS, Citrus 

Fruits: 2013 Summary, September 19, 2013; USDA, AMS, 

Fresh Fruit and Vegetable Shipments 2000, March 2001; 

USDA, AMS, Fresh Fruit and Vegetable Shipments 2013, 

February 2014.

78
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87

Chapter 3

Potential for SSA Integration into 

Regional and Global Supply Chains

Introduction

Regional and global supply chains are cross-border production networks joining multiple firms 

that supply interlinked economic activities that are needed to bring a product or service from 

conception to consumption.75 Because firms contribute economic value through these 

activities, the chains are often referred to as value chains.76 Although sub-Saharan Africa (SSA) 

is endowed with abundant natural resources, little domestic processing of these resources 

occurs within SSA. As a result, SSA’s position along the global supply chain is primarily as a 

supplier of raw materials or primary products that undergo little value addition or domestic 

processing within SSA. According to South Africa’s minister of trade, the challenge for Africa: 

is not just to integrate ourselves into VCs [value chains]—we are already integrated 

into VCs—but to elevate our place in those VCs. We are at the moment largely 

integrated into GVCs [global value chains] as producers and exporters of primary 

products. We are producers and exporters of dirt out of the ground, which is going 

to support ID [industrial development] somewhere else.

77 

Potential for further integration into regional or global supply chains therefore generally refers 

to the ability of firms within SSA to increase the economic value of what they produce and 

export (i.e., “moving up the value chain”). This can be accomplished by boosting domestic 

downstream processing of raw materials or primary commodities to produce intermediate or 

semifinished goods that are used to produce other goods (e.g., processing leather into leather 

upholstery for car seats, or processing cotton into textiles to produce apparel), or to produce 

final goods that are consumed within SSA or abroad (e.g., foodstuffs like beverages).

This chapter looks at the potential for SSA integration into regional and global supply chains by 

first providing an overview of global supply chains and a description of SSA’s participation in 

75 USITC, Import Restraints, 2011, 3-2. For the purposes of this report, “regional supply chains” generally refers to 

regional production networks that are primarily located within SSA countries. Also, this chapter examines only 

traded goods.

76 For the purposes of this report, the terms “supply chains” and “value chains” are used interchangeably, as they 

commonly are in the relevant literature. However, some authors have distinguished different concepts for each 

term. See, for example, FGI, NTU, and WTO, Global Value Chains in a Changing World, 2013; USITC, Import 

Restraints, 2011; Webber and Labaste, Competitiveness in Africa’s Agriculture, 2009, 9. 77 Davies, keynote address, 2012.

89

 
them. The chapter then examines recent examples of value-added products in SSA that have 

been integrated into regional and global supply chains, including cut and polished diamonds in 

Botswana, cocoa in Ghana, and agroprocessed goods and apparel in southern Africa. It then 

presents products that have been identified by researchers, SSA governments, and other 

stakeholders as having potential for integration into regional and global supply chains. Based on 

a review of literature, these sectors include agricultural products and foodstuffs, leather and 

leather products, textiles and apparel, and minerals processing and extractive industries 

beyond merely supplying raw materials. 

Overview of Regional and Global Supply 

Chains 

The activities occurring in a supply chain can be grouped into a series of broad sequential stages 

(figure 3.1). Moving upstream to downstream, a typical supply chain includes research and 

development (R&D) and/or product design; manufacturing, which includes all production 

stages from raw materials production to finished goods assembly; and marketing and retail 

sales activities.78 A supply chain can also be considered a value chain, because firms contribute 

economic value as they move downstream. For some supply chains several firms are involved in 

the production phases, whereas for others a single firm carries out most production activities 

internally, while purchasing raw materials and some services from external suppliers.79

Figure 3.1 Example of a simple supply or value chain

Source: Compiled by USITC staff. 

Global supply chains (GSCs) are value chains where one or more of these activities take place 

across international borders. An often cited example of a GSC is the production of Apple’s 

iPod.80 In this case, most R&D, management, and marketing are U.S.-based; the hard drive is 

78 In addition, these chains use services such as financial and logistic services. USITC, Import Restraints, 2011, 3-2. 79 USITC, Import Restraints, 2011, 3-2. 80 See, for example, USITC, Import Restraints, 2011, 3-2 to 3-3; Linden, Dedrick, and Kraemer, “Innovation and Job 

Creation in a Global Economy,” 2011; Timmer et al., “Rethinking Competitiveness,” June 26, 2013; IMF, Trade 

Interconnectedness, August 26, 2013, 3; OECD, Interconnected Economies, 2013, 17. The example in the text 

references the GSC of the fifth-generation iPod.

90

 
designed in Japan; parts are produced in Asian countries, including Japan, Taiwan, the Republic 

of Korea (Korea), China, the Philippines, and Singapore; and final assembly is carried out in 

China by Taiwanese-owned manufacturers. 

For some GSCs, participation is primarily among firms in countries that are geographically close 

to one another, such as countries within North America or the European Union (EU).81 In such 

cases the chains are referred to as regional supply chains (RSCs). Production of the Learjet is an 

example of a North American-based RSC.82 The Learjet, produced by a Canadian-owned firm, is 

assembled in the United States using fuselages built in Mexico and U.S.-designed engines built 

in Canada.83 Only the wings come from outside North America. Firms operating in an RSC 

benefit from the ability to better meet customer and local pricing preferences, to lower 

inventory costs and exchange rate risk, to lower the cost of regulatory compliance, and to take 

advantage of regional trade preferences, such as those offered by the North American Free 

Trade Agreement (NAFTA) and the EU.84

Several factors have led to the rapid growth of GSCs over the past 30 years.85 GSCs have 

enabled firms to take advantage of international cost differences (historically, lower wage costs 

in particular) by locating distinct activities in different countries based on their respective 

comparative advantage. But to take advantage of cost differences between countries, firms 

needed technological changes to improve communications (primarily through advances in 

telecommunications and the Internet) and to lower the cost of moving products across 

international borders. Thus GSCs have developed because of (1) improvements in international 

logistics, essential for fragmented GSCs, resulting from the development of comprehensive 

logistic firms; 86 (2) lower transportation costs; (3) lower tariffs and nontariff measures brought 

about by trade agreements; and (4) improvements in intellectual property rights protection and 

contract enforcement, which reduced risk for lead firms87 to outsource.88 To paraphrase one 

author, technological advances made GSCs feasible, and wage differences made them 

81 USITC, Import Restraints, 2011, 3-2. 82 Economist, “Ready to Take off Again?” January 4, 2014, 23; USITC, Business Jets, 2012, 3-1–3-9. 83 The U.S. firm LearJet was purchased by the Canadian firm Bombardier in 1990. 84 Based on an automobiles example from USITC, Import Restraints, 2011, 3-37 to 3-39. 85 For an example, see USITC, Import Restraints, 2011, 3-4 to 3-6; UNECA, Making the Most of Africa’s 

Commodities, 2013, 82–83; Baldwin, “Global Supply Chains,” 2013, 13–17. 86 These firms supply multiple logistical services, which could include warehousing, distribution, tracking, and 

customs brokerage.

87 It is common in the literature on value chains to talk about “lead firms.” Lead firms are the controlling force in 

the GVC; they choose the location and number of suppliers, and oversee the chain to ensure suppliers meet 

appropriate standards and other requirements. UNECA, Making the Most of Africa’s Commodities, 2013, 82–83. 88 USITC, Import Restraints, 2011, 3-4 to 3-6; UNECA, Making the Most of Africa’s Commodities, 2013, 82–83; 

Baldwin, “Global Supply Chains,” 2013, 13–17; OECD, Interconnected Economies, 2013, 19–20.

91

 
profitable.89 While most participants in GSCs are developed and emerging economies, research 

has shown that participation by developing countries can have a positive effect on their 

economies (box 3.1).

Box 3.1 Why participation in GSCs is important for developing countries

Integration into GSCs is important for developing countries because it can boost economic growth by 

adding greater value to domestic industries, increasing employment, increasing productivity, and raising 

incomes.a According to the United Nations Conference on Trade and Development (UNCTAD), the 

amount of value added locally through GSC trade “can be very significant” relative to the size of a 

developing country’s domestic economy. UNCTAD calculates that value-added trade contributes 

28 percent to a developing country’s gross domestic product (GDP), on average, versus 18 percent for 

developed countries.b UNCTAD concludes that participation in GSCs generates employment, provides a 

chance for industrial upgrading, and appears to correlate positively with GDP growth rates.c A World 

Bank study found that Asia’s rising participation in GSCs correlated with its growing industrialization, 

which created millions of better-paying jobs that brought workers out of agriculture and the informal 

sector.d

However, participation in GSC trade does not automatically trigger development gains. Countries must 

work to link to GSCs in a way that brings sustainable improvements in welfare. The Organisation for 

Economic Co-operation and Development (OECD) asserts that to support broad development goals, GSC 

trade must also (1) be brought into the overall national economic development agendas; (2) create 

general linkages to the local economy and build domestic capacity; and (3) improve employment by 

increasing the workforce, creating better jobs, and improving working conditions.e Also, the level of 

engagement of foreign firms plays an important role in the amount of gains that can be derived from 

GSCs. Developing countries derive greater benefits when these firms aid in workforce development, 

form links with domestic firms, and work with local institutions to develop the domestic industry.f 

Notes:

a UNCTAD, Global Value Chains and Development, 2013, 1; Bamber et al., “Connecting Local Producers,” 2013, 7; OECD, 

“Interconnected Economies,” 2013, 32–33, 156. b UNCTAD, Global Value Chains and Development, 2013, iii.

c UNCTAD, Global Value Chains and Development, 2013, 1, 20.

d Dinh et al., Light Manufacturing in Africa, 2012, 22.

e OECD, Interconnected Economies, 2013, 32.

f

Bamber et al., “Connecting Local Producers,” 2013, 8.

GSCs operate in the production of a wide variety of goods, including electronics, 

semiconductors, toys, housewares, apparel, pharmaceutical products, certain agricultural 

products, minerals, metals, and oil. Manufacturing industries have been at the forefront of the 

development of GSCs because their products often have component parts that can be easily 

89 Baldwin, “Global Supply Chains,” 2013, 16.

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broken into discrete production phases in different countries, as the above iPod example 

illustrates.90 Indeed, increased trade in intermediate and semifinished products between lead 

firms and their worldwide suppliers has been an important feature of the “GSC age.”91

Extractive industries (mining, oil, and gas) have long supplied raw materials to GSCs. However, 

in the past decade extractive industries have begun employing their own production GSCs by

establishing and expanding the use of specialization and outsourcing of some production 

functions.92 Some products are more apt to be made in RSCs than GSCs. These include products 

that are heavy, bulky, and expensive to transport; that spoil quickly, such as fresh agricultural 

products; that require lead firms and suppliers to collaborate closely on product development, 

like automobiles; that must meet strict regional standards; and that need to be delivered “just 

in time.”93

Several factors affect the ability of developing countries to participate in GSCs and RSCs. The 

OECD identified 14 such factors and organized them into five broad categories:94

• Production capacity, which covers human-capital factors (including the cost, 

availability, and skill of labor), standards and certification, and “national innovation 

systems,” including both the flow of information between parties and spending on 

innovation and R&D; 

• Infrastructure and services, which covers the cost and quality of transportation, 

information and telecommunications, water, and energy supplies; 

• Business environment, which includes “macro-economic stability and public 

governance,” ease of opening a business, and access to financing; 

• Trade and investment policy, which covers market access, export and import 

procedures, and border transit times (all of which can be referred to as trade 

facilitation measures) as well as tariffs and industry-specific policies (designed to 

support specific industries in participation and upgrading in GSCs); and 

90 UNCTAD, Global Value Chains and Development, 2013, 6. 91 UNECA, Making the Most of Africa’s Commodities, 2013, 80. The amount of foreign value-added content serves 

as an indicator of the extent of GSCs’ linkages by industry. This content tends to be highest in basic industries (i.e., 

industries that make heavy use of primary goods such as metals, petroleum, rubber, and chemicals) and highertech industries, which often use component parts from many other countries in their assembly (such as 

communication equipment, televisions, radios, instruments, motor vehicles, and electrical machinery). OECD, 

Interconnected Economies, 2013, 25–27. 92 Bamber et al., “Connecting Local Producers,” 2013, 16. In GSCs in the extractive industries, the lead firms have 

the extraction rights. These lead firms have increasingly outsourced a number of production functions—including 

engineering, project management, and even exploration—to their suppliers. 93 See for example, USITC, Import Restraints, 2011; Bamber et al., “Connecting Local Producers,” 2013; UNECA, 

Making the Most of Africa’s Commodities, 2013. 94 Bamber et al., “Connecting Local Producers,” 2013, 10–11.

93

 
• Industry institutionalization, which the OECD defines as both (1) the ability of the 

private sector and public institutions to coordinate and (2) inter-industry 

coordination and maturity. Characteristics of industry maturity include experience of 

firms participating in GSCs and the establishment of influential industry associations 

to reduce transaction costs for meeting requirements.95

The importance of each of these factors varies by sector (table 3.1). In addition, a country’s 

location, size, and stage of development also affect participation in GSCs.96

Table 3.1 Top five factors affecting the competitiveness of developing countries in GSCs, by sector

Sector GSC Production capacity

Infrastructure and 

services

Business 

environment

Trade and 

investment 

policy

Industry 

institutionalization

Agriculture • Human capital

• Standards and 

certifications 

• Transportation 

infrastructure and 

services

• Access to 

finance

• Industry maturity 

Extractive 

industries

• Human capital

• National innovation 

systems

• Energy 

infrastructure and 

services

• Public 

governance

• Access to 

finance

Manufacturing • Human capital

• Standards and 

certifications

• National innovation 

systems

• Transportation, 

energy, and water 

services and 

infrastructure 

• Policy and 

facilitation 

Source: Bamber et al., “Connecting Local Producers,” 2013, 14–22. 

Many developing countries have successfully integrated themselves into GSCs. Countries in East 

and Southeast Asia have been particularly successful at linking to manufacturing GSCs, largely 

by creating business-friendly environments.97 Generally these countries have good production 

capacity, strong human capital (especially high worker productivity), and adequate 

infrastructure and services (including integrated transportation networks and a consistent 

supply of energy), as well as access to a reliable supply of inputs.98 Their governments have also 

established policies that positively supported the countries’ business environments, industry 

institutionalization, and trade and investment, allowing local firms to take advantage of the 

95 Bamber et al., “Connecting Local Producers,” 2013, 11. 96 For further information, see Bamber et al., “Connecting Local Producers,” 2013, 29. 97 UNCTAD, Global Value Chains and Development, 2013, 10; WEF, World Bank, and AfDB, The Africa 

Competitiveness Report, 2011, 18; UNECA, Making the Most of Africa’s Commodities, 2013, 83. The highest 

participation in GSCs is found in east and southeast Asia, which is the world’s primary region for export-oriented 

manufacturing and processing. UNCTAD, Global Value Chains and Development, 2013, 10–11. 98 WEF, World Bank, and AfDB, The Africa Competitiveness Report, 2011, 18; WEF, Global Competitiveness Index: 

Country Rankings (accessed December 12, 2013).

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opportunities GSCs offered to industrialize.99 They also created environments where local firms 

could upgrade within the GSCs, taking over more complex functions.

SSA’s Participation in Regional and Global 

Supply Chains

According to the International Trade Centre, a joint agency of the World Trade Organization 

and the United Nations, one approach to assessing the extent of SSA integration into GSCs is to 

examine the share of SSA’s total imports accounted for by intermediate goods and the share of 

SSA’s total exports accounted for by transformed or finished goods. It assumes that an increase 

in the former share reflects greater domestic processing of imported inputs into final goods 

(and thus an increase in domestic value-added activities over time) that are consumed either in 

SSA or abroad. An increase in the latter share reflects greater domestic processing of either 

domestic or imported inputs into final goods (and thus an increase in domestic value-added 

activities over time) that are consumed in foreign markets. The International Trade Centre 

found that between 1995 and 2010, the share of imports of intermediate goods in SSA’s total 

imports declined slightly (although it increased in value terms), but the share of exports of 

transformed or finished goods in SSA’s total exports increased. Taking these trends together, 

the Center concluded that SSA has been moderately successful in establishing domestic 

processing industries that are based on a greater share of domestically produced inputs, and 

that it has also been moderately successful moving up the value chain by boosting exports of 

value-added products without increasing its reliance on imported inputs to process 

domestically.100

Despite evidence of moderate success in exporting some high-valued products, SSA’s 

participation in GSCs occurs primarily in supplying raw materials. Most SSA economies continue 

to export primary commodities and import finished goods for consumption.101 SSA involvement 

in manufacturing and other value-added production activities, and especially GSC 

manufacturing, is generally limited.102 Manufacturing in SSA usually involves semiprocessed 

items and/or items that have preferential access to third-country markets via such measures as 

99 UNECA, Making the Most of Africa’s Commodities, 2013, 83–84. 100 International Trade Center, “Africa’s Trade Potential,” 2012, 5–9, 16. 101 Dinh et al., Light Manufacturing in Africa, 2012, 23; UNECA, Making the Most of Africa’s Commodities, 2013, 74; 

GTIS, Global Trade Atlas (accessed November 22, 2013); USITC, hearing transcript, January 14, 2014, 118 

(testimony of Edward Gresser, Progressive Economy) and 189 (testimony of Steve Lande, Manchester Trade 

Limited, Inc.).

102 Webber and Labaste, Building Competitiveness in Africa’s Agriculture, 2010, 3; UNECA, Making the Most of 

Africa’s Commodities, 2013, 74.

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the United States’ African Growth and Opportunity Act (AGOA) or the EU’s Everything But Arms 

(EBA).103

Reasons for low SSA participation in downstream GSC activities can be inferred using the OECDidentified factors affecting GSC participation discussed above.104 First, SSA generally lacks 

skilled human capital. For example, the productivity of Africa’s large rural labor force is very 

low, both when measured by value added per worker and by yields.105 Moreover, SSA generally 

has poor transportation and communications infrastructure, as indicated by some of the 

measures in the World Bank’s Logistics Performance Index (LPI), as well as inadequate 

utilities.106 Macroeconomic policies have been improving in SSA, but the business environment 

for many SSA countries is unfavorable because of broad concerns about public governance, 

including corruption, and limited access to financing. Most SSA countries have cumbersome 

trade and investment policies, especially those affecting export and import procedures. 

Because of long border transit times, exports from SSA take longer and cost more than from 

most other regions of the world; for example, the SSA average export time is almost triple the 

OECD average, and export costs are double.107 USITC research found that the time, cost, and 

uncertainty of SSA overland transport to ports of export hurt SSA countries’ ability to integrate 

into regional and global supply chains, which require production of time-sensitive goods or of 

items that require multiple stages of transportation.108 Finally, many SSA countries have poor 

private sector and public sector coordination. 

103 Webber and Labaste, Building Competitiveness in Africa’s Agriculture, 2010, 3; UNECA, Making the Most of 

Africa’s Commodities, 2013, 74. According to UNECA, Africa deindustrialized during the 1980s and 1990s, while 

Latin America and Asia became more industrialized as they took advantage of globalization. Between 1980 and 

2009, SSA’s share of GDP attributable to manufacturing value added fell from about 17 percent to 13 percent. This 

decline in industrialization is due to both historical legacy and policy failures, especially the structural adjustment 

programs (SAPs) in the mid-1980s, which are generally acknowledged to have failed in many areas, including 

improving value addition. (SAPs were World Bank and International Monetary Fund mandated policy changes, 

which included trade liberalization, macroeconomic adjustment and privatization). 104 Dinh et al., Light Manufacturing in Africa, 2012, 5–7: USITC, Trade Facilitation in the EAC, July 2012; World Bank, 

Logistics Performance Index 2012; World Bank, “Trading across Borders,” June 2013; UNECA, Making the Most of 

Africa’s Commodities, 2013; WEF, World Bank, and AfDB, The Africa Competitiveness Report, 2011; WEF, World 

Bank, and AfDB, The Africa Competitiveness Report 2013, 2013, 8. 105 SSA still has a majority rural-based population and work force; 65 percent of SSA’s people live in rural areas, and 

75 percent of the workforce works in agriculture. Webber and Labaste, Building Competitiveness in Africa’s 

Agriculture, 2010, 2, 4; World Bank, Agriculture Value Added per Worker (accessed December 11, 2013). 106 The World Bank assesses six factors for its LPI ranking, including efficiency of customs procedures, logistical 

competence, and infrastructure. Only five SSA countries ranked in the top half of the LPI 2012 ranking: South 

Africa, Benin, Botswana, Mauritius, and Malawi. World Bank, Logistics Performance Index 2012. 107 World Bank, “Trading across Borders,” June 2013. 108 Christ and Ferrantino, “Land Transport for Export,” October 2011; USITC, Sub-Saharan Africa: Effects of 

Infrastructure, 2009.

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The reasons for low GSC participation are also illustrated by the World Economic Forum’s global 

competitiveness index (GCI).109 The vast majority of SSA countries rank in the bottom half of the 

GCI’s country rankings, based on such factors as infrastructure, innovation, macroeconomic 

environment, technological readiness, access to finance through financial market development, 

and adequate human capital through higher education and training.110

SSA Success Stories in GSC Participation

Despite generally low rates of participation in GSC downstream activities, some SSA countries 

have successfully moved into production activities with greater value added (see below).111 One 

area of success has been agriculture/agroprocessing (e.g., vegetables and vegetable 

agroprocessing in Kenya, floriculture in Uganda and Kenya, and cocoa production and 

processing in Ghana). A second area of some success has been extractive industries (e.g., 

upstream oil GSC activities in Nigeria and diamond processing in Botswana). A third is 

manufacturing (e.g., automobiles production in South Africa and apparel production in many 

SSA countries). These examples may point to trade policy and infrastructure changes that could 

help SSA economies increase their participation in higher-value-added production and become 

more integrated into GSCs.112 They also illustrate that to participate in GSCs, SSA countries 

must be competitive in some, but not necessarily all, of the key factors affecting GSC 

participation in a particular industry (table 3.1).113

SSA countries with more advanced economies typically have higher downstream participation 

in GSCs across multiple industries. For example, South Africa, SSA’s dominant manufacturer, 

109 WEF, Global Competitiveness Index: Country Rankings (accessed December 12, 2013). Only four SSA countries 

ranked in the top half of the GCI 2013–14 ranking: Mauritius, South Africa, Rwanda, and Botswana. 110 For more information on the GCI ranking of SSA countries, see chapter 5. 111 UNECA, Making the Most of Africa’s Commodities, 2013; Building Competitiveness in Africa’s Agriculture, 2010; 

Rabbobank, Looking for Delta, October 2013. 112 This was done in detail in a study for the World Bank, which used SSA case studies to illustrate how “tools” can 

be used to increase SSA performance and productivity within agricultural/agroprocessing GSCs. Webber and 

Labaste, Building Competitiveness in Africa’s Agriculture, 2010. 113 For example, the history of SSA textile and apparel manufacturing highlights the importance of market access 

for manufacturing, as the region’s participation in apparel GSCs has ebbed and flowed with access granted first 

through the Multi-Fiber Arrangement (MFA) and later through AGOA in conjunction with the third-country fabric 

provision. USITC, hearing transcript, January 14, 2014, 9, 20 (testimony of Ambassador Somduth Soborun, Republic 

of Mauritius), 188 (testimony of Steve Lande, Manchester Trade Limited, Inc.), 220 (testimony of Paul Ryberg, 

African Coalition for Trade).

97

 
and Mauritius have diverse economies and export a variety of manufactured goods.114 These 

countries are also the top two destinations for foreign investment in SSA.115 Reportedly, 

Mauritius has attracted over 32,000 offshore entities that are primarily focused on global 

commerce with India and China and regional commerce with South Africa.116 South Africa and 

Mauritius rank highest among the SSA countries on the GCI—close to the average Southeast 

Asian level—indicating that they are competitive in many of the factors that make countries 

successful in GSCs.117 South Africa, in particular, has good transportation, communications, and 

energy infrastructure and services, as well as well-developed legal and finance sectors.

118 

Four examples of SSA GSCs and RSCs illustrate the factors that have contributed to their 

successful development. The case of diamond exports by Botswana highlights how public 

governance (i.e., how a government exerts its authority) and public-private coordination can 

move a country into intermediate GSC production. Cocoa exports by Ghana show how industry 

institutionalization and standards can both improve the quality and value of a primary input 

that financially benefits the producer and, with different policies, can increase downstream 

production in a GSC to capture more value in the cocoa GSC. The example of Zambeef 

illustrates how a lead African firm based in Zambia can help others integrate into an RSC. The 

example of apparel production in southern Africa shows how labor cost differentials and open 

market access can lead to the development of an RSC. 

Botswana: Diamonds 

Traditionally, SSA diamond-producing countries have operated in rough diamond stages of the 

diamond GSC (figure 3.2).119 While rough diamonds have substantial value, downstream 

diamond jewelry retail values are estimated to be three to four times that of the rough 

stone.120 The middle stage of jewelry production involves cutting and polishing stones 

114 CIA, “South Africa” (accessed January 15, 2014); CIA, “Mauritius” (accessed January 16, 2014); GTIS, Global 

Trade Atlas (accessed January 16, 2014): Dinh et al., Light Manufacturing in Africa, 1: The Africa Competitiveness 

Report, 2011, 15. Most SSA heavy manufacturing exports also come from South Africa: 75 percent as of 2008. In 

2008, 75 percent of SSA’s “light” manufacturing exports, which tend to be labor intensive, also came from South 

Africa, with other significant sources including Botswana, Namibia, Mauritius, and Kenya. The Africa 

Competitiveness Report, 2011, 15, 19. 115 For more information on foreign direct investment in SSA countries, see chapter 5. 116 CIA, “Mauritius” (accessed January 16, 2014). 117 South Africa and Mauritius both score 4.4 on the GCI, while the Southeast Asian regional average is 4.5. South 

Africa ranks 52nd out of 144 countries, and Mauritius ranks 54th. The Africa Competitiveness Report, 2013, 11. 118 CIA, “South Africa” (accessed January 15, 2014). 119 The different colors in figures 3.2–3.5 represent different stages of the GSC. 120 UNECA, Making the Most of Africa’s Commodities, 2013, 89; Spektorov et al., The Global Diamond Report 2013, 

August 27, 2013, 4; Grynberg, Motswapong, and Philimon, Diamond Beneficiation and the WTO, 2012, 12. The 

value of the diamond often determines the location where it is beneficiated.

98

 
(“diamond beneficiation”). These activities do not add as much value as the jewelry stage, but 

do generate additional value and create employment opportunities. This stage of production 

historically occurred outside of Africa, mostly in Antwerp, Belgium, and more recently in new 

low-cost centers like Mumbai, Dubai, and Shanghai.121 However, the government of Botswana, 

with support from De Beers, has moved Botswana’s private sector downstream in the diamond 

GSC.122

Figure 3.2 Diamond jewelry global value chain

Source: Spektorov et al., The Global Diamond Report 2013, August 27, 2013, 5; UNECA, Making the Most of Africa’s 

Commodities, 2013, 89.

In Botswana, where diamond mining is the major driver of economic growth, the government 

has sought to increase domestic participation in the downstream stages of the diamond GSC, 

including cutting and polishing stones, jewelry making, diamond trading, and complementary 

businesses.123 De Beers, a leading firm in the diamond industry and the major mining operator 

in Botswana, has supported government efforts in recent years.124 Initially the focus was on 

increasing domestic diamond beneficiation by controlling access to the diamonds from the 

121 Taglia bue, “An industry Struggles to Keep Its Luster,” November 5, 2012. 122 UNECA, Making the Most of Africa’s Commodities, 2013, 101; Grynberg, “Diamond Beneficiation in Botswana,” 

2013; Spektorov et al., The Global Diamond Report 2013, August 27, 2013, 17; Grynberg, Motswapong, and 

Philimon, Diamond Beneficiation and the WTO, 2012. 123 UNECA, Making the Most of Africa’s Commodities, 2013, 101; Grynberg, “Diamond Beneficiation in Botswana,” 

2013.

124 Grynberg, Motswapong, and Philimon, Diamond Beneficiation and the WTO, 2012, 6; Grynberg, “Diamond 

Beneficiation in Botswana,” 2013. De Beers had historically argued that Botswana did not have a comparative 

advantage in beneficiation, and the authors do find that beneficiating diamonds in Botswana is currently more 

expensive than doing so in low-cost centers in Asia. However, in the mid-2000s, De Beers dropped its objections 

for a number of reasons, including its diminished market power as its cartel ended, the fact that it is not directly 

involved in beneficiating diamonds, and the renegotiation of its leases on important Botswana mines. Thus far, 

access to rough Botswana diamonds has offset the additional costs of beneficiating diamonds in country.

99

 
mines jointly operated by the government and De Beers;125 a policy required diamond traders 

wanting access to rough diamonds to set up in-country downstream processing.126 As of 2012, 

close to 20 percent of Botswanan diamonds were cut domestically, and about 3,000 workers 

were employed in diamond beneficiation, making it the largest manufacturing sector in the 

country.127 Additional downstream jobs are expected from the relocation to Botswana of the 

sales functions of the international branch of DeBeer’s Diamond Trading Company (DTC) in 

2013.128 This includes relocating DTC aggregation, quality assurance, and sight preparation 

operations to Botswana.129 

Ghana: Cocoa 

West Africa is the world’s major cocoa bean supplier, and includes the world’s top three 

exporters: Côte d’Ivoire, Ghana, and Nigeria.130 These countries participate in the cocoa and 

chocolate GSC as suppliers of raw materials (cocoa beans) (figure 3.3). In Ghana, where cocoa is 

a major driver of economic growth, the government has taken measures to ensure a 

consistently high-quality cocoa bean. The government-controlled Ghana Cocoa Board 

(COCOBOD) plays a central role in supporting Ghana’s global competitiveness in cocoa. It works 

to exercise quality control for export beans (including grading, inspection, and treatment to 

prevent pests), conduct R&D (especially into high-yielding cocoa plants and pest and disease 

125 The mines are operated by Debswana Diamond Company (Pty) Ltd, a joint venture between the government of 

Botswana and De Beers. DTC Botswana website, http://www.dtcb.co.bw/about_us.php (accessed January 23, 

2014).

126 Grynberg, “Diamond Beneficiation in Botswana,” 2013. 127 Grynberg, “Diamond Beneficiation in Botswana,” 2013; UNECA, Making the Most of Africa’s Commodities, 2013, 

101.

128 UNECA, Making the Most of Africa’s Commodities, 2013, 101; Grynberg, Motswapong, and Philimon, Diamond 

Beneficiation and the WTO, 2102, 10. The Diamond Trading Company (DTC) is the trading arm of De Beers. DTC 

Botswana is a joint venture between De Beers and the Botswana government. The government of Botswana also 

owns 15 percent of De Beers. DeBeersGroup.com, DTC website, 

http://www.debeersgroup.com/operations/sales/diamond-trading-company/ (accessed January 23, 2014). For 

more information on DTC Botswana see the DTC Botswana.com website, 

http://www.dtcbotswana.com/about_us.php (accessed January 23, 2014); Grynberg, Motswapong, and Philimon, 

Diamond Beneficiation and the WTO, 2102, 10. 129 Spektorov et al., The Global Diamond Report 2013, August 27, 2013, 17. 130 UNECA, Making the Most of Africa’s Commodities, 2013, 95. Cameroon is the sixth-largest producer.

100

 
Figure 3.3 Cocoa/chocolate global value chain

Sources: UNECA, Making the Most of Africa’s Commodities, 2013, 95; World Cocoa Foundation, Cocoa Value Chain, (accessed 

January 8, 2014).

control),131 and provide extension services for farmers.132 These efforts have helped to expand 

Ghana’s cocoa production and develop high-quality, premium-priced beans.133

Besides creating a premium cocoa bean, Ghana is also seeking to participate in the 

intermediate stages of the cocoa GSC by producing cocoa liquor and paste, which are sought by 

European buyers for use in manufacturing finished chocolate and confectionery.134 Support for 

expanding and improving intermediate cocoa processing comes both from the private sector 

and the government. A number of local and foreign firms (including Archer Daniels Midland and 

Cargill) conduct downstream activities to produce intermediate cocoa products in Ghana. Local 

processing firms have established strong business relationships with many of their foreign 

buyers. As a result, Ghanaian producers receive support from many of their foreign buyers, 

including advice on purchasing materials and equipment, technical assistance, and, in some 

cases, forward contracts enabling better production planning and risk management.

The Ghanaian government has set a target to increase intermediate cocoa processing to 

40 percent of production. To help achieve this goal, export processing zones (EPZs) have been 

established that are reportedly attracting investments from foreign cocoa grinders. The 

government has also created incentives for domestic producers, including price discounts, 

allowing access to imported processing machinery, enforcing EPZ benefits, and extending credit 

payment. While the cocoa industry still faces constraints, including an unreliable electricity 

supply, poor infrastructure, and inadequate access to capital, evidence suggests that Ghana is 

successfully increasing its intermediate production; the share of domestically processed cocoa 

131 This is done through the Cocoa Research Institute of Ghana (CRIG). USDA, FAS, Ghana: Cocoa Report, March 15, 

2012, 3.

132 UNECA, Making the Most of Africa’s Commodities, 2013, 145; USDA, FAS, Ghana: Cocoa Report, March 15, 

2012, 5.

133 Ibid. 134 Regional markets generally want finished products, although the market for such goods is limited.

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exports doubled between 2007 and 2011 to account for roughly one-quarter of total cocoa 

exports.135

Zambia: Meat Products 

Zambeef Products PLC (Zambeef) is a vertically integrated agribusiness that is part of an 

expanding South African lead RSC for consumer meat products in SSA. Zambeef was established 

in 1994 as a small beef slaughterhouse and retailer in Zambia.136 However, over the past 20 

years its business has expanded to the production, processing, distribution, and retailing of 

beef, chicken, and pork, as well as a number of other agricultural products.137 An important 

factor in Zambeef’s expansion has been its relationship with Shoprite, a South African 

supermarket chain (figure 3.4).

138 In 1995, Shoprite expanded into Zambia and contracted with 

Zambeef to manage its in-store meat counters.139 When Shoprite broadened its operations to 

Nigeria (2005) and Ghana (2007), Zambeef also entered these markets to manage Shoprite’s 

meat counters.140 However, besides participating in Shoprite’s RSC, Zambeef has expanded its 

own RSC by opening four stores in West Africa. In order to support both sets of stores, Zambeef 

is now expanding its supply chain in the region by establishing Nigerian operations that will 

include a feed lot, processing plant, and cold storage.141

Figure 3.4 Zambeef’s involvement in RSCs 

Source: Zambeefplc.com website http://www.zambeefplc.com/zambeefplc/what-we-do/ (accessed January 23, 2014); 

Rabbobank, Looking for Delta, 2013, 31.

135 UNECA, Making the Most of Africa’s Commodities, 2013, 144–48. 136 Zambeefplc.com website, “Our History,” http://www.zambeefplc.com/zambeefplc/what-we-do/ (accessed 

January 23, 2014).

137 These other products are milk, dairy products, eggs, edible oils, stock feed, flour, and bread. Zambeefplc.com 

website, http://www.zambeefplc.com/who-we-are/ (accessed January 23, 2014). 138 Rabbobank, Looking for Delta, 2013, 31. 139 Zambeefplc.com website, http://www.zambeefplc.com/zambeefplc/what-we-do/ (accessed January 23, 2014); 

Rabbobank, Looking for Delta, 2013, 31. 140 Ibid. 141 Ibid.

102

 
Southern Africa: Apparel 

In the mid-2000s, South African apparel firms established an RSC in which they manufacture 

apparel in Lesotho and Swaziland for the South African market (figure 3.5).142 Head offices in 

South Africa handle the relationships with South African retail buyers and are responsible for 

product design, sourcing of inputs, and logistics. Most fabric, the primary input, is supplied by 

Asia; however, some is regionally supplied from South Africa, Mauritius, or Lesotho.143 South 

African apparel firms located production facilities in Lesotho and Swaziland to take advantage 

of several factors:144 (1) the lower cost of production (especially labor and overhead); (2) more 

flexible labor markets; (3) duty-free access under the Southern African Customs Union (SACU) 

for the finished clothes; and (4) proximity, as Lesotho and Swaziland’s apparel industries are 

located in industrial zones near their borders with South Africa. Also, the changing needs of 

South African retailers encouraged the establishment of these RSCs. First, these retailers 

wanted to diversify their supplier base, especially after the South African government placed 

quotas on Chinese apparel imports in 2007–08. Second, some retailers wanted suppliers who 

could provide quicker and more flexible production runs with a higher fashion content.

Figure 3.5 South African apparel RSC

Source: Gereffi and Memedovic, The Global Apparel Value Chain, 2003, 5; USITC, Textiles and Apparel, January 2004, 1-2. 

Note: “NFs” are natural fibers; “SFs” are synthetic fibers.

142 Morris, Staritz, and Barnes, “Clothing Sectors of Lesotho and Swaziland,” 2011, 98. Before South Africa entered 

these markets, both Lesotho and Swaziland had apparel industries, mostly established by Taiwanese firms. These 

Taiwanese firms primarily established production in Lesotho and Swaziland as part of their GSCs, in order to take 

advantage of U.S. market access offered first by the MFA, but especially by AGOA. However, a few Taiwanese firms 

now manufacture clothes in Lesotho and Swaziland for the South African market. Morris, Staritz, and Barnes, 

“Clothing Sectors of Lesotho and Swaziland,” 2011, 97, 99. 143 Morris, Staritz, and Barnes, “Clothing Sectors of Lesotho and Swaziland,” 2011, 105, 107: USITC, hearing 

transcript, January 14, 2014, 208 (testimony of Paul Ryberg, African Coalition for Trade, Inc

144 Morris, Staritz, and Barnes, “Clothing Sectors of Lesotho and Swaziland,” 2011, 102: Chemengich,

Competitiveness of the SSA Textile Sector, 2010, 43.

103

 
Potential Participation in Regional and Global 

Supply Chains: Review of the Literature 

A review of literature suggests that SSA sectors with the greatest potential to further integrate 

into RSCs and GSCs are (1) agricultural products and foodstuffs, (2) leather and leather 

products, (3) textiles and apparel, and (4) extractive natural resource products. Research shows 

that SSA already has factors that could enable it to be competitive in light manufacturing, 

including low-wage labor (enough to offset its lower labor productivity compared with Asian 

competitors), abundant natural resources, preferential access to high-income markets like the 

United States and EU, and sufficiently large local or regional markets. Large local or regional 

markets allow emerging SSA producers to develop capabilities and hone their skills in quickresponse, high-volume production in those regional markets before selling into global 

markets.145

These sectors’ potential for supply chain integration has garnered interest from governments 

and other stakeholders. For instance, a study being undertaken by UNCTAD (a UN body that 

addresses trade and development issues and provides technical assistance to developing 

countries) is intended to identify potential SSA supply chains in agroprocessing, textiles and 

apparel, and leather. The study will reportedly identify constraints to forming supply chains in 

these sectors, and identify and promote regional cooperation among industry associations 

active in these sectors.146 In December 2013, UNCTAD, in collaboration with the 

Commonwealth Secretariat and other stakeholders, organized a workshop to discuss and share 

ongoing research in identifying potential RSCs in the sectors noted above.147

However, the development of light manufacturing in SSA faces several challenges. According to 

some researchers, broad impediments that continue to hamper the development of light 

manufacturing in SSA include (1) problems with the availability, cost, and quality of inputs, 

including lack of access to industrial land with developed infrastructure; (2) lack of access to 

finance; (3) inadequate or absent skills in the workforce; and (4) poor trade logistics (i.e., high 

costs for transporting goods to and from market).148 

145 Dinh et al., Light Manufacturing in Africa, 2012, 26, 41. 146 UNCTAD, “UNCTAD Asked to Identify Potential Supply Chains in Sub-Saharan Africa,” September 27, 2012. 

According to a similar study UNCTAD did for the leather and leather products sector in South Asia, the removal of 

tariffs and greater regional integration could boost intraregional trade of these products in South Asia 10-fold. FGI, 

NTU, and WTO, Global Value Chains in a Changing World, 2013, 323. 147 Gitau, “Promoting Value Supply Chains in Sub Saharan Africa,” December 23, 2013. 148 Dinh et al., Light Manufacturing in Africa, 2012, 55.

104

 
Agricultural Products and Foodstuffs 

Based on a review of literature, the agricultural products and foodstuffs sector (collectively, the 

agroprocessing sector) has the greatest potential to integrate into regional supply chains within 

SSA.149 According to one study by the UN Industrial Development Organization (UNIDO), rising 

incomes, greater urbanization, and changing consumer preferences within SSA have 

increasingly shifted consumption away from undifferentiated staple crops toward more fruits, 

vegetables, vegetable oils, fish and meats, dairy products, and other processed foods.150 As a 

result, the study found that domestic and regional SSA markets will drive demand for valueadded agricultural products and foodstuffs. Indeed, domestic markets and intra-SSA trade were 

found to account for more than three-quarters of the value of SSA’s agricultural market.151

Moreover, demand for food in SSA is expected to double between 2010 and 2015 to 

$100 billion. This will include demand for processed foods like bread, biscuits, and snack 

products, offering greater opportunities for SSA producers in domestic and regional markets.152

Indeed, the growth of supermarket chains, retail outlets, and food service industries across SSA

already reflects these trends.153

The agricultural products and foodstuffs sector must meet several competitive challenges if it is 

to further develop and integrate into regional supply chains across SSA. According to UNIDO, a 

key challenge is developing backward linkages with small-scale farmers in regional supply 

chains.154 Principal impediments that these farmers face include (1) limited access to markets 

outside of local villages; (2) the variable availability and quality of the agricultural goods they 

produce, which impedes their ability to find a buyer; (3) poor access to inputs, including 

machinery and packaging; (4) lack of access to finance; and (5) inadequate access to market 

information within their own country.155 According to the same study, other factors that limit 

access to regional markets, and thus the producers’ potential to integrate into regional supply 

chains, include high transport costs; unreliable systems of contract enforcement; and 

149 Although definitions differ, agroprocessing refers to the processing of raw materials derived from the 

agricultural, forestry, and fisheries sectors. The agroprocessing sector thus broadly encompasses agricultural 

products like staple crops (e.g., cassava), coffee, fruits, vegetables, fish, and meats, as well as processed products 

like vegetable oils, fruit juices, and other processed foods. For an overview of agroprocessing in SSA, including 

definitions and concepts, see UNIDO, Agribusiness for Africa’s Prosperity, 2011, 28. 150 UNIDO, Agribusiness for Africa’s Prosperity, 2011, 44, 135 151 UNIDO, Agribusiness for Africa’s Prosperity, 2011, 44. 152 UNIDO, Agribusiness for Africa’s Prosperity, 2011, 154; AECOM International Development, “Priority Value 

Chains Assessment and Selection,” April 2011, 21.

153 UNIDO, Agribusiness for Africa’s Prosperity, 2011, 52. 154 Ibid, 51. 155 Ibid, 66.

105

 
insufficient information on the quantity, quality, and price of agricultural products in 

neighboring countries.156

Nonetheless, SSA countries, often under the leadership of regional associations, are developing 

policies to promote industrial development and greater domestic value addition in agricultural 

products and foodstuffs, which in turn could lead to greater participation in RSCs and GSCs.157

For instance, a recent program launched in West Africa by the UN Economic Commission for 

Africa (UNECA), the Economic Community of West African States (ECOWAS), and other 

stakeholders aims to develop the agricultural sector by analyzing and developing value chains 

for strategic commodities, including rice (in Côte d’Ivoire, Ghana, Mali, and Senegal), maize 

(Benin, Côte d’Ivoire, Ghana, and Mali), and livestock (Mali).158 In East Africa and southern 

Africa, efforts are underway to develop value chains for cassava, coffee, cereals, horticultural 

products, and cotton under the EU’s “All ACP Commodities Program.”159 According to the 

Common Market for Eastern and Southern Africa (COMESA), as a result of Zambia’s national 

cassava strategy, a number of small and medium-sized businesses in Zambia have reportedly 

begun to process cassava into flour, and livestock feed and chips, creating domestic market 

linkages between cassava producers, millers, and food and livestock firms. The strategy is 

expected to serve as a stepping stone to the development of a regional agroprocessing strategy 

focusing on roots and tubers.160 Similarly, recognizing the low levels of domestic value added to 

agricultural products in West Africa, ECOWAS has prioritized the development of its 

agribusiness sector under a regional integration framework.161 Likewise, trade ministers of the 

Southern African Development Community (SADC) have targeted the agroprocessing sector for 

development and increased value addition.162 

Leather and Leather Products 

The leather and leather products sector also has the potential to further integrate into RSCs and 

GSCs. According to one International Trade Centre study, several SSA countries, including 

Ethiopia, Mali, and Nigeria, increased domestic processing and exports of leather and leather 

156 Ibid., 81. 157 COMESA, Annual Report 2011, 2011, 63–64. 158 UNECA, “AUC-ECA Launch Programme,” December 3, 2013. 159 COMESA, Annual Report 2011, 2011, 63. The program, which ended in 2012, was an initiative of the European 

Commission and the African, Caribbean, and Pacific Group of States (ACP). The program aimed to reduce poverty 

and improve incomes and living conditions of agricultural producers in ACP countries. 160 COMESA, Annual Report 2011, 2011, 63–64. 161 ECOWAS Commission, West African Common Industrial Policy, 2010, 35, 38. For a list of potential agricultural 

and industrial products identified for development, see Annex I of the policy.

162 SADC, Report of the Executive Secretary 2011–2012, 2012, 16.

106

 
products between 1995 and 2010.163 The sector has garnered attention across SSA as a way to 

add value to local resources and sell leather products such as shoes and handbags into regional 

and international markets. In fact, Ethiopia is one of the largest producers and exporters of 

leather and leather products in SSA, and has targeted the sector for further development, as 

described below in chapter 4.

The sector faces several supply-side constraints that will likely continue to impede the 

development of RSCs. According to one study, poor disease control, lack of quality processing of 

raw hides and skins, and bans on imported processed leather contribute to a shortage of 

quality processed leather in Ethiopia.164 Other competitive factors affecting the sector include 

lack of refrigeration at slaughtering facilities, long transport distances, and poor road conditions 

to tanneries.165 Other SSA countries likely face similar obstacles.

Textiles and Apparel 

As mentioned above, Lesotho and Swaziland have been integrated into regional production 

networks by several South African apparel firms to supply the South African market since the 

mid-2000s.166 However, the sector has the potential for further integration into RSCs, primarily 

in East Africa and southern Africa. According to one Commission report, greater integration into 

RSCs could help facilitate access to materials, product specialization, production sharing, and 

speed to market.167 In addition, cross-country integration could also enable producers to access 

larger apparel markets or reduce costs associated with transport, storage, border delays, and 

tariffs.168 One industry observer notes that additional regional sourcing opportunities exist, 

particularly in the quick-response, fashion, and short-run segment, where regional suppliers 

have a potential competitive advantage compared to Asian apparel suppliers.169

The textiles and apparel sector faces numerous competitive challenges. According to one 

Commission report, SSA generally suffers from an insufficient base of apparel manufacturing 

through which to develop and sustain upstream production of yarn, fabric, and other inputs.170

Another study characterizes the textile sector as the “weak link” in the SSA cotton-textile163 International Trade Centre, “Africa’s Trade Potential,” 2012, 10. 164 Dinh et al., Light Manufacturing in Africa, 2012, 122. 165 USITC, Sub-Saharan Africa: Effects of Infrastructure Conditions, 2009, 6-36. 166 See Morris, Staritz, and Barnes, “Value Chain Dynamics, Local Embeddedness, and Upgrading,” 2011, 101–102; 

Staritz, Making the Cut? 2011, 88–89. 167 USITC, Sub-Saharan African Textile and Apparel Inputs, 2009, 3-20. 168 Ibid. 169 Staritz, Making the Cut? 2011, 88–89. 170 USITC, Sub-Saharan African Textile and Apparel Inputs, 2009, xv.

107

 
clothing value chain.171 Other competitive challenges facing upstream production of inputs 

include lack of knowledge of regional or international market opportunities, too little reliable 

electricity at competitive rates, insufficient clean water and wastewater treatment facilities, 

and inadequate transportation infrastructure, among others.172

Despite these challenges, efforts continue to develop textile and apparel regional supply chains 

in other parts of SSA. For instance, in 2009 COMESA launched the development of a cotton-toclothing supply chain strategy to improve coordination within the sector. One initiative under 

the strategy aims to strengthen collaboration in the areas of research and policy between 

Malawi, Mozambique, Zambia, and Zimbabwe. Another initiative under the strategy aims to 

develop linkages in cotton and yarn between Zimbabwe and Mauritius.173 

Minerals Processing and Extractive Industries 

Processed minerals and other downstream products related to extractive resources have 

longer-term potential for integration into GSCs; most identified efforts, however, are currently 

in the nascent stages. In addition, efforts are being made across resource-rich countries within 

SSA to identify and develop mineral-based RSCs, although prospects appear mixed. For 

instance, South Africa is developing a strategy to strengthen regional industry linkages and 

develop value chains in the following sectors: (1) ferrous (including iron ore, ferroalloys, and 

steel);174 (2) platinum group metals; (3) titanium and titanium pigments; (4) coal-, gas-, and oilbased polymers; and (5) mining equipment.175 According to one study, how neighboring 

countries will respond to South Africa’s regional strategy remains unclear, since value-added 

processing activities will likely be concentrated in South Africa.176 In East Africa, the East African 

Community (EAC) is drafting a framework to develop value chains in the mineral processing, 

petrochemicals and gas processing, iron, and steel sectors.177 In West Africa, ECOWAS has 

echoed similar commitments to develop regional industrial and mining policies and action 

plans.178

171 Staritz, Making the Cut? 2011, 90. 172 USITC, Sub-Saharan African Textile and Apparel Inputs, 2009, xix–xx; Starlitz, Making the Cut? 2011, 75. 173 COMESA, Annual Report 2011, 2011, 63–64. 174 South Africa is one of the world’s largest suppliers of all of the major ferroalloys. For a description of factors 

affecting growth in South Africa’s exports of ferroalloys, see chapter 2 of this report.

175 Government of South Africa, DTI, Industrial Policy Action Plan 2013/2014–2015/2016, 2013, 124. 176 FGI, NTU, and WTO, Global Value Chains in a Changing World, 2013, 338. 177 EAC, “Regional Frameworks for Development of Extractive Industries,” March 20, 2013. 178 ECOWAS Commission, Regional Strategic Plan, 2011; UNECA, Minerals and Africa’s Development, 2011, 146-

148.

108

 
Despite its abundant natural resources, several factors continue to impede the development of 

mineral-based value chains within SSA. According to one study by UNECA, barriers to 

developing upstream linkages (including industries to support mining activities) include the lack 

of domestic capacity to supply upstream inputs, such as consulting, technical, or scientific 

services; lack of access to capital; and a shortage of local workers with technological 

expertise.179 Impediments to developing downstream linkages (such as mineral processing or 

“beneficiation” activities) include a lack of the large economies of scale needed to be 

competitive in mineral processing, due in part to the absence of local manufacturing that would 

consume such products, as well as the inability of local firms to penetrate established mineralbased value chains primarily dominated by large multinational corporations. According to the 

same report, poor infrastructure conditions across SSA, including deficient and fragmented 

road networks and inadequate and expensive electricity supply, inhibit the development of 

both upstream and downstream linkages.180

179 UNECA, Minerals and Africa’s Development, 2011, 110. 180 Ibid., 109.

109

 
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the U.S. Market. USITC Publication 3671. Washington, DC: USITC, 2004. 

http://www.usitc.gov/publications/docs/pubs/332/pub3671/pub3671.pdf. 

Webber, C. Martin, and Labaste, Patrick. Building Competitiveness in Africa’s Agriculture: A 

Guide to Value Chain Concepts and Applications. Washington, DC: World Bank, 

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World Bank. Agriculture Value Added per Worker (constant 2005 US$) database. 

http://data.worldbank.org/indicator/EA.PRD.AGRI.KD (accessed December 11, 2013).

———. Logistics Performance Index: LPI Results 2012; Global Rankings 2012. 

http://lpisurvey.worldbank.org/international/global/2012 (accessed December 12, 

2013).

———. “Trading across Borders.” Doing Business Index, June 2013. 

http://www.doingbusiness.org/data/exploretopics/trading-across-borders. 

World Cocoa Foundation. “Cocoa Value Chain: From Farmer to Consumer.” 

http://worldcocoafoundation.org/about-cocoa/cocoa-value-chain/GO (accessed 

January 8, 2014).

World Economic Forum (WEF). Global Competitiveness Index: Country Rankings. 

http://www.weforum.org/issues/global-competitiveness (accessed December 12, 2013).

———. World Bank, and the African Development Bank (AfDB). The Africa Competitiveness 

Report 2011. Geneva: WEF, 2011. http://www.weforum.org/reports/africacompetitiveness-report-2011. 

114
———. World Bank, and the African Development Bank (AfDB). The Africa Competitiveness 

Report 2013. Geneva: WEF, 2013. http://www.weforum.org/reports/africacompetitiveness-report-2013. 

115

Chapter 4

AGOA Country Export Potential to the 

United States

Introduction

While chapter 3 of this report identifies African products with potential for integration into 

regional and global supply chains, this chapter presents products that have been identified as 

offering the greatest potential for AGOA beneficiary countries to expand their exports to the 

United States. Two approaches were used to identify products. The first was to review 

published reports that identify products with export potential for SSA countries, including SSA 

countries’ national export development strategies, previous USTR-requested Commission 

studies on SSA export competitiveness, and other economic literature, including academic 

studies and reports from international development institutions such as the World Bank. The 

second approach was to identify products that AGOA countries currently export and that are 

imported by the United States, but mainly from non-AGOA countries, such as fish products, cut 

flowers, and certain apparel products. For products identified under both approaches, the 

chapter describes AGOA countries’ competitive strengths and weaknesses, along with other 

trade impediments that could hinder sales to the U.S. market.

Products with Export Potential for AGOA 

Countries: A Review of Published Research

Products Identified in National Export 

Development Strategies 

Country governments and stakeholders across SSA have identified export sectors to develop as 

part of broader economic development strategies. These strategies include regional integration 

among SSA countries, which has the potential to create important export opportunities for SSA 

goods; export diversification to complement traditional export sectors; and product value 

addition for goods consumed domestically or exported. For example, the national export 

strategies from certain SSA countries, such as Rwanda, Uganda, and Malawi, identify a number 

of products with potential for growth and diversification (table 4.1). The products listed include 

agricultural and horticultural products, handcraft and woodcraft products (e.g., basketry, mats, 

and home furnishings), and leather and leather products (e.g., footwear and handbags). 

117
118

Table 4.1 Products with export potential and factors affecting competitiveness in those sectors in selected SSA countries

Country Products/sectors Positive factors Negative factors

Ethiopiaa Textiles and apparel Government support to attract private investment in the 

sector. 

Unreliable and inadequate electricity supply; underutilized mill 

capacity; limited access to credit; onerous customs procedures.

Leather products and footwear Abundance of livestock herds; good climatic and soil conditions 

contribute to quality livestock and skins; government support 

for the sector.

Poor disease control among livestock herds and weak 

veterinary services; lack of quality processing of raw hides and 

skins; bans on imported processed leather; lack of refrigeration 

at slaughtering facilities; long transport distances; poor road 

conditions to tanneries.

Home furnishings Not identified. Not identified.

Cut flowers Not identified. Not identified.

Ghanab Handcrafts (basketry and 

related straw products, leather 

products, smock weaving)

Abundant and low-cost labor; low capital investment; relatively 

simple production processes.

Limited availability and rising costs of raw materials like straw 

and imported dies; limited storage facilities for inputs and final 

products; lack of suitable and readily available cargo trucks to 

transport baskets to the Accra market and for export.

Woodcraft and furniture Abundant and low-cost labor. Limited availability and high cost of raw materials (wood); low 

productivity; lack of credit to expand business; insufficient 

market demand/lack of market information.

Cashew nuts (including cashew 

kernels and cashew apple 

processing)

Abundant and low-cost labor; climatic conditions conducive to 

growth of cashew nut trees.

High input costs; lack of processing facilities for both cashew 

nuts and cashew apples; high incidence of bush fires that 

destroy cashew crops; poor conditions of feeder roads linking 

farms to paved highways.

Shea and shea butter Climatic conditions and weather patterns conducive to shea 

nut production; policies and programs to support the sector.

Low rates of collection of shea production; high transport costs 

and costs incurred due to other delays that reduce the prices 

offered to farmers, thereby discouraging collection. 

Malawic Oilseed products (cooking oil, 

soaps, lubricants, paints, 

varnishes, meals and flours, 

biofuel, animal feed, fertilizer, 

snacks and confectionary 

derived from sunflowers, 

groundnuts [peanuts], soya, and 

cotton)

Easy access to smallholder value-addition processes such as oil 

extraction from sunflower seed varieties; short growing 

seasons and low input requirements for sunflowers; 

groundnuts widely grown and adaptable to numerous 

environments; established groundnut farming methods that 

rural Malawians are familiar with; suitable soil and climatic 

conditions in low-lying areas of the country to grow cotton.

Low prices for raw sunflower crop acts as disincentive for 

farmers to produce; low crop yields, inefficient production 

techniques, poor storage techniques, and limited storage 

capacity; inability to control level of aflatoxin (a carcinogenic 

fungus) in groundnuts; poor yields for soya crops; lack of 

reliable market linkages between farmers and potential trading 

partners.

Sugarcane products (sugar, 

high-value sugar through 

branding, sugar confectionary 

[syrups, sweets, caramel], 

sweetener, ethanol, spirits, 

cane juice, fertilizer, animal 

feed, cosmetics)

Low labor costs; large economies of scale in sugar production 

in the Shire Valley and the lakeshore; established sectoral 

knowledge and expertise; programs in place to help develop 

smallholder sugarcane farming in a way that reduces the risk of 

land disputes and allows community development.

Lack of a regulatory framework to develop sugarcane products 

sector, including for cultivation; high transportation costs; high 

irrigation and water usage costs; lack of milling capacity.
119

Country Products/sectors Positive factors Negative factors

Malawic Manufactures (beverages; 

agroprocessing [dairy and 

maize, wheat, horticulture, and 

pulse value addition]; plastics 

and packaging, assembly) 

Good soil and climatic conditions allow key upstream inputs 

(e.g., maize, horticulture, and oilseeds) to grow well in order to 

develop supply chains for the beverage and agroprocessing 

sectors; close proximity to regional markets with rapidly 

growing demand.

Lack of affordable and reliable energy supply; lack of market 

linkages between manufacturing and agriculture for 

agroprocessing and beverage sectors; lack of skilled labor and 

access to finance.

Mauritiusd Jewelry (metal, diamonds, 

pearls, semiprecious stones, 

imitation jewelry, and 

accessories)

Well-developed air transport infrastructure; goods are nonperishable, lightweight and have little volume, and hence 

relatively easy to airfreight; skilled human resources; 

established training institutions offer programs in design.

Lack of developing a brand image in gold and diamond jewelry 

products.

Agroprocessing and seafood 

processing

Large maritime exclusive economic zone with an abundant 

stock of various fish species; well-developed port infrastructure 

including cold storage.

Lack of Mauritius-flagged fishing vessels to confer Mauritius 

country of origin to qualify for duty-free access under AGOA.

Light manufacturing, plastic and 

metal-based products (e.g., 

cutlery, hardware, fabricated 

metal, plastic items, etc.)

Geographic location, well-developed transport infrastructure, 

including quality port facilities.

Lack of branding.

Leather, handbags, and fashion 

accessories

Skilled human resources. Lack of export strategy for small enterprises.

Mozambiquee Major crops (cashew, coconut, 

cotton, sugar, tobacco);

Horticulture (grapefruit, cut 

flowers, vegetables);

Basic food crops (maize, rice, 

cassava);

Diversification crops (beans, 

pulses, oilseeds, groundnuts)

Abundant land resources with a wide range of fertile soils and 

climatic conditions that permit cultivation of a wide variety of 

crops; irrigation potential based on abundant surface water 

resources; coastal access; geographically well-positioned to sell 

to growing markets, including the Middle East and India.

Low productivity; low level of technological innovation; 

inability to meet foreign requirements for sanitary and 

phytosanitary (SPS) control; limited agroprocessing capabilities; 

high costs for seeds and other production inputs for export 

crops; ineffective producer organizations; high transport costs; 

limited export development services, including post-harvest 

management, finance, and assistance with complying with 

foreign import regulations.

Leather and leather products Abundant livestock herds and low-cost labor. Lack of backward linkages to local hides, skins, and tanning.

Rwandaf Horticulture (fruits, vegetables, 

and flowers, with focus on 

developing value-added 

products, including juices and 

dried fruits/chilies)

Availability of abundant labor; good climatic growing 

conditions.

Lack of adequate land to achieve economies of scale; lack of 

knowledge around proper crop cultivation and fertilizer and 

pest management; lack of knowledge of export procedures and 

requirements.

Handcrafts (basketry and mats; 

embroidery and woven 

products; hand-loomed textiles 

and other products; ceramics 

and pottery; leather and leather 

products; wood products; 

jewelry

Availability of abundant and unique raw materials (e.g., 

bamboo, reeds, clay, animal skins, banana fiber, etc.); 

prevalence of artistic and creative culture; diversity of goods 

produced based on wide geographic footprint of production; 

presence of government policies to support the sector.

Supply-side constraints, including the following: (1) limited 

access tobecause of poor transportation and supply/logistics 

systems raw materials; (2) fragmented, unstructured, or 

individualized production systems; (3) low production levels; 

(4) low levels of specialization; (5) inconsistent product 

standardization; (6) low product development (design and 

quality); (7) limited knowledge of ways to access and develop 

market.
120

Country Products/sectors Positive factors Negative factors

Ugandag Fruits and vegetables (dried 

fruits, fruit juices and 

concentrates, fruit pulp 

processing, flour processing for 

bakery industry, fruit canning, 

and vegetable purees and 

chutneys)

Organized industry associations; cold storage infrastructure at 

Kampala airport; inexpensive labor; plentiful land resources; 

high-quality fruits and vegetables.

Lack of scale economies among small-scale, subsistence 

farmers; poor post-harvest handling practices (sorting, packing, 

loading); lack of processing technology and value addition, with 

the exception of a few companies that largely depend on 

imported pulp and concentrates; lack of adequate research to 

support value addition.

Dairy products (including 

powdered milk, yogurt, ghee, 

and butter)

High-quality dairy products; good regulatory and legal 

framework; established institutional network, including 

research and development institutions; existence of a dairy 

processors association.

Poor animal husbandry practices; poor-quality milk-handling 

facilities in collection centers; high input costs (water, power, 

transport, packing); lack of adequate cold storage and 

transportation chain; limited success adding value to cheese, 

yogurt, and butter.

Cereals, pulses, and oilseeds 

(including maize, beans, rice, 

chickpeas, sesame seeds, 

sunflower, soybeans)

Organized industry associations; existence of cooperatives to 

help farmers organize; stable support institutions; plentiful 

land resources; diverse subsector plant varieties.

Overdependence on rain-fed agriculture; limited scale 

economies due to subsistence farming and poor production 

methods; poor sorting at harvest stage; improper drying of 

seeds, resulting in poor quality and low prices; limited value 

addition (e.g., animal feed, breakfast cereals); dominance of 

informal trade.

Natural ingredients for 

pharmaceuticals and cosmetic 

industries

Wide variety of natural ingredients grown in Uganda; sector 

initiative supported by biotrade program sponsored by UN 

Conference on Trade and Development (UNCTAD); private 

sector investment in the sector, although from a small base; 

indigenous knowledge of natural ingredients sector.

Lack of national production and processing standards; limited 

value addition, with over 70 percent of production sold as raw 

material; low levels of processing technologies; inadequate 

information on commercial plant species.

Handcrafts (basketry, mats, 

ceramics, beads, pottery, hand 

textiles and woven products, 

toys, jewelry, bags, ornaments, 

leather products, and 

woodcrafts)

Availability of abundant and unique raw materials (e.g., raffia, 

barkcloth, banana fiber, animal skins, etc.); rich and diversified 

culture producing a wide variety of handcrafts; indigenous 

knowledge of sector; current and potential domestic market 

based on the tourism sector.

Unstructured and individualized production systems; limited 

investment; limited technical skills, capacity, and technology; 

limited resources for production, distribution, and marketing.

Sources: a USAID, East Africa Trade Hub, “AGOA Strategies Chart Course for Increased Exports,” December 4, 2013; Government of Ethiopia, Growth and 

Transformation Plan 2010/2011–2014/2015, 2010; Dinh et al., “Light Manufacturing in Africa,” 2012; Abebe, “Textiles FDI Booming,” November 24, 2013. b West 

Africa more generally, including Burkina Faso and Mali. See USAID, West Africa Trade Hub, Exports, Employment, and Incomes in West Africa, 2011; c Government 

of Malawi, National Export Strategy 2013–2018, 2013; d Chemonics International, Mauritius National AGOA Strategy, 2013; Enterprise Mauritius website, 

http://www.sourcemauritius.com (accessed February 10, 2014); e USAID, Removing Obstacles to Growth in Mozambique, 2004; USAID, Mozambique Country 

Assistance Strategy 2009–14, 2009; African Development Bank, Republic of Mozambique Country Strategy Paper 2011–2015; f Government of Rwanda, Rwanda 

Handcraft Strategic Plan, 2009; Government of Rwanda, Rwanda National Export Strategy, 2011; and g

 Exports are mostly focused on regional markets. See 

Government of Uganda, The Uganda National Export Strategy 2008–12, 2007. 

Note: As of this writing, Ethiopia has not published its AGOA export strategy, but it has identified home furnishings and cut flowers as priority sectors.
In many cases, the main competitive factors affecting the export potential of SSA countries in 

these sectors have also been identified, and are included in table 4.1. These strategies and 

sectors address exports generally, but many of them could also be targeted at increasing 

exports to the United States under AGOA.

Other SSA national development plans include specific steps to develop AGOA export strategies 

to increase export opportunities under the program. For example, Burundi is developing a 

country export strategy expected to be completed by early 2014.181 The country is identifying 

strategic export sectors to develop, and reportedly plans to use AGOA’s third-country fabric 

provision to help develop its nascent apparel manufacturing sector. Zambia is also committed 

to developing its domestic textiles and apparel sector to take greater advantage of AGOA 

preferences, and has reportedly called for the development of an industrial strategy to address 

the sector.182 

Products Identified by the Commission 

Previous USTR-requested Commission reports on SSA reviewed and identified export 

opportunities and barriers in AGOA-eligible countries. A 2005 Commission report used 

“revealed comparative advantage” (RCA) to help identify sectors in 37 AGOA-eligible countries 

with potential for export growth.183 An RCA index identifies the extent to which a country has 

captured world market share for a particular good it exports compared to the extent to which it 

has captured world market share for all traded goods. RCA indices help identify a country’s 

exports that are internationally competitive based on past export performance, as well as 

products that could be competitive based on past export growth.184 RCAs were calculated for 

37 AGOA-eligible countries using export data for 1998–2003 classified at the Harmonized 

System (HS) 4-digit level. The RCA analysis found a broad range of products with potential for 

export growth in a number of sectors. These included products in the agriculture, forestry, 

fisheries, and agroprocessing sectors (such as bananas, cereal flours, corn, honey, coffee, 

cocoa, cotton, fruits, vegetables, cut flowers, cashews, sesame, shrimp and prawns, logs, 

hardwoodlumber, and wood products); energy-related industries (including downstream 

petroleum products, liquid natural gas, and electricity); manufacturing (including light industrial 

products, leather products, processed wood products, and chemicals); and minerals and metals 

(including aluminum, gold, copper, and gemstones).

181 East Africa Trade Hub, “AGOA Strategies Chart Course for Increased Exports,” December 4, 2013. 182 Kunda, “Zambia: Govt to Revive Textile Sector,” September 3, 2013. 183 USITC, Export Opportunities and Barriers, 2005, D-4. 184 In particular, the RCA index measures a good’s share in a country’s total exports relative to that good’s share in 

world trade. For a more detailed description of RCA, see USITC, Export Opportunities and Barriers, 2005, D-4.

121

 
Two Commission reports in 2007 and 2008 identified factors that affect the competitiveness of 

certain products in global export markets. These products were selected by USTR and viewed as 

having significant potential for export diversification and growth in sub-Saharan Africa.185

Agricultural products identified in these reports were cashews, cocoa butter and paste, cut 

flowers, fish, coffee, shea butter, spices, and tropical fruit; mining and manufacturing products 

identified were acyclic alcohol, flat-rolled steel, liquid natural gas, apparel, unwrought 

aluminum, wood veneer, footwear, natural rubber, processed diamonds, textiles, and wood 

furniture.186 For each of these products, the reports identified the key factors affecting 

increased exports. Although a range of factors were identified, common to many products were 

demand growth and rising prices, increased investment, policies to promote the sector, 

regional integration, and certain improvements in infrastructure. 

A 2009 Commission report focused on the effects of infrastructure conditions on SSA export 

growth and competitiveness for different agricultural products (coffee, shea butter, and 

pineapples and bananas) and manufacturing products (natural rubber and downstream 

products, and textiles and apparel). Some of the impediments to SSA export growth identified 

in the report were poor road infrastructure, the limited availability and high cost of vehicles for 

harvesting and shipping, unreliable and high-cost energy, and inefficient agricultural processing 

facilities.187 

A witness at the Commission’s hearing in connection with the current investigation said that 

technical assistance, capacity building, and other marketing efforts provided under AGOA have 

helped SSA countries increase exports of products that already faced low or no duties, including 

birdseed from Ethiopia and shea butter from West Africa.188 A 2005 Commission report and the 

2007 and 2008 Commission reports also identified shea in describing factors affecting trade 

trends in SSA.189 The reports noted that the West African region, with the largest concentration 

of shea nut trees in SSA, has the potential to increase exports of both shea nuts and processed 

shea nut vegetable fat (shea butter) to markets in the United States and Europe.190

185 USITC, Sub-Saharan Africa (First Annual Report), 2007; USITC, Sub-Saharan Africa (Second Annual Report), 2008. 186 U.S. imports under AGOA of many of these products grew during the 2000–2013 period, as described in 

chapter 2 of this report. 187 USITC, Sub-Saharan Africa: Effects of Infrastructure Conditions, 2009. 188 USITC hearing transcript, inv. nos. 332-542, 332-544, 332-545, and 332-546, Edward Gresser, 119–20. 189 USITC, Export Opportunities and Barriers, 2005; USITC, Sub-Saharan Africa (Second Annual Report), 2008; USITC, 

Sub-Saharan Africa: Effects of Infrastructure Conditions, 2009. 190 USITC, Export Opportunities and Barriers, 2005, 5-18; USITC, Sub-Saharan Africa (Second Annual Report), 2008.

122

 
Products Identified in the Economic Literature 

A World Bank guide on value-chain concepts and analysis pointed to several criteria for the 

selection of sectors, including sectors identified as national priorities for development because 

of their large impact on rural incomes and employment, the likelihood of attracting investment, 

previous sector assessments, and other qualitative input from industry experts or other 

stakeholders.191 Using several of these criteria, a USAID-funded project drew up an initial list of 

products with export potential for Senegal, including cotton and horticultural products, 

cashews, mangoes, dairy products, bissap (hibiscus tea), fonio (a small-seeded millet variety), 

bananas, woven textiles, and fisheries. Following additional analysis, the list of sectors selected 

for intervention was eventually narrowed down to cashews, bissap, and mangoes.192

According to the same World Bank study, an alternative (or complementary) quantitative 

approach to RCA analysis is to compare a country’s costs for producing a good domestically (socalled domestic resource cost, or “DRC”) with world prices for the same good. This approach is 

useful in determining whether or not a country can competitively increase exports of that good. 

It is also useful because cost data broken down along different stages of a product’s value chain 

can be used to identify potential inefficiencies in each link and therefore areas to target for 

improvement.193 A DRC analysis carried out in Mozambique found that cashews and grapefruit 

were the most competitive of the sectors and crops studied, but that rice, potatoes, paprika, 

and bananas could be more competitive if technical assistance or additional agricultural inputs 

were available.194

A 2011 study by the Economic Community of West African States (ECONWAS) identified 

cashews, peanuts, and shea, among other agricultural products, as having export potential for

many countries in West Africa.195 A study by the International Food and Agricultural Policy 

Council identified exports to the United States under AGOA as a potential niche market for SSA 

peanut producers, especially exports of value-added peanut products, such as peanut snack 

foods.196 Other studies showed the potential of nut exports under AGOA to improve incomes 

and employment in SSA. For instance, a USAID study estimated that every $1,000 of income 

generated from cashew production in central Ghana creates 120 jobs in the country and $1,430 

in additional income per household in the local economy.197 The study also found that shea 

191 World Bank, Building Competitiveness in Africa’s Agriculture, 2010, 29–31. 192 Ibid. 193 Ibid. 194 Ibid, 35–36. 195 ECOWAS, West African Common Industrial Policy, 2010, 72. 196 Skully, “U.S. Tariff Rate Quotas and AGOA Market Access,” 2010, 2–3. 197 USAID, West Africa Trade Hub, Exports, Employment and Incomes in West Africa, 2011, 6, 24.

123

 
production in Ghana had similar multiplier effects on additional household income. However, 

many of these studies also noted that these potential export sectors face challenges, such as 

poor infrastructure conditions, low-quality products, and a lack of technical assistance. 

Handcrafts and woodcraft products, including baskets, woven mats, wood carvings, and home 

furnishings, have export potential to the United States due to the AGOA program. A study by 

USAID identified wood carvings and straw handcrafts as products offering Ghana opportunities 

to increase and diversify trade.198 The sector enjoys widespread appeal across SSA, given its 

potential to reduce poverty in rural communities by boosting local employment and incomes, 

particularly among women. This study estimates that every $1,000 of income generated from 

basket producers in the Upper East region of Ghana creates 160 jobs and $580 in additional 

household income in the local economy, and that production of woodcrafts in Ghana had 

similar multiplier effects on job creation and additional household income.199 

A body of economic literature has focused on identifying sectors in SSA that would benefit from 

regional integration. This research does not specifically identify sectors with potential for 

export growth, but addresses a key related question about which sectors would benefit the 

most from trade liberalization through regional integration. According to the United Nations 

Economic Commission for Africa (UNECA), increased regional trade has the potential to increase 

industrialization and structural transformation.200 Indeed, regional integration has the potential 

to boost intra-African trade and create substantial export opportunities for SSA industrial and 

agricultural goods alike. Lowering barriers to trade within SSA is expected to result in increased 

trade within SSA, particularly for agricultural and food products. A UNECA study using a 

computable general equilibrium (CGE) model estimated that reducing tariffs, either under a 

regional free trade agreement (FTA) or a continental FTA, could boost intra-SSA trade by up to 

52.3 percent ($34.6 billion). SSA exports of agricultural and food products—primarily wheat, 

cereals, raw sugar, milk and dairy products, and other processed foods, such as meat, sugar, 

and other food products—would be expected to increase the most in percentage terms. In 

terms of value, SSA exports of industrial products, including textiles and apparel, and leather 

products; petroleum products; mineral and metal products; and other manufactured goods 

would increase the most as a result of regional integration.201 

198 Ibid, 66. 199 Ibid, 6, 24. 200 UNECA, Making the Most of Africa’s Commodities, 2013, 48. 201 UNECA, Assessing Regional Integration in Africa V, 2012, 42; Mevel and Karingi, “Deepening Regional 

Integration in Africa,” 2012, 16–22.

124

 
Another quantitative approach to identify potential export opportunities is based on the 

concept of “product space,”202 which draws on network science to determine how close 

products are to each other in terms of the production capabilities required to produce them, as 

well as how complex or sophisticated they are from the same point of view. This analysis also 

works to show the effect on countries’ economic development of expanding the range and 

sophistication of products. A study by Hidalgo using this approach found that regional 

integration in southern Africa and East Africa, including Kenya, Mozambique, Rwanda, 

Tanzania, and Zambia, could lead to new production and export opportunities in the 

agricultural and foodstuff sector, as well as in textiles and apparel.203 

Products That AGOA Countries Export and 

That the United States Principally Imports 

from Non-SSA Sources

Identification of Products 

Since 2000, the United States has imported a range of products (other than crude petroleum) 

principally from non-SSA countries, even though these products are produced and exported by 

SSA countries as well. In 2012, for example, global cut flower exports by AGOA countries 

(excluding South Africa) were valued at $894 million. While cut flower imports by the United 

States were $968 million, AGOA countries supplied less than $3 million (0.3 percent) of this 

total (table 4.2). Similarly, several categories of apparel (HS 6109 and 6110) were exported by 

AGOA countries in 2012 at a value of $376 million; U.S. global imports of these goods exceeded 

$19 billion in value, but only 0.8 percent were sourced from AGOA countries.

Identifying sectors where AGOA exports and U.S. imports are large and yet there is little 

bilateral trade is important in assessing export potential to the United States under AGOA. 

These are sectors where AGOA countries are viewed as globally competitive by third countries, 

as well as sectors where there is strong import demand in the United States, provided that 

impediments to trade can be overcome. If the impediments can be overcome, these sectors 

offer potential for future export growth and higher rates of utilization of the program going 

forward. 

202 Hausmann et al., The Atlas of Economic Complexity, 2011, 8. For a more detailed description of the product 

space methodology and its application to selected SSA countries, see appendix F of this report. 203 Hidalgo, “Discovering Southern and East Africa’s Industrial Opportunities,” 2011, 15–18.

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Table 4.2 Selected products exported by AGOA countries and which the United States imports from 

non-AGOA countries, 2012a

HS 4 Product

AGOA 

exports 

to world

U.S. imports 

from world 

U.S. imports 

from AGOA 

AGOA share of 

U.S. imports

Million $ Percent

0302 Fresh and chilled fish, excl. fillets 124.6 1,214.1 0.5 0.05

0303 Frozen fish, excl. fillets 447.9 531.6 2.4 0.45

0304 Fish fillets 529.4 4,644.2 9.2 0.20

0306 Crustaceans, live, fresh and chilled 159.4 5,104.6 3.2 0.06

0307 Molluscs, live, fresh and chilled 513.3 769.9 0.8 0.10

0603 Cut flowers 893.9 968.2 2.6 0.27

0708 Leguminous vegetables, fresh or chilled 217.2 152.4 0.0 0.02

0713 Leguminous vegetables, dried 316.9 482.1 2.1 0.44

0803 Bananas 412.7 2,084.0 0.0 0.00

0804 Tropical fruit 185.7 1,798.4 0.0 0.00

1701 Cane or beet sugar 826.9 2,282.8 15.7 0.69

4403 Wood in the rough 1,210.9 160.0 0.9 0.53

6109 T-shirts, singlets, tank tops, knitted or crocheted 198.8 5,255.2 41.9 0.80

6110 Sweaters, pullovers, sweatshirts, knitted or 

crocheted

176.8 13,817.3 106.0 0.77

7108 Gold, unwrought, semimanufactured or in powder 1,155.7 16,259.6 26.3 0.16

8411 Turbojets, turbopropellers, gas turbines, and parts 174.9 18,921.8 2.2 0.01

Source: GTIS (accessed March 4, 2014).

Notes: a HS 4-digit products for which AGOA-eligible countries’ exports to the world and U.S. imports from the world are 

greater than $100 million, and AGOA countries’ share of U.S. imports is less than 1 percent; excluding South Africa and 

petroleum and petroleum products.

The preferences afforded by the AGOA program are but one of the factors that shape U.S. 

importers’ decisions whether to source a product from third countries or from SSA countries.

For example, if an agricultural product exported from SSA is unable to meet U.S. sanitary and 

phytosanitary (SPS) regulations, it will not be allowed to enter the country, regardless of its 

tariff benefits under AGOA. The remainder of the chapter gives an overview of this and other 

factors that often lead U.S. importers to select non-SSA suppliers, followed by case studies that 

describe product-specific situations in more detail. 

Factors Affecting SSA Export Competitiveness in 

the U.S. Market 

Higher Transportation Costs to the U.S. Market

Transportation costs for AGOA products to the U.S. market reflect several factors, including 

distance to market, perishability of products, freight rates, and reliability of trade linkages. Each 

of these factors directly impacts the cost and timeliness of delivery of goods to U.S. consumers, 

with slower delivery times generally increasing transportation costs.

126
Distance to market plays an important role in determining transportation costs. For example, 

the United States is further from AGOA beneficiary countries than European countries, and the 

transportation cost differentials are substantial: container shipments to the United States 

reportedly take two weeks longer than shipments to European ports, and cost on average an 

extra $1,000 per standard 40-foot container.204 World Bank cost estimates show that an 

additional day’s travel time for a container from Africa offsets between 0.5 and 2.5 percentage 

points of tariff preferences.205 Reducing delays in trading times would increase SSA’s 

competitiveness in products where timely shipments are important, and increase the region’s 

shares of manufactured products—particularly apparel, footwear, furniture, and leather 

products—in its total exports.206

Transportation costs are also a function of supply chain efficiencies. Countries such as Kenya 

and Uganda have made investments in infrastructure and customs administration that have 

increased exports—including exports of perishable agricultural products such as fresh flowers, 

fresh fish, and leguminous vegetables—especially to the EU.207 SSA producers without a 

continuous cold chain continue to export perishable goods as well, but they must ship to 

nearby markets to reduce spoilage. 

Established and efficient trade linkages are also important for keeping transportation costs low. 

For products such as cut flowers and apparel, African producers benefit from regular, direct 

flights to Europe which allow for fast delivery. Such flights often do not exist for AGOA 

exporters to the United States. Suppliers of similar goods in the Western Hemisphere (e.g., 

Colombia and Ecuador for cut flowers and Caribbean nations for textiles and apparel) take 

advantage of regular flights and efficient supply routes to U.S. consumers.

Inability to Compete in the U.S. Market without Tariff Preferences

Preferential tariff programs, including AGOA, are designed to boost the competitiveness of SSA 

suppliers to the U.S. market to offset such disadvantages. However, factors both related and 

unrelated to the programs themselves can lessen the benefits of those programs—for example, 

the inability of SSA suppliers to comply with AGOA rules of origin, and the existence of similar 

means of preferential access under FTAs or other programs for competing suppliers. 

204 Industry representative, interview by USITC staff, Washington, DC, January 13, 2014. 205 USITC hearing transcript, invs. 332-542, 332-544, 332-545, and 332-546, January 14, 2014, Edward Gresser, 

122.

206 Minor and Tsigas, “Impacts of Better Trade Facilitation,” May 2008, 17. 207 Industry representative, interview by USITC staff, Washington, DC, January 13, 2014.

127

 
Some SSA exports to the U.S. market, such as sugar, tobacco, meat, and dairy products, 

continue to be subject to tariff rate quotas (TRQs) limiting export volumes eligible for duty-free 

treatment. For example, SSA countries producing sugar are eligible for duty-free treatment 

under U.S. raw sugar import quotas, but only under low-volume quotas granted to specific 

countries.208 Over-quota imports from AGOA beneficiaries are subject to normal trade relations 

(NTR) rates of duty, which are prohibitively high in most cases. In contrast, Mexico received 

duty-free treatment for more than 1.9 million metric tons of raw sugar exports to the United 

States in fiscal year 2013 under access provisions of the North American Free Trade Agreement 

(NAFTA).209 Some other products, such as certain canned fruit, are considered to be sensitive 

agricultural products and have never been eligible for tariff preferences under AGOA.

SSA exports to the U.S. market under preferential programs generally have no advantage over 

those of other suppliers that also enjoy such preferential access. An example is cut flowers from 

Colombia, which first received duty-free treatment under the Andean Trade Preference Act 

(1991) and subsequently under the U.S.-Colombia FTA (implemented 2012). As indicated in 

chapter 6, over time SSA exports to the U.S. market have been gradually facing a shrinking tariff 

preference margin vis-à-vis other suppliers as the United States concludes more reciprocal 

trade agreements with non-SSA trading partners. This tariff preference erosion is a narrowing 

of the gap between low (or zero) tariffs on U.S. imports from SSA countries and higher tariffs 

paid by other suppliers.

AGOA rules of origin are based on those in the U.S. GSP program. To be eligible for AGOA 

benefits, products must be grown, produced, or manufactured in one or more of the 

beneficiary countries and exported directly from an AGOA beneficiary country to the United 

States. Moreover, unless “wholly obtained” from a single AGOA country,210 goods are subject to 

a 35-percent value-content rule and must undergo a double substantial transformation to 

208 For example, Swaziland was allocated 16,849 mt (raw value) and Malawi 10,630 mt (raw value) of the U.S. raw 

sugar import quota in fiscal year 2014. For the complete list of country-specific quotas, see 

https://www.federalregister.gov/articles/2013/09/18/2013-22641/fiscal-year-2014-wto-tariff-rate-quotaallocations-for-raw-cane-sugar-refined-and-specialty-sugar. 209 Haley, Stephen, “Table 60b,” January 15, 2014. 210 The term “wholly obtained” is mainly used for natural products and goods made from natural products, which 

are entirely obtained in one country; it encompasses products extracted or harvested in a country and live animals 

born or hunted in a country. Commodities with imported parts or materials cannot be considered to be wholly 

obtained. World Customs Organization, http://www.wcoomd.org/en/topics/origin/instrument-andtools/comparative-study-on-preferential-rules-of-origin/specific-topics/study-topics/who.aspx (accessed March 5, 

2014).

128

 
count toward that figure.211 According to industry sources, some SSA industries, such as tuna 

processing, have difficulty achieving the 35 percent value addition and therefore cannot export 

to the United States duty-free under AGOA (see below). 

Historic Commercial Ties and Market Orientation

Resilient commercial ties, supported perhaps by a common language or a past colonial 

relationship, support a strong market orientation toward Europe for many SSA countries. 

Longstanding commercial ties have led to European investment in SSA industries, such as fish 

processing and vegetable farms, as described in more detail below. Furthermore, most SSA 

countries have had duty-free access to the EU under the Lomé Convention since 1976, giving 

SSA countries an incentive to export certain goods to the EU.212 In contrast, the United States’ 

historic trading partners are primarily in the Western Hemisphere, the Middle East, and East 

Asia, particularly NAFTA partners Mexico and Canada and countries with U.S. FTAs in place.

Small producers in emerging economies, such as those in SSA countries, are sometimes unable 

to meet the large orders required to service the U.S. market. Because of historic trade ties with 

Europe, SSA producers of textiles and apparel are often better matched to supply European 

fashion houses seeking small batches, as is the case for Mauritian apparel producers shipping to 

France. 

Demand for Raw Materials from Rapidly Growing Developing 

Countries 

Certain developing countries, such as China and India, have invested heavily in Africa’s 

extractive industries to secure raw materials for their rapidly industrializing economies (more 

details are provided in chapter 5 of this report). For example, China invested $3 billion in coal 

and iron mines in Tanzania in 2011. An expanded port in Bagamayo, Tanzania, will export 

mineral ores and agricultural products to Asia from Tanzania, Zambia, and the Democratic 

Republic of the Congo.213 China extends foreign debt forgiveness and loans to secure access to 

natural resources. In return for Chinese investment in development infrastructure, AGOA 

211 To achieve a double substantial transformation, the materials imported into the beneficiary country must be 

substantially transformed into a new and different intermediate article of commerce, which also must be 

transformed into the final article. The 35-percent value-content rule requires that the sum of (1) the cost or value 

of the materials produced in one or more of the beneficiary countries plus (2) the direct costs of processing 

operations performed in the designated beneficiary country must total no less than 35 percent of the appraised 

value of the merchandise at the U.S. port of entry. See section 507(a)2 of the Trade Act of 1974 (19 U.S.C. § 2466a) 

and HTS general notes 4(a) and 16.

212 Industry representative, interview by USITC staff, Washington, DC, January 13, 2014. 213 Grill, “Billions from Beijing: Africans Divided,” November 29, 2013.

129

 
countries provide licenses to Chinese firms to extract natural resources in Africa. Mineral 

products account for nearly 80 percent of China’s imports from Africa.214 China is Africa’s 

largest single-country trading partner, with two-way trade reaching $200 billion in 2012.215

Sanitary and Phytosanitary (SPS) Restrictions

For agricultural products, such as fresh produce and beef, African producers are often unable to 

meet U.S. SPS requirements and are thus unable to export to the United States. At the 

Commission hearing, African governments stated that U.S. stakeholders could help African 

producers meet U.S. SPS standards by expanding capacity-building efforts on food safety, as 

well as animal and plant health. In addition, SPS restrictions could be streamlined to facilitate 

more exports from Africa to the U.S. market without sacrificing consumer safety.216 One person 

testifying at the hearing cited macadamia nuts and shea butter as success stories in capacity 

building and cooperation between U.S. and African governments to meet SPS standards.217

Case Studies 

The following section sets out several product-specific case studies that illustrate the factors 

affecting the ability of AGOA countries to export to the U.S. market.218 The products covered by 

these case studies were chosen because they provide good examples of the many barriers and 

logistical difficulties that SSA producers face in exporting to the U.S. market, which in turn 

affect the potential for expanding AGOA exports to the United States. U.S. and global imports of 

these products from AGOA countries and the world are shown in table 4.3.219

Beef

In 2012, AGOA countries exported $98.2 million in fresh and frozen boneless beef, but none to 

the United States.220 The factors preventing beef exports to the United States include U.S. SPS 

214 Economist, “More than Minerals,” March 23, 2013. 215 Economist, “Little to Fear but Fear Itself,” September 21, 2013. 216 USITC hearing transcript, invs. 332-542, 332-544, 332-545, and 332-546, Amb. Somduth Soborun, January 14, 

2014, 22–23. 217 USITC hearing transcript, invs. 332-542, 332-544, 332-545, and 332-546, Edward Gresser, January 14, 2014, 120. 218 Products were chosen for profiling here if they were both significant imports of the United States from nonAGOA countries and significant exports from AGOA. More precisely, a product was reported at the HS 6-digit level 

if the value of its exports to the world market from AGOA countries (excluding South Africa) exceeded $500,000 

and if the United States had imported it in significant quantities globally but had imported less than $20,000 worth 

from AGOA countries.

219 Unless otherwise noted, U.S. import data presented in this section are from USITC DataWeb/USDOC, and global 

trade data are from GTIS, World Trade Atlas database (accessed February 6, 2014). 220 Fresh and frozen boneless beef are classified under HS subheadings 0201.30 and 0202.30.

130

 
Table 4.3 Select products that AGOA beneficiary countries export, but that the United States principally 

imports from non-AGOA countries, 2012 (million $)

Product 

Global exports from 

AGOA countries U.S. imports from AGOA

U.S. imports from rest 

of world

Boneless beef 98 0 3,083 

Copper 6,547 a 5,605 

Fresh fish and shellfish 598 a 1,399 

Miscellaneous fresh vegetables 302 a 2,168 

Women’s and girls’ cotton blazers 4 a 48 

Source: USITC DataWeb/USDOC (accessed March 5, 2014); GTIS, Global Trade Atlas database (accessed March 5, 2014).

Note: a Less than $20,000.

requirements and the U.S. beef TRQ. U.S. regulations prohibit imports of fresh or frozen beef 

from countries or zones in which foot and mouth disease (FMD) is present, or which otherwise 

pose an undue risk of introducing FMD into the United States.221 Further, AGOA provides for 

duty free access within the beef quota, but does not provide for duty free access over the quota 

volume.

Namibia was the largest AGOA country beef exporter in 2012, followed by Botswana and 

Swaziland. The EU was the largest market for these exports that year, followed by Norway. 

AGOA countries also exported smaller amounts of beef to regional trade partners such as 

Egypt. African producers have benefited from preferential market access in the EU since 

1976.222 Currently, the EU grants duty-free, quota-free access to beef from Namibia, Botswana, 

and Swaziland (as well as other countries), subject to EU SPS restrictions. This is more liberal 

access than is granted under AGOA.223 In addition, some African exporters, such as Botswana, 

can reportedly get a higher price for beef in the EU than in closer export markets, such as South 

Africa.224 Norway grants duty-free access to boneless beef imports within a TRQ from Southern 

African Customs Union (SACU) countries under the free trade agreement between the 

European Free Trade Association (EFTA) states and SACU.

221 This includes all of SSA. 222 Grynberg, “Botswana’s Beef with the EU,” July 6, 2012; Lomé Convention, 1975, 

http://ec.europa.eu/europeaid/where/acp/overview/lome-convention/lomeitoiv_en.htm. 223 If sanitary conditions were met, imports from SSA countries would be duty free within quota only. Over-quota 

rates remain the same.

224 Grynberg, “Botswana’s Beef with the EU,” July 6, 2012.

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In 2012, the United States imported $3.1 billion of beef, mainly from FTA partners Canada, 

Australia, and Mexico.225 New Zealand also shipped significant amounts to the U.S. market. U.S. 

regulations prohibit imports of fresh or frozen beef from countries or zones in which FMD is 

present, which includes much of SSA. EU regulations allow imports of fresh or frozen beef from 

countries or zones in which FMD is present, as long as it is controlled through vaccination 

backed up by control of animal movement and traceability.

Copper

In 2012, AGOA-eligible countries exported $6.5 billion of copper ores and concentrates, 

unwrought forms, and waste and scrap of copper to the world;

226 U.S. imports were less than 

$3,000 from AGOA-eligible sources in that year. These upstream materials must undergo 

various degrees of further processing to be suitable inputs for manufacturing copper mill 

products, castings, and chemical compounds.227 The factors affecting trade in copper include 

developing country demand for raw materials and historic commercial ties.

Zambia was the largest AGOA-eligible copper exporter in 2012, followed by South Africa, 

Namibia, Mauritania, and the Republic of the Congo. China was the largest market for exports 

from AGOA-eligible countries in 2012, followed by the EU, Korea, India, and Egypt. China and 

India have too little domestic copper to meet the consumption needs of their rapidly 

industrializing economies and have sought supplies worldwide, including from AGOA 

countries.228 Chinese mining firms in particular have invested heavily in Zambia, dating back to 

the late 1990s.229

Furthermore, AGOA-eligible countries have well-established commercial ties, particularly trade 

and investment ties, and common legal systems and languages with their respective former 

225 The United States has a TRQ for beef that covers fresh and frozen beef carcasses, bone-in beef, and boneless 

beef. The country-specific aggregate quantity imported in a calendar year under the TRQ cannot exceed the 

following ceilings: Canada, no limit; Mexico, no limit; Australia, 378,214 mt; New Zealand, 213,402 mt; Japan, 

200 mt; Argentina, 20,000 mt; Uruguay, 20,000 mt; other countries or areas (including all SSA countries), 64,805 

mt. The within-quota rate for boneless beef ranges from 4.4¢ per kg to 10 percent ad valorem. The over-quota rate 

is 26.4 percent. In most years, there are no over-quota imports. USITC DataWeb/USDOC (accessed January 17, 

2014).

226 Copper ores and concentrates, unwrought forms (unrefined and refined), and waste and scrap thereof are 

covered under HS subheadings 2603.00, 7401.00, 7402.00, 7403.00, 7403.11, 7403.12, 7403.19, 7403.29, and 

7404.00.

227 Edelstein, “Copper,” January 2013, 48. 228 Tse, “The Mineral Industry of China: Advance Release,” December 2013, 8.1, 8.6–7; Kuo, “The Mineral Industry 

of India: Advance Release,” January 2013, 11.2.

229 Mobbs, “The Mineral Industry of Zambia: Advance Release,” October 2012, 43.1, 43.7–8.

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Western European colonial powers.230 South Africa’s copper shipments to the EU market 

benefit from duty preferences under the European Union-South African Trade and 

Development Cooperation Agreement.231 Other AGOA-eligible countries are in various stages of 

finalizing or have finalized economic partnership agreements (EPAs) with the EU.232 British 

mining firms already have a foreign direct investment (FDI) presence in Namibia’s copper 

mining industry and in South Africa’s copper mining industry.233

Although a major producer of mined copper,234 the United States imports copper principally 

from western hemisphere, FTA-partner countries. In 2012 the top-four sources of U.S. imports 

of mined copper—Chile, followed by Canada, Mexico, and Peru—were eligible for duty-free 

treatment under the U.S.-Chile FTA, NAFTA, and U.S.-Peru FTA, respectively. In the western 

hemisphere, the copper industry is characterized by long-established corporate and commercial 

ties, including an especially prominent U.S. FDI mining presence in Peru, along with some 

Canadian FDI mining presence in the United States.235 Due to these existing trade and 

investment linkages, AGOA-eligible countries ship only very small amounts of copper to the 

United States.

Certain Fresh and Frozen Fish and Shellfish

In 2012, AGOA beneficiary countries exported over $598.3 million in certain fresh and frozen 

fish and shellfish, but less than $20,000 worth went to the United States.236 In 2012, the United 

States imported $1.4 billion in these goods. Canada, China, Russia, Thailand, and Indonesia 

were the principal suppliers to the U.S. market. Major factors affecting trade in these products 

230 State Department and USFCS, Doing Business in Namibia, 2013; Doing Business in South Africa, 2013; and Doing 

Business in Zambia, 2013. 231 EC, “Trade: Countries and Regions; South Africa,” November 19, 2013. 232 EC, “Trade: Countries and Regions; Central Africa,” November 19, 2013; “Trade: Countries and Regions; East 

African Community (EAC),” November 19, 2013; “Trade: Countries and Regions; Eastern and Southern Africa 

(ESA),” November 19, 2013; “Trade: Countries and Regions; Southern African Development Community (SADC),” 

November 19, 2013; and “Trade: Countries and Regions; West Africa,” November 19, 2013.

233 Bermúdez-Lugo, “The Mineral Industry of Namibia: Advance Release,” April 2013, 32.2, 7; Yager, “The Mineral 

Industry of South Africa: Advance Release,” July 2013, 37.3, 18. 234 Edelstein, “Copper,” January 2013, 49. 235 Gurmendi, “The Mineral Industry of Peru: Advance Release,” April 2013, 17.3, 11; Edelstein, “Copper: Advance 

Release,” July 2013, 20.3, 8.

236 Certain fresh and frozen fish and shellfish are classified under the following HS subheadings: 0301.99, 0302.85, 

0302.29, 0302.23, 0302.59, 0303.41, 0303.42, 0303.43, 0303.44, 0303.57, 0303.29, 0303.39, 0303.90, 0303.33, 

0303.84, 0303.19, 0304.95, 0304.83, 0304.99, 0304.43, 0305.69, 0305.51, 0306.24, 0306.14, 0306.21, 0306.19, 

0307.49, 0307.99, 0307.11, and 0308.19.

133

 
include historic commercial ties and AGOA’s rules of origin, which follow the value-content 

method rather than the tariff shift method.237

Over half of AGOA countries’ exports of these products went to the EU, with the remaining 

shipments going to China, Japan, and Hong Kong. South Africa, Senegal, and Mauritius were the 

largest AGOA exporters. Due to Africa’s nearness to the European market, European fishing 

fleets are very active in African waters. African nations routinely grant fishing permits to EU 

vessels to fish in their waters, and some European companies perform basic processing of fish 

in SSA countries.238 Much of the fish imported by the EU likely qualifies for its trade preference 

program. 

Mauritius, Seychelles, Ghana, and Senegal have export-oriented tuna canning facilities, most of 

which are owned by major European brands. Under AGOA rules of origin, the fish caught by a 

European flagged vessel (a “third country” vessel) are not considered to be wholly the product 

of a beneficiary AGOA country and thus must undergo a double substantial transformation to

meet a 35 percent value addition to the cost of the raw fish. U.S. Customs has held that the 

substantial transformation of raw tuna occurs when it is cut, trimmed, and packed, and that 

canning in itself is not an additional transformation, so it does not meet the double substantial 

transformation standard. As a result, the value of the raw tuna may not be included in the 

35 percent calculation for tuna caught by a third country’s vessels. Because the cost of raw tuna 

averages about 60 percent of the cost of the finished canned product, relying solely on the 

canning process to provide the required 35 percent value-content from beneficiary countries is 

risky, since the price of raw tuna is volatile.239 As a result, very little tuna canned in AGOA 

beneficiary countries enters the United States under AGOA. 

Industry sources indicate that AGOA countries could be potentially competitive sources of 

canned tuna in the U.S. market if AGOA’s rules of origin were modified.240 Several participants 

at the Commission hearing recommended a change to tariff-shift rules for tuna.241

237 Under the tariff shift rule, a good is considered sufficiently transformed when it is classified under an HTS code 

that is different from all non-originating inputs. Each program that uses this method has a unique set of tariff shift 

rules for all HS categories. See 19 C.F.R. part 102.

238 TradeWatch, “The European Union’s New Preferential Rules of Origin,” March 28, 2011. 239 Industry representative, telephone interview by USITC staff, January 6, 2014. 240 Ibid. 241 USITC hearing transcript, invs. 332-542, 332-544, 332-545, and 332-546, Amb. Somduth Soborun, January 14, 

2014, 20; USITC hearing transcript, invs. 332-542, 332-544, 332-545, and 332-546, Paul Ryberg, January 14, 2014, 

226–27.

134

 
Miscellaneous Fresh Vegetables242

AGOA countries exported fresh vegetables, such as green beans, peas, peppers, eggplant, 

squash, asparagus, okra, and sweet corn valued at $302 million in 2012; U.S. imports of these 

products from AGOA countries were less than $10,000 that year. The EU was by far the largest 

export market for these countries, though there is also notable intra-African trade in these 

goods. The factors affecting trade in these products include high transport costs related to 

perishability, historic commercial ties and FDI, and, to a lesser extent, U.S. SPS requirements.

Among AGOA producers, Kenya was the largest exporter of miscellaneous fresh vegetables, 

accounting for over two-thirds of AGOA exports, followed by Senegal, South Africa, Ethiopia, 

and Zambia. Since the 1990s, several African countries have diversified their production into indemand products in the EU where African producers can take advantages of preferential 

market access.243

Fresh vegetables are perishable products requiring specific export infrastructure. The value of 

these products is greatly impacted by their handling after harvest; therefore, successful 

exporters must have efficient, sanitary, and refrigerated supply chains in place, which raises 

costs. Most fresh vegetables are shipped via airfreight over regular, established air routes.244

Proximity to the EU and preferential market access give AGOA countries a pricing advantage 

over many western hemisphere suppliers in the EU market. Shipments to the EU are also the 

result of an investment relationship between European firms and African growers, as many 

African export-oriented vegetable farms were financed by European investors to supply the 

European market.

U.S. import demand for miscellaneous fresh vegetables is high; the United States imported 

$2.2 billion in 2012. NAFTA partners Canada and Mexico accounted for over 80 percent of total 

U.S. imports, with smaller shipments from other FTA partners such as Peru and Guatemala. 

High transport costs render most African countries uncompetitive in the U.S. market compared 

with closer producers such as Mexico, Canada, and Guatemala. The only types of vegetables for 

which AGOA countries would likely be competitive in the U.S. market are either highly 

differentiated products, such as a unique vegetable variety, or vegetable products with a 

particular certification (e.g., fair trade and organic). 

242 Miscellaneous fresh vegetables are classified under the following HS subheadings: 0708.10, 0708.20, 0709.20, 

0709.30, 0709.60, 0709.93, and 0709.99.

243 Singh, “Nontraditional Crop Production in Africa for Export,” 2002. 244 Ibid.

135

 
Lastly, though not a binding constraint, U.S. imports of “new” fruit or vegetable products are 

allowed only after a pest risk analysis by the U.S. Department of Agriculture’s Animal and Plant 

Health Inspection Service (APHIS) to prevent the entry of quarantined pests. These are 

conducted only if the National Plant Protection Organization in a source country requests an 

assessment first.245 Many AGOA countries have thus far not applied for such analyses for the 

above products.246

Women’s and Girls’ Cotton Blazers247

AGOA countries exported $4.2 million of women’s and girls’ cotton blazers in 2012, but less 

than $4,000 to the United States. Women’s blazers are a higher-value product with complicated 

construction, often containing lining fabric and extra seams. Relevant factors affecting trade in 

this product include distance to market and historic commercial ties.

Mauritius was the leading AGOA exporter of this product, shipping over $3.9 million in 2012 to 

the EU, primarily to the United Kingdom, France, and Belgium. Mauritius produces more highquality, fashionable garments than other AGOA suppliers, and the Mauritian industry’s 

reputation for quality and reliability ensures it is competitive with major Asian producers.248

AGOA apparel producers receive preferential market access to the EU similar to that extended 

under AGOA, including an exemption for the use of third-country fabric.249 Moreover, selling to 

Europe is a better match for Mauritius than selling to the United States, as EU markets place 

smaller orders and Mauritian factories are generally smaller and more specialized. In addition, 

Mauritian firms have long had a special relationship with France and share a common language.

According to industry sources, for higher-fashion (i.e., non-basic) items, speed to market 

becomes increasingly important, as these items quickly lose value if they reach retail outlets 

past their season. Shipping times by boat to the EU from Africa are generally two weeks shorter 

than those to the United States. Further, there are direct flights to several European cities from 

Mauritius, which allows air shipment.

In 2012, the United States imported over $814.8 million in apparel under AGOA. Basic apparel 

items such as slacks and trousers (“bottoms”), men’s cotton woven shirts, and knit tops were 

the largest categories making up these imports. However, for women’s and girls’ cotton blazers, 

245 USDA, APHIS, Commodity Import Approval Process, February 8, 2013, 4. 246 For approved applications, the FAVIR (Fruit and Vegetable Import Requirements) database can be consulted at 

http://www.aphis.usda.gov/favir. 247 Women’s and girls’ cotton blazers are classified under HS subheading 6104.32. 248 Just-style, “Prospects for an African Clothing Industry?” June 25, 2013; Just-style, “European Economic Woes Hit 

Mauritius Textile Sector,” December 1, 2010.

249 Industry representative, interview with USITC staff, January 13, 2014.

136

 
the United States reported minimal imports under AGOA. On the other hand, the United States 

imported $47.9 million of women’s and girls’ cotton blazers in 2012 from lower-cost Asian 

suppliers such as China, Vietnam, Indonesia, and the Philippines.250

250 USITC DataWeb/USDOC (accessed January 30, 2014).

137

 
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143

Chapter 5

Business Climate and Investment 

Trends in Sub-Saharan Africa

Introduction

The business and investment climate in AGOA-eligible countries, and in sub-Saharan Africa 

(SSA) more broadly, has improved since 2000. Global investors have responded, increasing 

foreign direct investment (FDI) inflows into SSA almost sixfold between 2000 and 2012. This 

significant increase contrasts with a slight overall decline in global FDI flows over the same 

period. However, FDI in SSA accounted for only 2.0 percent of global FDI between 2000 and 

2012, and still presents significant challenges for investors.251 As discussed later in this chapter, 

AGOA has been one factor in higher FDI flows to SSA, although several other factors also 

contributed to the region’s progress. 

South Africa and Nigeria were by far the largest FDI beneficiary countries in SSA, followed by 

the Republic of the Congo and Ghana. As a group, the members of the European Union (EU) are 

the largest investors in Africa, particularly the United Kingdom, Germany, and France. The 

United Kingdom and France maintain close economic ties to a number of former colonies, and 

Germany has extensive FDI in Africa’s manufacturing sector, particularly in the automotive 

industry in South Africa. China and India have significantly expanded their investment in SSA 

since 2000, while Brazil does not have a large investment footprint in SSA. Natural resources 

(mining and petroleum), manufacturing, and services are all important sectors for foreign 

investment in SSA; however, the AGOA program has contributed more to investment in the 

apparel sector than to other SSA industries. 

This chapter reviews several measures of the business and investment climate in SSA, and 

discusses changes in those measures over recent years. The chapter then presents a review of 

investment trends in the region, highlighting the primary destination countries, source 

countries, and industries for investment in SSA. Finally, the chapter addresses the possible links 

between AGOA and foreign investment in SSA since 2000.

251 Based on FDI data from UNCTAD, UNCTADStat database (accessed December 10, 2013).

145

 
Changes in the SSA Business and Investment 

Climate 

The business and investment climate for a given country or set of countries is the set of 

location-specific factors shaping the incentives for firms to invest and operate.252 An attractive 

business and investment climate is not just about generating profits for firms, but also about 

reducing uncertainty and minimizing costs and risks.253 To evaluate the business and 

investment climate in SSA, this report employs five metrics that determine business and 

investment opportunities as well as risks in the region: macroeconomic variables, governance, 

business regulatory environment, trade and investment policy regime, and competitiveness.

As shown below, because of better macroeconomic conditions, sounder governance, a less 

burdensome regulatory environment, and a more open trade and investment policy regime, the 

business and investment climate in SSA has improved noticeably overall since 2000. However, 

the progress has been uneven among SSA countries. As a group, SSA remains among the more 

challenging places to do business, and the investment environment is less favorable than in 

Pacific Asia and in Latin America and the Caribbean (LAC). A number of issues, including poor 

investor protection, slow reduction of investment barriers, and insufficient infrastructure, 

continue to hinder business and investment. 

Of 49 SSA countries, Rwanda, Sierra Leone, and Burundi (AGOA beneficiary countries) have 

made improvements by most metrics, while Somalia and Eritrea, which have never been 

eligible for AGOA benefits, experienced deteriorations in most metrics. This pattern suggests 

that designation as AGOA eligible may be related to improvement in the business and 

investment environment. 

Macroeconomic Variables 

The macroeconomic conditions in most SSA countries generally have improved or remained 

stable since 2000. The 2013 IMF Regional Economic Outlook acknowledged SSA’s strong 

economic performance and predicted that this phenomenon would continue into the near 

future.254 According to the World Bank’s World Development Indicators (WDI), during 2000–

2012, the economy of SSA as a group grew at an average annual rate of 11.8 percent—

5.0 percentage points higher than the world average (table 5.1). SSA’s gross domestic product 

(GDP) nearly quadrupled during the period, from $342 billion in 2000 to $1.3 trillion in 2012. 

252 World Bank, World Development Report 2005, 2004, 20. 253 Mukherjee, Wang, and Tsai, “Governance and Foreign Direct Investment,” 2011, 1. 254 IMF, Regional Economic Outlook, 2013, 1.

146

 
Table 5.1 Economic indicators, by selected region

SSA

East Asia 

and Pacific

(developing only)

Latin America 

and Caribbean 

(developing 

only) World

GDP (nominal, billions $, 2012) 1,306.00 10,289.70 5,823.60 71,918.40

GDP, average annual growth rate (%, 2000–2012) 11.80 16.20 8.70 6.90

GDP per capita (nominal, $, 2012) 1,433.40 5,245.10 9,190.40 10,206.40

Exports of goods and services (billion $, 2011) 476.02 3,270.70 1,125.20 22,534.80

Exports (annual growth) (%, 2000–2011) 13.7 16.5 9.3 9.9

Share of global exports (%, 2011) 2.1 14.5 5.0 100

Source: World Bank, World Development Indicators (accessed December 10, 2013); USITC calculation.

During this time, out of 49 SSA countries, 255 44 grew at an average annual rate of more than 6 

percent; 28 of them achieved a double-digit average annual growth rate. Equatorial Guinea 

(24.8 percent), Angola (23.4 percent), Ghana (19.1 percent), Chad (18.9 percent), Zambia 

(16.7 percent), Sierra Leone (16.1 percent), and Nigeria (15.6 percent) were among the fastestgrowing economies in SSA, while Gambia (1.3 percent), Zimbabwe (4.1 percent), and Seychelles 

(4.4 percent) were among the slowest-growing. South Africa, the largest economy in the region, 

achieved an average annual growth rate of 9.3 percent.256

SSA’s exports of goods and services also grew steadily, by an average annual growth rate of 

13.7 percent during 2000–2011257—about 4 percentage points faster than the world average. 

The value of SSA exports quadrupled, from $116 billion in 2000 to $476 billion in 2011. 

Meanwhile, the goods and services trade deficit remained, on average, around 1 percent of 

GDP.258

In contrast to the double-digit inflation rate frequently experienced by SSA countries before 

2000, during 2000–2012, a period of robust economic growth, the inflation rate for SSA as a 

group was mostly kept at a single-digit level, averaged around 6.3 percent annually. In 2012, 25 

of the 49 SSA countries had an annual inflation rate below 5 percent.259 In addition to tighter 

monetary policies that contributed to lower inflation rates,260 SSA also trimmed down external 

debt significantly. As a percentage of gross national income, SSA’s external debt stocks fell by 

83.8 percent on average during 2000–2011.261 As a result, interest payments on external debt 

have been falling, lightening the financial burden on SSA countries and allowing more resources 

to be allocated to economic development.

255 Data for Somalia and South Sudan were not available. 256 Based on data from the World Bank’s World Development Indicators (accessed December 6, 2013). 257 The latest data available from the World Bank World Development Indicators is 2011 for this measure. 258 Based on the data from the World Bank, World Development Indicators. 259 Ibid. 260 IMF, Regional Economic Outlook, 2013, 3. 261 Based on data from the World Bank, World Development Indicators (accessed December 6, 2013).

147

 
The indicators above suggest improved macroeconomic conditions in SSA, which may be one 

reason for the region’s improved environment for business and investment. However, SSA still 

lags behind the world, and behind even other developing regions, in most macroeconomic 

variables (table 5.1). The size of the SSA economy remained small in 2012, contributing only 

1.8 percent of global GDP.262 The income level in SSA was low, with GDP per capita of $1,433 in 

2012. SSA’s exports underperformed as well, accounting for only 2.1 percent of global goods 

and services exports in 2011. These facts could be perceived unfavorably by investors, but also 

could suggest the potential for future growth.

Governance 

The World Bank defines governance as “the traditions and institutions by which authority in a 

country is exercised,”263 including “a) the process by which governments are selected, 

monitored, and replaced, b) government’s capacity to effectively formulate and implement 

sound policies, and c) the respect of citizens and the state for the institutions that govern 

economic and social interaction among them.”264 Governance is an important measure of the 

business and investment climate. A country with good governance is more attractive to 

business and investment, because it provides a predictable, accountable, stable, and 

transparent political environment, and allows investors and business owners to participate in 

the policy development and implementation process. On the other hand, a country with bad 

governance is more likely to deter business and investment, as the lack of transparency, 

efficiency, and capacity within the public sector often contributes to bureaucratic red tape, 

unexpected delays, and poor services. Such a situation creates a difficult business environment 

with high operating costs and risks.265

The World Bank publishes the Worldwide Governance Indicators (WGI), which have evaluated 

governance in 215 countries since 1996.266 The WGI consists of six composite indicators of 

broad dimensions of governance and covers all 49 SSA countries. According to the WGIs, most 

SSA countries have made some progress in improving their governance during 2000–2012 

(table 5.2). Over this period, 43 out of 49 SSA countries improved at least one of the six 

measures of governance. Angola, the Democratic Republic of the Congo, Liberia, and Rwanda 

were among the top performers, making improvements across all six dimensions, while Benin, 

262 Ibid. 263 World Bank, Worldwide Governance Indicators (accessed December 17, 2013). 264 Kaufmann, Kraay, and Mastruzzi, “The Worldwide Governance Indicators,” September 2010, 2–3. 265 UNCTAD, Good Governance in Investment Promotion, 2004. 266 World Bank, Worldwide Governance Indicators (accessed December 17, 2013).

148

 
Table 5.2 The Worldwide Governance Indicators, and the number of SSA countries that improved over 

2000–2012

WGI Measures # of countries improved

Political stability and 

absence of violence/

terrorism

Captures perceptions of the likelihood that the government will be 

destabilized or overthrown by unconstitutional or violent means, 

including politically motivated violence and terrorism.

29

Rule of law Captures perceptions of the extent to which agents have confidence 

in and abide by the rules of society, and in particular the quality of 

contract enforcement, property rights, the police, and the courts, as 

well as the likelihood of crime and violence.

25

Voice and 

accountability

Captures perceptions of the extent to which a country’s citizens are 

able to participate in selecting their government, as well as freedom 

of expression, freedom of association, and a free media.

22

Regulatory quality Captures perceptions of the ability of the government to formulate 

and implement sound policies and regulations that permit and 

promote private sector development.

22

Government 

effectiveness

Captures perceptions of the quality of public services, the quality of 

the civil service and the degree of its independence from political 

pressures, the quality of policy formulation and implementation, and 

the credibility of the government’s commitment to such policies.

17

Control of corruption Captures perceptions of the extent to which public power is 

exercised for private gain, including both petty and grand forms of 

corruption, as well as “capture” of the state by elites and private 

interests.

14

Source: World Bank, Worldwide Governance Indicators 2013 (accessed December 17, 2013); USITC calculations.

Gabon, Madagascar, Mali, Mauritania, and São Tomé and Príncipe were among the worst 

performers, experiencing deteriorations in all six areas of governance during 2000–2012 (see 

appendix G, table G.1 of this report).267 

The areas in which SSA countries improved the most are “political stability and absence of 

violence/terrorism,” “rule of law,” “voice and accountability,” and “regulatory quality.” This 

trend reflects the subsiding civil wars and violent conflicts in the region, as well as the 

movement toward establishing democratic political systems and rule of law on the continent.268 

However, according to the WGIs, corruption continues to pose a big challenge for business 

owners and investors, as only 14 SSA countries made progress in curbing corruption, while the 

remaining 35 SSA countries experienced various degrees of deterioration in control of 

corruption.269 As 26 SSA countries were ranked in the bottom 25th percentile of “government

effectiveness” worldwide in 2012, and only 17 SSA countries improved their performance in this 

indicator over 2000–2012, considerable progress is still needed in most SSA countries.

267 Benin and Gabon are AGOA beneficiary countries. Madagascar lost its AGOA eligibility in 2010. Guinea-Bissau 

and Mali lost their AGOA eligibilities in 2013. Mauritania lost its AGOA eligibility twice over 2000–2013, though in 

2013 it is again an AGOA beneficiary country. World Bank, Worldwide Governance Indicators (accessed on 

December 17, 2013), chapter 1, table 1.1.

268 World Bank, Worldwide Governance Indicators (accessed December 17, 2013). 269 Ibid.

149

 
Business Regulatory Environment 

While the metric of governance captures a country’s overall political climate, the business 

regulatory environment reflects the transparency and ease of business-specific regulatory 

procedures, and associated start-up and operation costs for local firms. The less burdensome 

the regulatory procedures are, the more efficient and less costly for business operations, 

making the country attractive for business and investment. The analysis below uses the World 

Bank’s Doing Business Indicators to measure the business regulatory environment and the 

progress that has been made in SSA countries. Launched in 2002, the Doing Business project 

provides objective measures of business regulations and their enforcement in 11 measures 

across 189 economies.270 Based on 10 of the 11 measures, it provides an overall ranking of the 

ease of doing business for each economy.271 In 2013, the Doing Business Indicators covered 47 

SSA countries.272 Three SSA countries were ranked in the top 50, and 33 SSA countries were 

ranked in the bottom 50 in terms of ease of doing business (appendix G, table G.2). The top 3 

SSA countries were Mauritius, Rwanda, and South Africa.

SSA countries have made promising advances in improving their business regulatory 

environments. The World Bank reported that among the 50 economies with the greatest 

improvements in the world since 2005, the largest share, one-third, is in SSA.273 According to 

the Doing Business Indicators, Burkina Faso, Mali, Rwanda, Sierra Leone, and Uganda were the 

top SSA performers, having made improvements in 9 out of 10 measures during 2006–13.274

Most SSA countries have streamlined regulatory procedures and shortened the time required 

to conduct business activities. A majority of SSA countries successfully reduced the costs of 

getting electricity, dealing with construction permits, and registering property, and made 

improvements in getting credit. About 27 SSA countries made improvements in paying tax and 

reduced the tax rate as a share of profit. However, only a handful of SSA countries reduced the 

cost of exports and imports; 9 SSA countries made improvements in protecting investors; and 5 

SSA countries reduced the cost of enforcing contracts. Of 47 SSA countries, 8 had no regulatory 

procedures in place for closing a business, and 10 made improvements in one or more 

components of resolving insolvency (table 5.3 and appendix G, table G.2).

270 World Bank, Doing Business Indicators (accessed December 23, 2013). 271 The 11 areas are starting a business, dealing with construction permits, getting electricity, registering property, 

paying taxes, trading across borders, getting credit, protecting investors, enforcing contracts, resolving insolvency, 

and employing workers. The overall ranking is based on the first 10 measures; the measure of employing workers 

is not included.

272 Doing Business Indicators do not cover Djibouti and Somalia. 273 World Bank, “Doing Business: A Joint Publication and Project,” 2013. 274 2006 Doing Business Indicators are the earliest data available that are comprehensive and compatible with 

2013 Doing Business Indicators. Doing Business Indicators do not have 2006 data for Liberia and South Sudan, so 

the changes mainly refer to the remaining 45 SSA countries.

150

 
Even with clear signs of progress, then, SSA still lags behind other regions. Whereas 66 percent 

of 47 SSA countries were ranked in the bottom 25th percentile of the ease of doing business in 

2012, only 16 percent of 25 Asia-Pacific economies and 13 percent of 32 LAC countries were in 

the bottom group. The business regulatory environment of SSA as a whole remains among the 

least business-friendly in the world.

Trade and Investment Policy Regimes 

A country’s trade and investment policy regime matters to business owners and investors. 

Open trade and investment policy regimes not only encourage trade and investment, but also 

foster regional economic integration, encourage market expansion, and generate business and 

investment opportunities. Moreover, trade and investment tend to be intrinsically 

interlinked.275 An open trade policy promotes greater trade, which in turn attracts greater 

investment inflows. Likewise, an open investment policy encourages greater FDI inflows, which 

in turn increase the likelihood of trade.

Measures of the overall openness of a SSA country’s trade and investment policy regime are 

composites of the metrics used to calculate the Heritage Foundation’s Economic Freedom 

index—“Trade Freedom” and “Investment Freedom.” Based on the trade-weighted average 

tariff rate and nontariff barriers (NTBs), the Heritage Foundation’s Trade Freedom index is a 

composite measure of the absence of tariffs and NTBs that affect imports and exports of goods 

and services.276 The higher the score, the less restrictive is a country’s trade policy regime. A 

score of 100 means no restrictions. From 2000 to 2013, 42 out of 48 SSA countries improved 

their “Trade Freedom” scores on average by 21.9 points. By reducing tariff rates and/or NTBs, 

most SSA countries became more open to trade, scoring an average of 67.1 in 2013. Mauritius, 

Zambia, Namibia, Botswana, Burundi, Rwanda, South Africa, and Mozambique are among the 

most open-to-trade SSA countries (appendix G, table G.3).

The Heritage Foundation’s Investment Freedom index measures the restrictions a country 

imposes on the flow of investment capital, including different rules for foreign and domestic 

investment; restriction on access to foreign exchange, payments, transfers, and capital 

transactions; as well as the transparency of investment regulations. Similar to the Trade 

Freedom index, the higher the score, the less restrictive is a country’s investment policy regime.

A score of 100 means no restrictions. Compared to the progress made in “Trade Freedom,” 

improvements in “Investment Freedom” were modest. From 2000 to 2013, 25 out of 48 SSA 

countries improved their “Investment Freedom” scores, but on average by only 5.4 points. The 

average score of “Investment Freedom” for 48 SSA countries was 45.8 in 2013, suggesting that

275 OECD, “A Policy Framework for Investment: Trade Policy,” 2005, 2. 276 Heritage Foundation, “2013 Index of Economic Freedom: Trade Freedom” (accessed December 20, 2013).

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Table 5.3 SSA country improvements in doing business, 2006–13

Doing Business indicators Component

Number of countries 

improved

Starting a business Procedures (number) 33

Time (days) 38

Cost (% of income per capita) 42

Paid-in min. capital (% of income per capita) 26

Dealing with construction permits Procedures (number) 11

Time (days) 23

Cost (% of income per capita) 36

Getting electricity277 Procedures (number) 3

Time (days) 15

Cost (% of income per capita) 44

Registering property Procedures (number) 10

Time (days) 22

Cost (% of property value) 35

Getting credit Strength of legal rights index (0–10) 20

Depth of credit information index (0–6) 14

Public registry coverage (% of adults) 18

Private bureau coverage (% of adults) 10

Protecting investors Extent of disclosure index (0–10) 5

Extent of director liability index (0–10) 8

Ease of shareholder suits index (0–10) 5

Strength of investor protection index (0–10) 9

Paying taxes Payments (number per year) 13

Time (hours per year) 13

Total tax rate (% profit) 27

Trading across borders Documents to export (number) 15

Time to export (days) 35

Cost to export (US$ per container) 4

Documents to import (number) 17

Time to import (days) 37

Cost to import (US$ per container) 3

Enforcing contracts Time (days) 16

Cost (% of claim) 5

Procedures (number) 18

Resolving insolvency Time (years) 1

Cost (% of estate) 1

Outcome (0 as piecemeal sale and 1 as going concern) 0

Recovery rate (cents on the dollar) 8

Source: USITC calculations based on World Bank, Doing Business Indicators 2013 (accessed December 17, 2013). 

investment barriers remain significant in these countries. Mauritius, scored at 90, by far is the 

most investment-friendly country in the region. It was followed by Benin, Botswana, and 

Ghana, which each scored 70 (appendix G, table G.3). South Africa, one of the leading recipients 

of FDI in the region, scored 45 points in 2013, a decline of 25 from the 70 points it scored in 

2000. In 2013, South Africa initiated a major investment policy change. Box 5.1 addresses 

changes under way in South Africa’s investment policy regime.

277 Improvement over 2010–13.

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Box 5.1 South Africa’s 2013 investment legislation

The South African government recently made changes to its regulatory framework for foreign 

investment, drawing a mixed reaction from the investment community. The South African government 

published the draft of its 2013 Promotion and Protection of Investment Bill (“Investment Bill”) for public 

comment on November 1, 2013.a The bill was introduced as part of an overhaul of the regulatory 

framework for foreign investment, following a government review of its policy on bilateral investment 

treaties (BITs) and the decision to withdraw from its BITs with Belgium, Luxembourg, Spain, Germany, 

and Switzerland. South Africa also indicated that it will terminate the remaining BITs with other 

countries, and the Investment Bill will replace these BITs with domestic legislation that sets out the 

rights and obligations of the government, and of all investors, both local and foreign.

b

The response to South Africa’s attempt to update its investment regime has been mixed. While some 

commentators applauded such action as reflecting the government’s commitment to the rule of law, 

others are concerned about the negative effects that the unilateral termination of South Africa’s BITs 

may have on investor confidence. The investment community has contended that the protection offered 

to foreign investors under the Investment Bill is of a lower standard than what the BITs provided. For its 

part, the South African government has argued that the Bill contains ample clarity, transparency, and 

certainty, and provides adequate protection to all investors, including foreign investors.c 

Notes:

a The draft of the bill is available at http://www.tralac.org/files/2013/11/Promotion-and-protection-of-investment-bill-2013-

Invitation-for-public-comment.pdf. b Tralac Trade Law Center, “South Africa’s Promotion and Protection of Investment Bill,” November 20, 2013.

c Ibid.

Competitiveness 

The four sets of metrics used in the foregoing discussion—involving macroeconomic variables, 

governance, business regulatory environment, and trade and investment policy regime—are all 

crucial components of a country’s business and investment climate. However, other factors 

may be equally critical for business operations and investment decisions, such as infrastructure, 

market efficiency, technological advancement, and innovation. All factors together contribute 

to a country’s level of competitiveness, as well as the potential for sustained business growth, 

and it is to these factors that this section turns.278 

First published in 2004, the World Economic Forum’s Global Competitiveness Index (GCI) takes 

into account 12 important factors in its measure of overall competitiveness, and offers the 

most comprehensive and integrated snapshot available of national business and investment 

environments in the global context.279 In 2009, the methodology of GCI went through a major 

278 WEF, World Bank, and AfDB, Africa Competitiveness Report 2013, 2013, 4. 279 WEF, Global Competitiveness Report 2008, 2009, 43. The 12 factors are identified in figure 5.1.

153

 
revision, making it impossible to directly compare recent data to pre-2009 data, so this 

discussion will concentrate on the 2009–2013 results. In 2013, GCI covered 144 countries and 

territories, including 34 SSA countries. According to the 2012–13 GCI, the average GCI score for 

SSA was 3.57, lower than the Latin America and the Caribbean (LAC) average (3.97) and the 

Southeast Asia average (4.46).280 SSA scored the lowest in 10 factors and second lowest in 

“institutions” and “labor market efficiency,” where SSA scored slightly higher than LAC 

(figure 5.1). The gaps between SSA and the other two regions were biggest in “market size,” 

“infrastructure,” and “technological readiness.”

Figure 5.1 GCI and 12 pillar scores of sub-Saharan Africa, Latin America and the Caribbean, and 

Southeast Asia, 2012–13

Source: WEF, World Bank, and AfDB, Africa Competitiveness Report 2013, 2013.

In 2012–13, of 34 SSA countries, 8 were ranked between 50th and 100th out of the 140 

countries rated, and 14 were ranked in the bottom 15 in the world (figure 5.2). South Africa, 

Mauritius, Rwanda, Seychelles, and Botswana, which have been AGOA beneficiary countries 

since 2000, were the most competitive economies in the region. Among 12 pillar factors of 

competitiveness, SSA performed relatively better in “labor market efficiency,” “institutions,”

and “financial market development,” and worse in “health and primary education,” “higher

education and training,” and “technological readiness.” A full list of SSA country rankings in 

each pillar factor can be found in appendix G, table G.4.

280 The score range of GCI by country is 5.67 (best) to 2.85 (worst).

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Figure 5.2 The rankings of sub-Saharan African countries in global competitiveness index, 2012–13

(lowest score = most competitive)

Source: WEF, World Bank, and AfDB, Africa Competitiveness Report 2013, 2013. 

Note: According to the figure, South Africa was the most competitive and Burundi was the least competitive.

Overview of SSA Investment Trends 

For most of the period from the 1970s through the end of the 1990s, total annual FDI flows into 

SSA remained close to $5 billion (not adjusted for inflation), even as FDI into Latin America and 

East Asia expanded rapidly. As a result, the SSA share of total FDI flows to developing countries 

declined from 25 percent early in the 1970s to 5 percent in 1999.281 At the same time, the 

sources of FDI into SSA became more diverse. Before the mid-1990s, the principal source 

281 Odenthal, “FDI in Sub-Saharan Africa,” March 2001, 11.

155

 
countries for FDI into Africa were France, the United Kingdom, the United States, and Japan. 

However, between 1994 and 1998 additional countries became important investors, and 

combined FDI flows from Canada, Italy, the Netherlands, Norway, Portugal, and Spain 

accounted for almost 25 percent of overall FDI inflows. China, India, Malaysia, and Taiwan also 

began to invest significant amounts in Africa, and FDI began to diversify away from natural 

resources to the food and beverages, textiles and apparel, and financial and other services 

sectors. African governments also began to privatize infrastructure assets, leading to a marked 

increase in FDI in infrastructure, including electric power, railways, and telecommunications.282

Increased political stability, liberalized FDI regulations in many SSA countries, and increasing 

regional integration, which expands the potential market for foreign investors in any one 

country, all encouraged new investment during the 1990s.283 FDI inflows to SSA grew at an 

average annual rate of 16 percent, from $6.8 billion in 2000 to $41.0 billion in 2012 (figure 5.3), 

contrasted with a global annual decline of 0.37 percent over the same period.284

Figure 5.3 FDI inflows to SSA, 2000–2012

Source: UNCTAD, UNCTADStat database (accessed October 29, 2013).

The years since 2000—the AGOA period—have seen continued growth of FDI into SSA. FDI 

inflows into SSA during 2000–2012 represented 2.0 percent of global FDI inflows, compared 

with an average of 1.3 percent during the 1990s. Natural resources projects have continued to 

account for the majority of this investment, by value, but investor interest in other sectors has 

been increasing. For example, in 2012 nearly 25 percent of total greenfield FDI projects285 in 

SSA were in consumer-related industries, up from 7 percent in 2008. Countries that were 

282 Ibid., 17–18. 283 Ibid., 26–29. 284 UNCTAD, UNCTADStat database (accessed October 29, 2013). 285 Greenfield FDI projects are new investments by foreign investors, as opposed to acquisitions of, or equity 

investments in existing companies.

156

 
eligible for AGOA at some point during the period (i.e., all SSA countries except for Equatorial 

Guinea, Somalia, Sudan, and Zimbabwe) accounted for 97 percent of overall SSA FDI position.286

Private capital flows have increased relative to foreign aid as a share of overall capital flows to 

SSA since 2002. During 2002–12, while foreign assistance more than doubled, rising from 

$18.1 billion to $42.5 billion, private capital flows to SSA nearly quintupled, rising from 

$14 billion to $67 billion, with FDI accounting for about three-quarters of the total.

287 

South Africa and Nigeria were by far the largest SSA recipients of foreign investment in 2012, as 

measured by cumulative FDI position (figure 5.4), and were also the two largest economies in 

SSA, as measured by GDP. However, a number of other countries have attracted higher 

amounts of FDI relative to their GDP, including Liberia (30.3 percent of GDP), Republic of the 

Congo (17.3 percent), Equatorial Guinea (15.6 percent), and São Tomé and Príncipe 

(14.8 percent). In comparison, FDI averaged 1.6 percent of GDP for South Africa and 3.4 percent 

of GDP for Nigeria.288 The SSA countries experiencing the fastest FDI growth on an average 

annual basis were Somalia, Comoros, Niger, and the Central African Republic, all starting from a 

very low base. Larger SSA economies experiencing particularly fast growth of FDI inflows 

included the Democratic Republic of the Congo (38 percent), Mozambique (35 percent), and 

Ghana (32 percent).289

SSA Country Recipients of FDI

South Africa 

FDI inflows to South Africa between 2007 and 2011 were dominated by investment from the 

United Kingdom, followed by Switzerland, Germany, and the United States (figure 5.5). South 

Africa is the most advanced economy in sub-Saharan Africa, with close links to several other 

markets in SSA, a relatively large and expanding domestic market, an abundance of tourist 

attractions, and extensive mineral wealth. Foreign investors are particularly attracted to 

banking, telecommunications, tourism, real estate, mining, and manufacturing.290 

286 BMI, Asian Investment in Africa, 2013, 17–18, based on data from UNCTAD, World Investment Report 2012, 

2012.

287 Sy, “Shifts in Financing Sustainable Development” (accessed January 23, 2014). 288 Annual FDI inflows vary significantly from year to year, so the figures presented here show the average, for 

2000–2012, of annual FDI inflows as a share of GDP. Commission calculations are based on data from UNCTADStat 

database (accessed October 29, 2013). Equatorial Guinea is not eligible for the AGOA program.

289 Commission calculations are based on data from UNCTAD, UNCTADStat database (accessed October 29, 2013). 290 EIU, “South Africa Trade,” February 15, 2013.

157

 
Figure 5.4 FDI position in SSA countries, 2012

Source: UNCTAD, UNCTADStat database (accessed October 29, 2013).

Figure 5.5 FDI inflows to South Africa, by major source country

Source: AfDB, African Statistical Yearbook 2013, 2013. 

Note: FDI inflows are negative when more money is divested from a country than is invested in that year.

Historically, South Africa has attracted FDI mainly into natural resources, especially mining

(particularly in gold and diamonds), which accounted for a third of total inbound FDI position in 

both 2001 and 2009 (table 5.4). However, South Africa’s mining sector has grown slowly 

compared to other countries with strong mining industries, due, in part, to investor uncertainty 

158
Table 5.4 South Africa: Distribution of inward FDI position, by industry, 2001 and 2009 (million $)

Sector/industry 2001 2009

Mining and quarrying 14,888 34,780

Manufacturing 10,733 29,066

Total services 18,569 39,794

Finance, insurance, real estate and business services 15,667 28,195

Transport, storage and communication 1,059 7,793

Wholesale and retail trade, catering and accommodation 1,817 3,738

Community, social and personal services 26 68

Construction 211 244

Agriculture, forestry and fishing 78 112

Electricity, gas and water 4 3

Total 44,483 104,000

Source: Unpublished data obtained from South African Reserve Bank (SARB) Research Unit and SARB Quarterly Bulletin, 

various issues, cited in Sauvant, Mallampally, and McAllister, Inward and Outward FDI Country Profiles, 1060.

over labor unrest and potential nationalization.

291 Inbound FDI patterns in South Africa are 

changing, with broader geographic origins and with non-mining industries attracting investment 

from countries other than Europe and the United States in recent years.292

FDI position in the manufacturing sector increased from $10.7 billion in 2001 to $29.1 billion in 

2009 (latest available). Since 2008, a number of manufacturing multinational companies 

(MNCs) have expanded their activities in South Africa, particularly in the automotive sector. 

Daimler AG invested $290 million into its South Africa operations and BMW invested a similar 

amount to expand its facilities, focusing on the export market. South Africa’s auto assembly 

industry also includes Ford, General Motors, Volkswagen, Toyota, and Nissan. The South African 

government has offered incentives for FDI in the automotive industry, which contributes 

significantly to the country’s export earnings, employment base, and technology transfer 

opportunities.293

The service sector accounted for a larger share of FDI in South Africa than either the primary or 

manufacturing sectors in 2001 and in 2009. FDI stock in services rose from $18.6 billion in 2001 

to $39.8 billion in 2009, most prominently in financial services. South Africa has a highly 

developed financial services industry with well-capitalized and well-regulated local banks.294 

The South African government released its National Development Plan in November 2011, 

detailing an effort to diversify the economy over 20 years. The plan contained broad policy 

guidelines to attract both domestic and foreign investment into certain industries, including 

291 Sauvant, Mallampally, and McAllister, Inward and Outward FDI Country Profiles, 2013, 1047–48. 292 Ibid., 1044. 293 Ibid., 1049. 294 Ibid., 1049–50.

159

 
financial services, mobile telecommunications, business process outsourcing, and infrastructure 

development.295 

Nigeria 

Nigeria received $50 billion in net FDI inflows between 2004 and 2011, the second-largest 

destination among SSA countries after South Africa.296 Global petroleum companies are active 

investors in Nigeria, both in oil and gas extraction projects and in related areas such as 

refineries and pipelines (table 5.5). The Netherlands is one of the largest investors in Nigeria,

likely reflecting Shell Oil’s investment in the petroleum sector and related industries 

(figure 5.6).297

Table 5.5 Nigeria, selected greenfield FDI projects in the coal, oil, and natural gas sector, 2003–13

Investing company Number of reported projects

Total reported capital investment 

(million $)

Total (France) 7 3,400

ExxonMobil (United States) 5 2,600

Eni SpA (Italy) 4 400

Royal Dutch Shell (Netherlands) 3 5,000

ONGC (India) 2 4,000

Skipper Energy (Mauritius) 2 775

Indian Oil (IOC) 2 3,500

CityView 1 1,000

Source: Financial Times, FDIMarkets database (accessed January 14, 2014).

Note: Other multinational oil companies with oil and gas extraction projects in Nigeria with no capital investment values 

reported include Afren (United Kingdom), Chevron (United States), Energy Equity Resources (UK), Eni (Italy), Korea National Oil 

(KNOC), Kulczyk Oil Ventures (Canada), Nexen (Canada), Petrobras (Brazil), and Statoil (Norway). These data include both oil 

and gas extraction and related projects.

295 Ibid., 1054–6. 296 AfDB, African Statistical Yearbook 2013, 2013, 278. 297 See the Shell Oil website, http://www.shell.com.ng/ for details on the company’s business activities in Nigeria.

160

 
Figure 5.6 FDI inflows to Nigeria, by major source country, 2007–11 (million $)

Source: AfDB, African Statistical Yearbook 2013, 2013. 

Note: FDI inflows are negative when more money is divested from a country than is invested in that year.

Mauritius 

Mauritius is one of the most FDI-friendly countries in SSA. Although a small economy, it is the 

third-largest SSA country in terms of FDI inflows from the United States, and has a highly 

diverse group of source countries compared with other SSA countries (figure 5.7). From 2004 to 

2011, Mauritius received significant FDI inflows from South Africa, other African countries 

(including North Africa), South Asia, as well as from the United States, the United Kingdom, and 

France. Investors are attracted to Mauritius for its open economy and strong regulatory 

system. Mauritius ranked first among African countries in the World Bank’s Doing Business 

scale, and 20th out of all countries listed. It is also known for a highly educated and bilingual 

(French and English) population. 

Significant FDI in Mauritius began in the 1980s with the creation of export processing zones 

(EPZs). The EPZs offered preferential access to the European market for textiles and other 

products, attracting investment from Asian companies interested in exporting apparel to 

Europe. Manufacturing, including apparel, was the main destination for FDI in the 1980s 

and1990s. More recently, however, the economy has attracted FDI in other sectors, and in 

2011 the service sector drew the largest share of FDI inflows (69 percent), led by real estate 

(38 percent); finance and insurance (13 percent); and accommodation and food services 

161
Figure 5.7 FDI inflows to Mauritius, by major source country, 2007–11 (million $)

Source: AfDB, African Statistical Yearbook 2013, 2013.

(12 percent). Construction accounted for 28 percent of total inflows in 2011. Manufacturing, 

agriculture, forestry, and fishing together received only 3 percent of total FDI inflows in 2011.298 

SSA Country Sources of FDI

The sources of FDI inflows to SSA have changed over time. The EU has remained the leading 

source of FDI inflows to SSA during the AGOA period, but the EU’s share has declined in recent 

years as FDI increased from the United States, China, and other sources (figure 5.8).299 Between 

2003 and 2007, the EU accounted for 66 percent of overall FDI inflows to SSA, compared with 

the United States (7 percent) and China (3 percent). However, during 2008–10, the EU share

declined to 50 percent while the shares from the United States, China, and other FDI sources all 

increased. 

298 Sauvant, Mallampally, and McAllister, Inward and Outward FDI Country Profiles, 2013, 908–15. 299 Comparison data for FDI inflows into SSA by source country/region are available only for 2003–2010. Data 

reflect the sum of FDI inflows for each period. “Other” includes SSA countries, particularly South Africa and Kenya, 

and non-SSA countries, including Japan, the United Arab Emirates, Canada, and Switzerland. “Other” was 

calculated by the Commission using total FDI inflows for each SSA country as reported by UNCTAD, and subtracting 

FDI outflows to SSA as reported by the official statistical agencies of the United States (USDOC, BEA), China 

(MOFCOM), and the EU (Eurostat). Official data are not available for Brazil or India. The EU reports data for all of 

Africa; Central and South Africa; and Northern Africa, so the SSA category used here is the Central and South Africa 

category. U.S. FDI outflows data are available for total Africa, and for individual countries within Africa. The SSA 

total reported here excludes the northern African countries of Algeria, Egypt, Libya, Morocco, and Tunisia, and 

reports the sum of available data for all other African countries.

162

 
Figure 5.8 Shares of FDI inflows into SSA, 2003–07 vs. 2008–10, by source region

Sources: MOFCOM; UNCTAD, UNCTADStat database; USDOC, BEA; EC, Eurostat (accessed January 8, 2014).

In addition to China, other Asian countries are also increasing FDI in SSA. The potential of West 

Africa’s palm oil industry is leading to increased investment from Malaysia and Indonesia, both 

important producers of palm oil in Southeast Asia.300 Also, Taiwanese firms have invested in 

the textile and apparel industries in a number of SSA countries, mostly to take advantage of 

AGOA trade preferences (see below).

There are few official government data sources that report FDI inflows into SSA by source and 

destination countries and by industry. Commercial databases provide data for individual 

greenfield FDI projects (from 2003) and for cross-border acquisitions of African firms. According 

to these sources, greenfield FDI projects accounted for three quarters of new FDI in SSA during 

2003–13, with the remainder being acquisitions by foreign firms. Data for the values of 

particular acquisitions and FDI projects are reported only sporadically, but it is possible to count 

the number of projects reported by source country, destination country, and industry. Such 

information is necessarily incomplete, but does provide some insight into the most prevalent 

investment sectors in SSA throughout most of the AGOA period.301

For both greenfield FDI projects and mergers and acquisitions, EU countries have accounted for 

about one-third of all projects during 2003–13, followed by other SSA countries and the United 

300 BMI, Asian Investment in Africa, 2013, 15. 301 Data for greenfield FDI projects are only available beginning in 2003.

163

 
States (figure 5.9).302 The number of greenfield FDI projects from all source countries has 

increased significantly since 2008. In addition to being the largest destination for greenfield FDI 

in SSA, South Africa is one of the largest outbound investors in other SSA countries, accounting 

for 322 of 656 (49 percent) FDI projects originating in SSA countries.

Figure 5.9 Greenfield FDI projects and M&A deals by source, 2003–13

Source: Financial Times, FDIMarkets database; Bureau van Dijk, Zephyr database.

U.S. Investment in SSA 

In 2012, the United States’ cumulative FDI position in SSA was $28.6 billion; the three largest 

destinations for U.S. investment were Nigeria, Mauritius, and South Africa (table 5.6). Before 

2001, South Africa was a leading SSA destination for U.S. investment, but since then U.S. FDI in 

Nigeria, Mauritius, and other SSA countries has grown significantly (figure 5.10). U.S. firms are 

continuing to invest in Africa. For example, GE reportedly planned to announce $1 billion of 

investment into Africa in 2013 alone. Illustrative GE projects include a $250 million project that 

broke ground in June 2013 in Calabar, Nigeria, that will manufacture and service powergenerating equipment, and a tentative agreement to build a 1,000 MW natural gas-fired power 

plant in Ghana, signed the same month.303

302 Financial Times, FDIMarkets database; Bureau van Dijk, Zephyr database. 303 Ernst & Young, Ernst & Young’s Attractiveness Survey, 49; Imara Africa Securities Team, “General Electric to 

Expand Its Investments,” July 2, 2013; Helman, “Obama’s ‘Power Africa’ Plan,” July 1, 2013.

164

 
165 

Table 5.6 United States: FDI outflows to SSA, 2000–2012, and FDI position in 2012

Country U.S. FDI outflows U.S. FDI position

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012

Million $

Total SSA 816 1,861 –705 2,228 1,164 1,452 5,103 3,494 2,220 8,904 5,523 3,048 1,546 28,576

Nigeria 137 –192 588 173 676 –846 144 –596 1,772 5,170 81 157 2,762 8,152

Mauritius –9 29 –121 –13 184 –20 323 1,326 –265 654 1,179 -50 -86 7,062

South Africa 346 –86 125 232 480 82 159 1,000 306 1,088 447 621 250 5,502

Ghana –24 91 –31 4 120 –4 729 (D) (D) 205 –313 328 461 3,629

Angola 79 342 –263 –36 –22 98 280 –99 789 54 1,974 707 –3,011 1,245

Liberia –218 –60 –260 47 62 149 –128 207 61 12 228 109 -19 1,019

Mozambique 1 8 3 1 (D) (D) 4 –3 –2 12 127 (D) (D) 619

Tanzania 20 –21 –3 –7 –3 –6 (D) (D) (D) (D) (D) (D) (D) 319

Kenya –19 (D) (D) 7 –7 40 –109 2 7 62 3 5 –145 259

Cameroon (*) –1 –1 (*) –32 36 –11 –52 2 –50 48 -4 6 203

Gabon 73 2 –182 11 61 –166 –17 130 –439 4 327 94 78 157

Zambia 5 2 -5 –4 –3 (*) 15 5 –1 3 18 –3 (*) 144

Cȏte d'Ivoire –8 –64 40 20 60 54 –23 –88 –166 31 –13 –10 –25 118

Uganda –5 -1 2 (*) –4 1 1 (D) (D) 3 6 1 –3 100

Other SSA countries 333 2,139 –1,418 1,823 8 2,216 4,800 3,090 142 2,646 4,995 2,270 –1,466 14,922

Source: USDOC, BEA, Balance of Payments and Direct Investment Position Data (accessed November 12, 2013).

Notes: FDI inflows are a measure of new investment in a single year. Inflows are negative when more money is divested from a country than is invested in that year. 

FDI position (or stock) is a measure of cumulative investment over time. (*) = Less than $0.5 million dollars; (D) = Data suppressed to avoid disclosure of individual 

company information.
Figure 5.10 U.S. direct investment position in AGOA countries, 2001–12

Source: USDOC, BEA, Balance of Payments and Direct Investment Position Data (accessed November 12, 2013).

Limited data are available for FDI by industry. Overall in 2012, 57 percent of the U.S. FDI 

position in Africa was directed to the mining sector (including petroleum), 15 percent in holding 

companies, and 6 percent in manufacturing.304 For South Africa, the largest shares of U.S. FDI 

go to manufacturing (42 percent) and professional, scientific, and technical services 

(10 percent), with mining accounting for only 1 percent. In Nigeria, 45 percent of the U.S. FDI 

position is in mining (including petroleum).305 Although further disaggregated industry data are 

not available, historically a large share of the FDI flows into Angola has been petroleum-related. 

That has begun to change in recent years, with more FDI going to services and consumer 

products manufacturing since 2008.

306

Official U.S. data do not provide an industry breakdown for FDI in Mauritius. Even though 

Mauritius is one of the largest SSA recipients of U.S. FDI, commercial databases record only 12 

greenfield FDI projects or acquisitions from the United States to Mauritius between 2000 and 

2013.307 U.S.-based companies often use Mauritius as an export platform to capture regional 

304 Total Africa data includes North Africa. USDOC, BEA, interactive FDI database (accessed January 17, 2014). 305 Ibid. 306 Financial Times, FDIMarkets database. 307 Greenfield projects include four in software and IT services, two in financial services, and one in minerals. M&A 

transactions include one each in financial services, metals, transport, and other services, and one with no industry 

listed. Financial Times, FDIMarkets database, accessed January 7, 2014; Bureau van Dijk, Zephyr M&A database 

(accessed January 10, 2014).

166
markets, benefiting from Mauritius’s membership in SADC and COMESA. Mauritius also has a 

significant offshore financial sector, which serves as a major route for foreign investors to 

access India and other points in South Asia. As a result, a large share of U.S. FDI outflows to 

Mauritius is likely to be destined for final FDI projects in India.308 Outbound FDI from Mauritius 

to India was estimated at $43 billion during April 2000–September 2010, or 42 percent of total 

FDI inflows to India during that period.309 U.S. investors recorded FDI outflows to African 

holding companies of $3.4 billion in 2012.310 Data for specific country destinations for those 

investments are not available, but given the investment patterns between Mauritius and India, 

a significant share of those funds may be invested in Mauritius.

Based on the number of FDI projects, Ghana, Liberia, and Mozambique appear to be the largest 

destinations after South Africa for non-petroleum-related FDI, although official data for FDI 

inflows by sector are not available for those countries. Nigeria is also a significant destination 

for non-petroleum-related FDI. As noted above, although the mining and petroleum industries 

account for almost one-half of all of the U.S. FDI position, U.S. investors also have significant 

interests in business services, downstream oil industry projects, communications, and 

consumer products in Nigeria.311

Overall, as measured by the number of greenfield FDI projects, U.S. investors in SSA have 

principally focused on software and IT services; business services; and coal, oil, and natural gas. 

In the manufacturing sector, the principal areas are consumer products, food and beverage, 

and automotive manufacturing (figure 5.11).312 In the coal, oil, and natural gas sector, 33 of the 

56 projects are oil and gas extraction projects. The others are fossil fuel electric power; natural, 

liquefied, and compressed gas; other electric power generation (coal, oil, and natural gas); 

other petroleum and coal products; petroleum refineries; and support activities for mining and 

energy.

308 Seetanah, “Inward FDI in Mauritius,” April 30, 2013. 309 Sauvant, Mallampally, and McAllister, Inward and Outward FDI Country Profiles, 2013, 909–10. 310 USDOC, BEA, Survey of Current Business, 226. 311 Financial Times, FDIMarkets database. 312 A table with more detail on U.S. greenfield FDI projects by industry sector and year is presented in appendix H.

167
Figure 5.11 U.S. greenfield FDI projects in SSA, 2003–13

Source: Financial Times, FDIMarkets database.

Note: OEM – original equipment manufacturer.

EU Investment in SSA 

Official statistics from the European Union report data for only two individual SSA countries: 

Nigeria and South Africa. In 2012, the FDI position in South Africa was $76.8 billion (41 percent 

of the overall EU position in SSA) and in Nigeria was $35.9 billion (19 percent).313 The share of 

the EU FDI position in both countries has dropped since their peak levels in 2009 and 2010 

(figure 5.12). On the other hand, the EU direct investment position in Central and Southern 

Africa increased at an average annual rate of 14.3 percent, from $42.7 billion in 2001 to 

$186.1 billion in 2012 (table 5.7).

313 EC, Eurostat database (accessed December 16, 2013).

168
Figure 5.12 EU FDI in SSA, 2001–12

Source: EC, Eurostat database (accessed December 16, 2013).

Table 5.7 EU: Outward FDI position in SSA, 2001–12

Country 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CAGR 

%

Million $

Africa 53,845 66,969 104,899 134,247 141,480 169,378 213,882 224,629 287,292 291,044 272,873 291,882 16.6

Central and 

South 

Africa

42,656 51,506 81,659 104,511 112,420 131,009 158,898 165,218 199,283 218,333 179,279 186,059 14.3

Nigeria NA NA 14,744 14,363 17,681 24,201 32,584 36,525 39,824 37,271 33,066 35,889 10.4

South Africa 20,730 28,171 45,853 49,732 57,217 56,048 79,768 76,849 103,500 99,060 71,850 76,819 12.6

Source: EC, Eurostat database (accessed December 16, 2013).

Note: NA = Not available.

According to other data sources, during 2003–13, the United Kingdom accounted for 39 percent 

of greenfield FDI projects from the EU into SSA, followed by Germany, France, and Portugal 

(figure 5.13).314 In addition, 38 percent of all the United Kingdom’s projects were invested in 

five countries: South Africa, Nigeria, Kenya, Tanzania, and Ghana. All of these countries are 

former British colonies; each country accounted for between 6 and 8 percent of all UK FDI 

projects in SSA. In South Africa, more than half of all UK-based greenfield FDI projects were 

314 Financial Times, FDIMarkets database.

169
Figure 5.13 Greenfield projects in SSA, by EU member, 2003–13

Source: Financial Times, FDIMarkets database.

destined for the service sector, with the largest areas reported as financial services, business 

services, and software and IT services.315

Portuguese FDI in SSA focuses on Portugal’s former colonies of Angola and Mozambique, with 

130 and 12 projects, respectively, out of a total of 149 projects in those countries during the 

period. In Angola, 94 of those are financial services projects, primarily new bank branches 

opened by several large Portugal-based banks. However, these projects are not likely to 

represent significant financial outlays. In Mozambique, many projects are in the manufacturing 

sector, including several from Cimpor, a large cement company.316

German firms, with almost as many individual FDI projects as Portuguese firms, were much 

more focused on South Africa (86 projects), followed by Nigeria (12 projects) and Kenya (13 

projects). In South Africa, auto industry projects accounted for one-third of the total, including 

11 by Volkswagen; chemicals investments accounted for another 18 projects. Other Germanybased FDI projects in SSA are scattered among a wide variety of industries.317

315 Ibid. 316 Financial Times, FDIMarkets database. 317 Ibid.

170

 
FDI projects from France are diversified among 30 SSA countries, with South Africa, Nigeria, and 

Senegal accounting for the largest shares. France-based companies have invested in a wide 

variety of industries in SSA. The coal, oil, and natural gas sector is the largest (17 percent of all 

projects); oil and gas extraction projects account for half of these. Telecommunications is next, 

followed by business services, financial services, computer and IT services, and food and 

tobacco.318

The United Kingdom was also the largest acquirer of existing SSA companies. However, the 

Netherlands and Luxembourg, which did not appear among the largest greenfield investors, 

also numbered among the primary investors (see appendix G, table G.11). This is likely due to 

the role of those two countries as offshore financial centers, so that companies investing from 

the Netherlands and Luxembourg may actually be based elsewhere.

Brazilian Investment in SSA 

Brazil is not a large investor in SSA, compared with other source countries discussed here, with 

total FDI position in the region equal to $200 million in 2010 almost entirely in Angola (latest 

available). This is only a tiny share of Brazil’s global FDI position (table 5.8). Brazil’s FDI into 

Africa targets strategic sectors, such as mining, energy, and infrastructure. Brazilian technology 

and expertise in infrastructure construction, tropical agriculture and agribusiness, biofuels, 

hydrocarbons exploration, mining, and telecommunications have created opportunities for 

Brazilian investors in SSA.319

Table 5.8 Brazil: Outward FDI position, 2001–10 (billion $)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

World 50 54 55 69 79 114 140 156 165 181

Developing economies 42 45 44 48 50 79 100 111 69 80

Africa 0.42 0.16 0.11 0.13 0.14 0.03 0.11 0.16 0.2 0.2

Angola 0.27 0.03 0.02 0.03 0.02 0.02 0.1 0.14 0.1 0.2

Source: Central Bank of Brazil and UNCTAD’s FDI/TNC database for 2007 and 2008, cited in Sauvant, Mallampally, and 

McAllister, Inward and Outward FDI Country Profiles, 2013, 669.

Companhia Vale do Rio Doce (Vale), the Brazil-based mining company, is one of the country’s 

largest investors in SSA (box 5.2). Vale accounted for 11 of the 32 greenfield projects recorded 

from Brazil to SSA between 2003 and 2013, six in the petroleum sector and five in the metals 

industry. Vale also acquired a majority stake in a joint venture with assets in the Simandou iron 

318 Ibid. 319 Alves, “Brazil in Africa: Achievements and Challenges,” June 2013, 39.

171

 
Box 5.2 Vale’s FDI in sub-Saharan Africa

Companhia Vale do Rio Doce (Vale), a Brazil-based global mining company, began an active expansion 

program in Africa in 2004. Vale’s Africa focus will help the company to meet the demand for mineral 

resources from fast-growing China and India, as those countries continue to urbanize, increase the 

penetration of durable goods such as automobiles, and expand their infrastructure.a As of 2010, Vale 

had invested $2.5 billion into Africa (from all global operations, not necessarily from Brazil directly), and 

had plans to invest an additional $20 billion into Africa over the coming five years. In December 2013, 

however, the company announced that it was significantly cutting its annual global investment budget 

to $14.8 billion, from $18 billion in 2011, so the expected investment in Africa may not materialize.b 

As of January 2014, Vale was active in six countries in SSA: Angola, the Democratic Republic of the 

Congo, Guinea, Malawi, Mozambique, and Zambia. The company was also reportedly exploring 

additional possibilities in other SSA countries. 

• Angola: Vale is currently conducting exploration activities focused on copper.

• Democratic Republic of the Congo: Together with its joint venture partner, African Rainbow Minerals 

Ltd. (ARM), Vale is currently planning for future cobalt and copper operations.

• Guinea: Vale acquired a 51 percent stake in Guinea-owned BGS Resources (BGSR) for $500 million in 

2006, with a further $2 billion depending on future developments. Vale’s goal is the development of 

BGSR’s concessions in the Simandou iron ore project. In addition to mining, the project envisions 

upgrading a local rail network. As of January 2014, licensing at Simandou was under review by the 

Guinean government and mining activities were suspended.

• Malawi: The railroad Vale is building from its Moatize coal mine in Mozambique will pass through 

part of Malawi on its way to the Port of Nacala in northern Mozambique. The railroad may also 

connect to Vale’s copper operations in Zambia.

• Mozambique: The Moatize coal project entered full operation in 2012, and is expected to reach 

11 million tons of coal production per year. The Moatize II project is scheduled to start producing in 

2015, which will increase total production to 22 million tons per year. In addition to the mining 

operations, Vale is building the Nacala corridor, a 137-mile railroad from the port of Nacala, and also 

restoring the Sena Railway to the port of Beira. Total investment is expected to be in the range of 

$6 billion. Vale is also exploring additional Mozambique projects related to coal, phosphates, and 

natural gas.

• Zambia: Through its joint venture with ARM and Zambia’s state-owned mining company ZCCM, Vale 

is mining for copper at the Lubambe mine, which has an annual production capacity of 45,000 tons 

of copper concentrate. The joint venture is expected to invest about $1 billion over five years.

Sources: Vale website, http://www.vale.com/EN/aboutvale/across-world/Pages/default.aspx (accessed January 23, 2014); 

Financial Times, FDIMarkets database; Bureau van Dijk, Zephyr M&A database; MacDonald, “Vale: Eyes $7B in Planned Africa 

Investments,” February 6, 2013.

Notes: a Campbell, “Vale Now Active in Southern, Central and West Africa,” September 2, 2011.

b MiningReview.com, “Vale Plans to Invest up to US$20 Billion in Africa,” October 28, 2010; Jamasmie, “Vale Slashes Investment 

Budget,” December 2, 2013.

172
ore mine in Guinea for $2.5 billion. Vale’s coal mine in Mozambique is its biggest operation 

outside Brazil.320

Petrobras, Brazil’s state-owned oil company, has invested in petroleum extraction projects in 

Angola and Nigeria (project values not reported) and also invested $200 million in a biomass 

power project in Nigeria.321 Petrobras is actively pumping oil in Angola and Nigeria and involved 

in petroleum exploration in Benin, Gabon, Libya, Nigeria, and Tanzania.322

Brazilian multinational construction firms have also been active in Africa. Odebrecht has been 

involved in Africa since at least the 1980s. Early projects included the construction of the 

Capanda dam in Angola and the country’s first shopping mall in Luanda. Camargo Corrêa, 

another Brazil-based construction company, is building housing in Ghana. The construction firm

Andrade Gutierrez has worked on projects ranging from ports to housing and sanitation 

projects in Angola, the Republic of the Congo, and Guinea. Unlike most Chinese construction 

firms, Brazilian construction firms are not state-owned and rely, to some extent, on credit lines 

to African governments from the state-owned Brazilian Development Bank (BNDES) and Banco 

do Brazil to fund their foreign operations. Brazilian credit lines to African countries target 

mostly infrastructure development and are generally tied to procurement of services and 

equipment in Brazil. Brazilian construction companies reportedly hire most of their labor force 

locally (Odebrecht is said to be the largest private employer in Angola).323 Brazilian agricultural 

and consumer products firms are also interested in Africa, but few deals have been signed to 

date.324

Chinese Investment in SSA 

Many Chinese investors in SSA are state-owned enterprises (SOEs), but as much as one-half of 

total investment comes from private-sector companies. Official Chinese FDI data may 

underestimate FDI in Africa, since the statistics often fail to include smaller, private sector 

companies involved in wholesale and retail trade and textiles. In general, Chinese private sector 

companies focus investing in the manufacturing and service sectors, while SOEs are more likely 

to invest in construction and resource extraction.325 According to an UNCTAD estimate, as of 

2006, there were about 700 Chinese-based firms operating in Africa.326 That number is likely to 

be significantly higher in 2014. Most Chinese FDI in SSA has been greenfield investment (see 

320 Economist, “Brazilian Companies Are Heading for Africa,” November 10, 2012. 321 Financial Times, FDIMarkets database. 322 Economist, “Brazilian Companies Are Heading for Africa,” November 10, 2012. 323 Alves, “Brazil in Africa: Achievements and Challenges,” June 2013, 41. 324 Economist, “Brazilian Companies Are Heading for Africa,” November 10, 2012. 325 BMI, Asian Investment in Africa, 2013, 25; Economist, “Little to Fear but Fear Itself,” September 21, 2013. 326 Kaplinsky and Morris, “Chinese FDI in Sub-Saharan Africa,” 2009, 555.

173

 
appendix G, table G.13). During 2000–2013, only five Chinese acquisitions of SSA companies 

were reported, one each in Chad, the Democratic Republic of the Congo, Ghana, Mauritius, and 

South Africa (Standard Bank).327

FDI from China and from OECD countries has taken different paths, for two principal reasons. 

First, Chinese SOEs are able to operate on a longer time horizon than many OECD-based 

multinational firms, as many of their FDI projects are funded by the Chinese government with 

preferential access to capital, whereas most FDI from OECD countries is funded through stock 

markets or other private capital at market rates. Second, most OECD FDI is constrained by a 

number of international agreements affecting labor rights, the environment, product 

specifications, and the U.S. Foreign Corrupt Practices Act, whereas Chinese SOEs have far fewer 

restrictions to observe.

328

Financing for many large infrastructure investment projects from China follows a model of “tied 

aid” that Western countries have largely abandoned. As described in one article, these projects 

generally follow a pattern: China’s Export-Import Bank provides a line of credit, usually at 

subsidized interest rates, with the funds tied to the use of Chinese inputs and labor. Chinese 

SOEs bid on substantial infrastructure or resource extraction projects. The funds most often are 

transferred directly from the Export-Import Bank as payment to the Chinese firms, never going 

to African countries directly. The funding is repaid to the Chinese government in the form of 

commodity exports resulting from the project, from the African countries to China.329

South Africa was by far the largest destination for FDI outflows from China during 2003–10 

(latest available data). However, Chinese investment in South Africa was driven almost entirely 

by a single transaction: the 2008 acquisition by the Industrial and Commercial Bank of China of 

a 20 percent stake in South Africa’s Standard Bank, valued at $4.75 billion.330 Nigeria ranked 

second, followed by Zambia and the Democratic Republic of the Congo, two countries that have 

attracted significant Chinese FDI in the mining industry (table 5.9).

327 Bureau van Dijk, Zephyr M&A database. 328 Kaplinsky and Morris, “Chinese FDI in Sub-Saharan Africa,” 2009, 563. 329 Ibid, 561. 330 Bureau van Dijk, Zephyr M&A database.

174

 
Table 5.9 China: FDI outflows to SSA destinations, 2003–10

Country 2003 2004 3005 2006 2007 2008 2009 2010 Total

Million $

South Africa 9 18 48 41 454 4,808 42 411 5,830

Nigeria 24 46 53 68 390 163 172 185 1,101

Zambia 6 2 10 87 119 214 112 75 626

Congo, Dem. Rep. 0 12 5 37 57 24 227 236 598

Niger NA 2 6 8 101 0 40 196 352

Sudan NA 147 91 51 65 -63 19 31 341

Ethiopia 1 0 5 24 13 10 74 59 186

Kenya 1 3 2 0 9 23 28 101 167

Madagascar 1 14 0 1 13 61 43 34 166

Angola 0 0 1 22 41 -10 8 101 164

Other SSA 29 56 72 78 95 186 335 454 1,305

SSA total 70 298 292 417 1,359 5,416 1,100 1,883 10,836

Source: Government of China, Ministry of Commerce.

Notes: SSA total calculated by the Commission by removing data for North African countries from the total provided by China’s 

Ministry of Commerce. NA = Not available.

Studies by the African Economic Research Consortium identified the most significant industry 

destinations for Chinese FDI in 20 SSA countries (table 5.10). Based on data from 2007, 

industries of particular note included oil and gas, mining, agriculture, services (particularly 

telecommunications, but also utilities and financial services), apparel and shoes, and 

agroprocessing.331

Table 5.10 Significant industry and country destinations for Chinese FDI in SSA, 2007

Industry Identified destination countries

Oil and gas Angola, Nigeria, and Sudan

Mining Ethiopia, Sudan, Zambia, Kenya, and Uganda

Agriculture Cotton in Zambia, Mali, and Uganda; poultry in Ghana; sugar in Madagascar; coffee in Kenya

Telecommunications Angola, Ethiopia, Madagascar, Nigeria, Republic of the Congo, and Uganda

Utilities Ethiopia

Financial services Madagascar and South Africa

Apparel and footwear Ethiopia, Ghana, Madagascar, Mauritius, and Kenya

Agroprocessing Nigeria, Zambia, and Uganda

Construction and 

infrastructure

Angola, Ethiopia, Nigeria, Zambia, Republic of the Congo, Mali, South Africa, Uganda, 

Cameroon, Namibia, and Tanzania

Import/export and retail Widespread activity throughout SSA reflecting small, private-sector Chinese firms

Source: Kaplinsky and Morris, “Chinese FDI in Sub-Saharan Africa,” 2009, 557.

Much of the infrastructure investment is related to FDI in the extractive industries (both 

petroleum and mining) and metals. Examples include an oil pipeline and related port facilities in 

Sudan; a deepwater port, railroad track, and a hydroelectric power plant linked to an iron mine 

in Gabon; and the refurbishment of Angola’s rail network, linked to petroleum extraction in 

331 Kaplinsky and Morris, “Chinese FDI in Sub-Saharan Africa,” 2009, 557.

175

 
that country, with potential links between Angolan ports and Zambia’s copper mines.332 In the 

metals industry, Chinese FDI in Mozambique’s aluminum industry, driven by higher demand for 

aluminum from China, significantly increased overall FDI in that country. China has also invested 

heavily in Zambia’s copper industry, particularly the Lumwana Mine and the Konkola Deep 

Mining Project.333

Indian Investment in SSA 

Africa accounted for 14 percent of Indian FDI outflows in 2009–10, up from 10 percent during 

1996–02 (table 5.11).334 Mauritius ranked third among all destinations for outbound FDI flows 

from India during 2002–09, the only SSA country to appear among India’s top 15 destinations, 

attracting just over 8 percent of total outflows during the period.335

Table 5.11 India: FDI outflows, 1996–2010

Region/economy 1996–2002 2002–09 2009–10 1996–2002 2002–09 2009–10

Shares in % Million $

World 100 100 100 7525 75,985 10,623

Developing economies 65 48 68 a 36,498 7,239

Africa 10 12 14 750 9,321 1521

Nigeria 0 0 NA 7 301 NA

Sudan NA 2 NA NA 1,191 NA

West Africa 0 1 0 29 542 11

Central Africa NA 0 NA NA 85 NA

East Africa 9 8 14 638 6,342 1,430

Mauritius 8 8 13 618 6,165 1,426

Kenya 0 0 NA 13 149 a

Southern Africa 0 0 1 29 154 72

South Africa 0 0 1 22 118 69

Source: Department of Economic Affairs, Indian Ministry of Finance, cited in Sauvant, Mallampally, and McAllister, Inward and 

Outward FDI Country Profiles, 2013, 872–73. 

Notes: NA = Not available. This table relies on investment approval data, since the Indian government does not publish a 

geographic breakdown of outward FDI flows. Data are by fiscal year (April 1–March 31).

Particularly large investments included acquisitions by three India-based mobile 

telecommunications companies in Zambia, South Africa, and the Republic of the Congo. Indian 

firms also acquired large African companies in oil and gas services, mining, steel production, 

and business services (see appendix G, table G.14).336 Indian companies also recorded 309 

greenfield FDI projects between 2003 and 2013 (see appendix G, table G.15). The largest 

number of projects went to South Africa (68), followed by Nigeria (35), Kenya (32), and 

332 Kaplinsky and Morris, “Chinese FDI in Sub-Saharan Africa,” 2009, 560. 333 World Bank, “The Business Environment in Southern Africa,” 2010, 63. 334 Sauvant, Mallampally, and McAllister, Inward and Outward FDI Country Profiles, 2013, 855, 859. 335 Based on data for investment approvals by the Indian government. Sauvant, Mallampally, and McAllister, 

Inward and Outward FDI Country Profiles, 2013, 874. 336 Bureau van Dijk, Zephyr database.

176

 
Tanzania (26). The largest share (15 percent) was invested in financial services, primarily in 

South Africa and Tanzania. Telecommunications and software and IT services were also 

important industry destinations for Indian investors, with 38 and 29 projects, respectively, 

followed by automotive manufacturing and the coal, oil, and natural gas sector.337

SSA Countries’ Investment in SSA 

As noted above, SSA countries account for a significant share of overall FDI into the region, with 

South Africa being the leading investor. Kenyan firms ranked second as intra-SSA investors, with 

145 outbound FDI projects in SSA. Together, South Africa and Kenya comprised 71 percent of all 

intra-SSA FDI projects during 2003–12.

338 SSA investors are more likely than investors from 

other regions to focus on the services and manufacturing sectors, rather than on natural 

resources extraction or processing. Manufacturing projects, in turn, tend to focus on less 

capital-intensive and lower-technology industries.339 Table 5.12 highlights greenfield FDI 

projects and acquisitions by SSA countries in other SSA countries. For 2003–12, the top three 

country destinations for South Africa’s FDI in SSA were Nigeria, Ghana, and Namibia.340

Investment in SSA by Industry

In the past, much of the FDI in SSA was focused on natural resource extraction, including 

mining, petroleum and natural gas extraction, and renewable energy. This pattern is changing, 

however: during 2007–12 the number of new FDI projects focused on resources declined, while 

the number of projects in the services and manufacturing sectors increased (figure 5.14).341

Natural resources contributed to less than one-third of Africa’s GDP growth between 2000 and 

2012, with the service sector growing particularly fast as a share of GDP.342 In an effort to 

illustrate this change, UNCTAD has recently tracked the share of greenfield FDI projects focused 

on sales to African consumers. UNCTAD defined the consumer sector as a basket of 

manufacturing and service sector industries that include financial services; food, beverages, and 

tobacco; textiles, clothing, and leather; transport, storage, and communications; and motor 

337 Financial Times, FDIMarkets database. 338 Ernst & Young, Ernst & Young’s Attractiveness Survey, 2013, 5, 36; Financial Times, FDIMarkets database. 339 UNCTAD, World Investment Report 2013, 2013, 42. 340 Bureau van Dijk, Zephyr M&A database; Financial Times, FDIMarkets database. 341 Ernst & Young, Ernst & Young’s Attractiveness Survey, 2013, 5, 37. Oil and gas extraction projects accounted for 

only 3 percent of the total (based on data from the FDIMarkets database), although these projects likely account 

for a significantly greater share of total capital expenditures.

342 Ernst & Young, Ernst & Young’s Attractiveness Survey, 2013, 17.

177

 
178 

Table 5.12 Number of greenfield FDI projects and mergers and acquisition transactions in SSA by SSA-based investors, by selected industry, 2003–

13

Industry 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

Metals, mining and agriculture 10 6 7 13 7 8 6 16 11 5 4 93

M&A 6 3 3 7 4 3 1 4 1 2 0 34

Greenfield 4 3 4 6 3 5 5 12 10 3 4 59

Chemicals, rubber, plastics, non-metallic manufacturing 5 3 2 1 3 7 5 3 13 6 7 55

M&A 3 1 1 0 1 4 1 1 0 1 1 14

Greenfield 2 2 1 1 2 3 4 2 13 5 6 41

Food, beverages, tobacco 1 2 2 2 1 14 5 8 17 18 13 83

M&A 0 0 0 0 0 3 1 1 1 1 1 8

Greenfield 1 2 2 2 1 11 4 7 16 17 12 75

Textiles, apparel, leather 5 2 0 1 1 1 0 1 3 1 6 21

M&A 1 1 0 1 0 0 0 0 0 0 0 3

Greenfield 4 1 0 0 1 1 0 1 3 1 6 18

Machinery manufacturing 0 1 2 0 6 6 5 4 3 1 8 36

M&A 0 1 0 0 4 2 0 1 0 0 0 8

Greenfield 0 0 2 0 2 4 5 3 3 1 8 28

Financial services and real estate 6 12 13 23 17 91 72 49 73 42 49 447

M&A 1 6 3 7 5 14 3 4 7 1 2 53

Greenfield 5 6 10 16 12 77 69 45 66 41 47 394

Communications, business, and computer services 9 8 14 25 7 10 18 23 33 53 34 234

M&A 6 8 10 19 7 7 6 5 4 4 4 80

Greenfield 3 0 4 6 0 3 12 18 29 49 30 154

Wholesale, retail, distribution 0 0 5 3 1 5 2 1 3 2 3 25

M&A 0 0 4 2 1 5 2 1 3 2 3 23

Greenfield 0 0 1 1 0 0 0 0 0 0 0 2

Transportation 1 1 1 6 0 1 3 1 1 9 1 25

Greenfield 0 0 0 2 0 1 2 0 1 7 1 14

M&A 1 1 1 4 0 0 1 1 0 2 0 11

Tourism 3 2 1 1 1 11 0 3 1 2 7 32

M&A 0 1 1 0 1 2 0 0 1 0 2 8

Greenfield 3 1 0 1 0 9 0 3 0 2 5 24

Construction 0 0 1 1 0 5 4 3 8 3 13 38

M&A 0 0 1 1 0 0 0 1 1 0 0 4

Greenfield 0 0 0 0 0 5 4 2 7 3 13 34

Sources: Bureau van Dijk, Zephyr M&A database; Financial Times, FDIMarkets database; Commission calculations.
Figure 5.14 Number of greenfield FDI projects in SSA, by sector, 2003–13

Source: Financial Times, FDIMarkets database (accessed January 14, 2014).

Note: Data are available only beginning in 2003.

vehicles. The share of overall greenfield FDI projects in these sectors has increased steadily 

since 2008, reaching almost 25 percent in 2012.343

The service sector accounts for the majority of greenfield FDI projects in SSA, led by financial 

services and communications (table 5.13). The metals sector includes both metals mining and

metals processing; the latter is a manufacturing industry. Other prominent manufacturing 

industries are food and tobacco and automotive manufacturing. Along with greenfield FDI, 

mergers and acquisitions (M&A) are the other source of foreign investment in SSA. Metals, 

mining, and agriculture; financial services; and wholesale and retail trade account for the 

largest shares of foreign acquisitions of existing SSA companies (figure 5.15).

Natural Resources (Petroleum, Metals, and 

Minerals) 

Some of the highest-value investment projects in SSA involve oil and gas extraction, many by 

Asian-owned petroleum companies. However, FDI in the natural resources sector also includes 

significant investment in downstream petroleum industry projects, including construction of 

343 UNCTAD, World Investment Report 2013, 2013, 42.

179

 
Table 5.13 Number of greenfield FDI projects in SSA, by industry, 2003–13

Industry Number of projects Share of total %

Financial services 779 18

Communications 401 9

Metals 367 8

Business services 332 8

Coal, oil, and natural gas 290 7

Food and tobacco 257 6

Software and IT services 247 6

Transportation 158 4

Automotive OEM 146 3

Industrial machinery, equipment, and tools 123 3

Hotels and tourism 101 2

Other 1,136 26

Total 4,337 100

Source: Financial Times, FDIMarkets database (accessed January 14, 2014).

Figure 5.15 M&A deals in SSA, by industry, 2000–2013

Source: Bureau van Dijk, Zephyr M&A database (accessed January 7, 2014).

pipelines and refineries (table 5.14).344 Chinese state-owned companies are also particularly 

active investors in the SSA mining industry, especially in iron ore mines in Guinea, Sierra Leone, 

and Liberia, and likely to remain so for the foreseeable future. Combining production by Chinabased mining companies with production by companies based elsewhere, Guinea in particular 

344 BMI, Asian Investment in Africa, 2013, 38.

180

 
Table 5.14 Key Asian investment in SSA's downstream oil and gas industry

Destination 

country Company Project

Expected

start-up

date Notes

South Africa Sinopec (China) Mthombo refinery,

Port Elizabeth

2016 $10 billion project planned by Sinopec, PetroSA 

(South Africa), and Industrial Development Corp. 

(South Africa)

South Africa Petronas (Malaysia) Engen Petroleum 2013 Petronas is currently in talks to sell its

stake in Engen Petroleum to PetroSA

Sudan CNPC (China) Khartoum refinery 2000 50/50 joint venture between CNPC and the 

Sudanese Ministry of Energy and Mining

South Sudan,

Kenya, Rwanda

Toyota (Japan) Oil pipeline NA $4 billion project. Dual pipelines running from 

South Sudanese oilfields to Kenya port of Lamu 

and from Rwanda to Mombasa

Uganda CNOOC (China) Hoima refinery NA In talks to develop a 30,000 barrel/day refinery in 

conjunction with a crude oil export pipeline as 

part of an upstream development in Lake 

Albertine

Uganda China Export-Import 

Bank (China)

Dar Es Salaam 

pipeline

2014 Domestic pipeline connecting gas-rich Mtwara to 

Dar es Salaam, Tanzania

Tanzania KOGAS (Korea) Maputo gas 

pipeline 

2014 Joint venture by KOGAS and ENH (Mozambique) 

to pipe gas for power and industry in Maputo, 

Mozambique

Source: BMI, Asian Investment in Africa, 2013.

Note: NA = Not available.

Table 5.15 Greenfield FDI projects: Mining and oil and gas extraction vs. downstream activities, 2003–

13

Coal, oil and natural gas Metals and minerals

Activity Number of 

projects

Share of 

total %

Activity Number of 

projects

Share of 

total %

Oil and gas extraction 115 40 Gold ore and silver ore mining 94 20

Coal mining 24 8 Copper, nickel, lead, and zinc mining 69 15

Other mining 122 26

Nonextractive activities 151 52 Nonextractive activities 178 38

Total 290 100 Total 463 100

Source: Financial Times, FDIMarkets database (accessed January 14, 2014).

could become one of the world’s largest sources of iron ore by 2020.345 During 2003–12, almost 

one-half of SSA greenfield FDI projects in the resource sector (including coal, oil, natural gas,

metals, and minerals) were focused on downstream manufacturing and services activities, 

rather than on resource extraction (table 5.15).346

345 Ibid., 39–42. 346 Services include activities such as marketing, business support services, and retail. Refining is included in 

manufacturing. Ernst & Young, Ernst & Young’s Attractiveness Survey, 2013, 38.

181

 
In the minerals sector, examples of SSA countries receiving recent investment, or expansion of 

existing projects, include:

• Mauritania: 100 percent acquisition of Sphere Minerals by Glencore Xstrata (UK).

• Burkina Faso and Mali: Golden Rim (Australia) and Royal Falcon Mining (United Arab 

Emirates) plan to invest $6.9 million in minerals exploration.

• Tanzania: 100 percent acquisition of Mantra Resources by Atomredmetzoloto 

(Russia).

• Eritrea: Nevsun Resources (Canada) has invested in the Bisha Project, a gold, copper 

and zinc mine, and Chalice Gold (Australia) has agreed to sell a 60 percent stake in 

the Zara Gold project to SFECO Group (China), pending due diligence 

investigation.347

West Africa has also seen extensive recent investment in iron ore mining. Mauritania was 

exporting iron ore as of 2012, and additional deposits of interest to international mining 

companies are located in Guinea, Liberia, Gabon, Mauritania, Nigeria, Sierra Leone, the 

Republic of the Congo, Cameroon, and Côte d’Ivoire. Global mining companies BHP Billiton 

(Australia), Vale (Brazil), Rio Tinto (Australia), and Chinalco (China) are all active in SSA.348 A 

number of SSA countries have made recent changes to their mining laws, raising taxes on 

mining companies, increasing the government ownership share in joint venture mining 

companies, or otherwise seeking to retain more revenue from mining projects. Angola, 

Tanzania, Guinea, and Mozambique have all passed new mining laws since 2010.349

Agriculture 

Agricultural investment in SSA has focused primarily on grains, sugarcane, and palm oil 

plantations. South Africa is the largest destination for acquisitions in the agriculture sector 

(21 percent of all deals), followed by Kenya (9 percent), Côte d’Ivoire (7 percent), and Tanzania 

(6 percent).

Investment in SSA agricultural projects comes from diverse corners of the globe. Investors from 

South Africa, UAE, and OECD countries account for a large share of agriculture investment 

projects in SSA (figure 5.16). The Gulf countries account for 22 percent of total foreign land 

acquisitions in Africa, compared with 12 percent for India and 3 percent for China. Some of 

Southeast Asia’s largest agricultural firms are among the investors, including Olam International 

(Singapore), Wilmar International (Singapore), Golden Agri Resources (Indonesia), and Sime 

Darby (Malaysia). Palm oil companies are showing increased interest in Africa, as expanded 

347 De Backer, “Mining Investment and Financing in Africa,” March 2012, 6. 348 Ibid, 7. 349 Ibid.

182

 
Figure 5.16 Number of foreign acquisitions in SSA agriculture, by 2000–2013

Source: Bureau van Dijk, Zephyr M&A database (accessed January 7, 2014).

Note: Reflects countries making acquisitions outside of their home country.

production in Indonesia becomes limited by land and labor availability. Vietnamese companies 

have also recently started acquiring land in different countries for rice cultivation, including 

Sierra Leone and Nigeria.

Infrastructure 

The entire SSA region requires investment in infrastructure as a critical factor in economic 

growth. The lack of inland transportation infrastructure inhibits intra-regional trade, forcing SSA 

countries to rely more on trade with the EU, the United States, and developed countries in 

other regions. Among other SSA countries, Kenya is investing in updated rail infrastructure, 

which should help to lower costs to inland investments in Kenya and neighboring Uganda, 

where Kenya is a leading investor.350 Historically, developed countries have provided significant 

funding for African infrastructure as financial assistance rather than through commercial 

investment, often through international development banks, such as the World Bank. The 

United States has been a major contributor to investment in trade-related infrastructure 

through its foreign aid programs.351

350 Industry representative, interview by USITC staff, Washington, DC, January 13, 2014. 351 USITC, hearing transcript, January 14, 2014, 84 (testimony of Dennis Matanda, Manchester Trade Ltd.).

183

 
In recent years, China has provided by far the largest share of resources invested in SSA 

infrastructure. Most of the companies involved are state-owned, and much of the funding is 

provided as export credits. In contrast to development banks and financial assistance from 

OECD countries, Chinese financial flows to SSA more often have been directed to large 

infrastructure projects, which have succeeded in significantly improving the infrastructure in a 

number of SSA countries, as measured by the World Economic Forum’s infrastructure rankings. 

However, while the number of SSA infrastructure projects financed by Chinese investment has 

significantly improved the overall level of infrastructure in the region, SSA is experiencing some 

backlash against Chinese practices, with Chinese companies accused of poor quality, little 

regard for environmental protections, and not enough hiring of local workers.352

India, Japan, and the Republic of Korea (Korea) have also begun to actively invest in SSA 

infrastructure, with an eye to securing resources. East Africa, and Ethiopia in particular, has 

received Indian investment in developing its road and rail capacity and connections with 

Djibouti. India has also invested in power and transport projects in Mozambique. In June 2013, 

Japan announced $32 billion in funding for Africa over a five-year period (with an undefined 

portion set for infrastructure), in addition to a May 2013 commitment of $2 billion to develop 

infrastructure around Africa’s natural resources. Investment will focus on countries that can 

provide resources for Japanese industry or markets for Japanese products. Korea has increased 

its foreign aid to Liberia, focusing on infrastructure improvements, and Korean companies are 

increasingly seeking investment opportunities in SSA.353

One recently announced investment project in the infrastructure sector is the Reykjavik project, 

a $4 billion investment by a group of partners from the United States and Iceland to develop 

about 1,000 MW of geothermal energy in Ethiopia. A consortium of private investors is also 

actively studying more than 50 wind power sites in Ethiopia, which would produce close to 

10,000 MW of electric power, in collaboration with U.S. engineers, manufacturers, and 

financiers.354

Manufacturing 

Commercial databases recorded more than 1,800 foreign investment transactions in the 

manufacturing sector during 2003–13, of which almost 90 percent were greenfield FDI projects 

(table 5.16). South Africa, in particular, has witnessed strong investment in the automotive and 

heavy equipment manufacturing industries. These investments are partly due to the 

elimination of U.S. tariffs under AGOA, which has made South Africa an attractive location from 

352 BMI, Asian Investment in Africa, 2013, 52–55. 353 Ibid, 56. 354 USITC, hearing transcript, January 14, 2014, 47-48 (testimony of Girma Birru, ambassador of Ethiopia to the 

United States).

184

 
Table 5.16 FDI transactions in SSA manufacturing, 2003–13

Greenfield M&A Total

South Africa 449 134 583

Nigeria 204 23 227

Kenya 119 8 127

Angola 102 2 104

Mozambique 84 5 89

Ghana 80 3 83

Uganda 63 8 71

Tanzania 57 3 60

Ethiopia 47 6 53

Zambia 47 4 51

Other 354 50 404

Total 1,606 246 1,852

Source: Financial Times, FDIMarkets database (accessed January 14, 2014); Bureau van Dijk, Zephyr M&A database (accessed 

January 7, 2014).

which to export these products to the United States.355 South Africa has also seen strong 

manufacturing investment in coal, petroleum processing, and chemicals. In Nigeria, the coal 

and petroleum processing sector was the most popular destination for FDI manufacturing 

projects, followed by food, beverages, and tobacco. In Kenya, destinations for manufacturing 

FDI include food, beverages, and tobacco; automobiles; consumer electronics; and other 

consumer products.356 By source country, the largest investors in the SSA manufacturing sector 

(by number of projects) were the United States and the United Kingdom, followed by India 

(figure 5.17). Chinese and Indian companies have begun to invest in the automotive sector, 

particularly in non-passenger-car segments such as commercial vehicles and motorcycles.357

Textiles and Apparel

In the textiles and apparel industry (including footwear), commercial databases recorded 85 

greenfield FDI projects and seven acquisitions between 2003 and 2013. South Africa was the 

recipient for about one-third of these transactions, followed by Ghana, Nigeria, and Ethiopia. 

According to many observers, the apparel industry has been the principal and most direct 

beneficiary of the AGOA program, largely due to AGOA’s liberal rules of origin (ROOs) in the 

form of the third-country fabric rule. The rule permits African countries to source yarn and 

fabric inputs from any country and to export the apparel made from this fabric to the United 

States duty free. This creates opportunities for foreign investors, particularly from Taiwan and 

China, to access the U.S. market through SSA, but the investment is likely to quickly disappear if 

355 USITC, hearing transcript, January 14, 2014, 152 (testimony of Edward Gresser, Progressive Economy). 356 Financial Times, FDIMarkets database. 357 BMI, Asian Investment in Africa, 2013, 63–68.

185

 
Figure 5.17 Greenfield FDI projects and M&A deals in manufacturing, by source country, 2003–13

Source: Bureau van Dijk, Zephyr M&A database; Financial Times, FDIMarkets database; Commission calculations.

the AGOA program is discontinued.358 The footwear sector has also attracted investment under 

AGOA, particularly in Ethiopia. The government of Ethiopia has introduced policies aimed at

attracting investment to this sector, leveraging assistance from the U.S. Agency for 

International Development and other sources. They have succeeded in reaching out to 

individual footwear companies, and, according to one observer, the industry is beginning to 

develop.359

Lesotho, Kenya, Mauritius, and Swaziland were the principal sources of textile and apparel 

exports to the United States under AGOA in 2012.360 Most of the production companies in 

Lesotho and Swaziland are owned by investors from Taiwan, with the remainder owned by 

South African-based firms.361 African and Middle Eastern countries were the sources of many 

358 Several Taiwanese investors quoted in the Godfrey article told the author that they would pull their companies 

out of Africa as soon as the program was ended, and given that the program was due to end in 2015, they would 

be unlikely to make any further investments in Lesotho or Swaziland. Further, uncertainty about AGOA renewal 

would lead some investors to relocate anyway. Godfrey, “Comment: Prospects for an African Clothing Industry?” 

June 25, 2013; Wang, Fangqing, “China’s Textile and Clothing Firms Expand,” December 18, 2012.

359 USITC, hearing transcript, January 14, 2014, 289–90 (testimony of Stephen Lamar, American Apparel & 

Footwear Association).

360 USITC DataWeb/USDOC, January 14, 2014. 361 Godfrey, “Prospects for an African Clothing Industry?” June 25, 2013.

186

 
small-scale FDI projects.362 The Ethiopian apparel industry has also received recent investment 

from India, China, and Turkey (for the EU market).363

Following the introduction of AGOA in 2000, Asian investors increased their FDI in Lesotho’s 

textile and apparel industries, from $118 million in 2000 to $123 million in 2004. Most of the 

increase was due to investment in a denim mill, the first textile operation in Lesotho, by Nien 

Hsing Textile Co. (Taiwan). Nien Hsing invested in Lesotho to take advantage of opportunities to 

export to the United States under AGOA.364 The mill produces fabric and yarn for use in local 

apparel production, and also exports fabric to countries within SSA and outside the region.365

By 2005, Chinese investors had established textile and apparel subsidiaries in Ghana, Kenya, 

Lesotho, Madagascar, Malawi, Mauritius, Namibia, Nigeria, Tanzania, and South Africa. These 

companies are a source of exports to the United States and the EU, but Chinese companies 

reportedly also are making some longer-term investments in SSA. For example, in August 2012, 

China Garments announced plans to invest $40 million in Zimbabwe to form a joint venture 

with the Zimbabwe Cotton Company, to gain access to a steady cotton supply.366

While Asian investors are primarily interested in apparel assembly for export to the United 

States and the EU, South African investors in Lesotho and Swaziland tend to focus on exporting 

to South Africa. Their FDI is motivated by avoiding the higher labor costs and stronger labor 

unions in South Africa, so the AGOA program is less important for the future of those 

investments. Exports from neighboring countries to South Africa are duty free under the 

Southern African Customs Union agreement.367

Mauritius and Madagascar also have strong apparel industries that export principally to the EU 

and South Africa, and in Mauritius, 90 percent of the companies are locally owned, so AGOA is 

only a minor factor in apparel-related FDI to these countries. Mauritius-based firms, in 

particular, are increasing their focus on the South African market as European economic 

problems reduce the value of Mauritius’ apparel exports to that region. Madagascar lost its 

362 World Bank, Snapshot Africa—Kenya, January 2007, 9. 363 Industry representative, interview with USITC staff, Washington, DC, January 13, 2014. 364 The reason why they are in Lesotho, says its local CEO Lin Chin Yi, is because of the duty and quota free access 

to the US market under the African Growth and Opportunity Act.” Mills, “Lesotho’s Textile Industry Unravels,” 

September 4, 2011.

365 Lesotho Textile Exporters Association, “Lesotho Textile Industry,” (accessed January 14, 2014); Nien Hsing 

Textile Co. website, http://www.nhjeans.com/en/milestone.php (accessed January 14, 2014); Mills, “Lesotho 

Textile Industry Unravels,” September 4, 2011.

366 Wang, “China’s Textile and Clothing Firms,” December 18, 2012. 367 Godfrey, “Prospects for an African Clothing Industry?” June 25, 2013.

187

 
AGOA eligibility on January 1, 2010, and experienced a sharp drop in apparel exports to the 

United States, at the same time as its exports to South Africa increased.368

AGOA was an important factor in the revival of Kenya’s textile industry, with FDI rising from $16 

million in 1999 to $162 million in 2004; Kenya’s apparel exports rose from $44 million to $226 

million during the same period. As of 2006, there were about 35 textile mills in the country, and 

Kenya was exporting yarn, fabrics, and other textiles. The textile firms, mostly located in the 

export processing zone, are primarily owned by investors from India, Sri Lanka, and Bangladesh, 

with some local ownership.369 PVH, owner of the Calvin Klein and Tommy Hilfiger brands, 

recently opened a Nairobi buying office.370

There has been more than $300 million of FDI in Ethiopia’s textile industry in 2012 and 2013, 

much of it from Europe, Turkey, and India. Most of this FDI is focused on exports to Europe, so 

is not directly related to AGOA. Many Turkish spinning and weaving factories have relocated 

from Turkey to Ethiopia because of the low costs of energy and labor, and are exporting their 

production back to Europe. The Ethiopian government is also offering new financial incentives 

to investors.371

West Africa’s largest country, Nigeria, was once a major textile producer. The industry 

effectively collapsed after an influx of cheap textiles from China, combined with the failure of 

the Nigerian industry to modernize their equipment. However, the Nigerian government has 

earmarked close to $500 million to upgrade to new equipment and to sell off land and buildings 

at subsidized rates in an effort to revive the industry. According to one observer, a longer-term 

AGOA program would help to revive the West African textile and apparel industry by giving 

confidence to long-range investors. In addition, because West Africa is the closest part of Africa 

to the United States, U.S. investors reportedly would be willing to consider the region.372

Services 

The SSA telecommunications services industry has attracted significant investment from around 

the world. The industry recorded 104 acquisitions from 2000 through 2013, with a combined 

reported value of $11.9 billion (values are not reported for all transactions). By number of 

368 Godfrey, “Prospects for an African Clothing Industry?” June 25, 2013; Anganan, “Mauritius Exporters Switch 

Focus from EU,” April 29, 2013; Just-Style.com, “European Economic Woes Hit Mauritius Textile Sector,” December 

1, 2010.

369 World Bank, Snapshot Africa—Kenya, January 2007, 10, 15; Godfrey, “Prospects for an African Clothing 

Industry?” June 25, 2013.

370 Industry representative, interview by USITC staff, Washington, DC, January 13, 2014. 371 USITC, hearing transcript, January 14, 2014, 281–82 and 291–94 (testimony of Jaswinder Bedi, African Cotton 

and Textile Industries Federation, and Stephen Lamar, American Apparel & Footwear Association).

372 USITC, hearing transcript, January 14, 2014, 291–94 (testimony of Jaswinder Bedi, African Cotton and Textile 

Industries Federation, and Stephen Lamar, American Apparel & Footwear Association)

188

 
deals, South Africa is both the biggest investor and the biggest destination country in this 

industry. By value, the United Kingdom is the largest investor, at just under $5.0 billion, 

primarily in South Africa. The United Kingdom is followed by Kuwait, which invested $1.3 billion 

in Sudan, and the Netherlands, with $1.3 billion, invested primarily in Ghana.373

In addition to reported merger and acquisition (M&A) transactions, China-based ZTE and 

Huawei have been active in SSA as greenfield investors in telecommunications. ZTE has invested 

in nine projects in Angola, Rwanda, Nigeria, the Democratic Republic of the Congo, Zambia, 

Ethiopia, and Kenya, with four of the projects (in Ethiopia, Kenya, Zambia, and Angola) reported 

to be focused on telecommunications manufacturing, rather than services. Huawei has invested 

in 10 projects (all reported as services) in South Africa, Angola, Nigeria, Côte d’Ivoire, 

Zimbabwe, Ethiopia, and Kenya.374

As of 2006, South Africa and Mauritius had developed call-center outsourcing industries, made 

possible by improvements in telecommunications infrastructure. Other countries beginning to 

develop call center industries include Ghana, Kenya, and Senegal. In most cases, these countries 

import capital goods from Europe, including computers and telecommunications equipment. 

SSA call centers generally serve multinational companies based in developed countries, but the 

call center functions are usually outsourced to locally owned firms, so are not themselves 

identified as foreign investment.375

AGOA’s Impact on FDI Trends

With reduced investment risks, growing consumer markets, expanded business opportunities, 

and higher rates of return on investment, FDI in SSA has expanded rapidly since 2000.376

Although it is difficult to quantify AGOA’s direct and indirect effects on FDI trends over these 

years, AGOA’s trade benefits and eligibility criteria appear to have incentivized and motivated 

SSA countries, particularly AGOA beneficiary countries, to improve their business and 

investment climates. Rwanda, Sierra Leone, and Burundi, all long-time AGOA beneficiary 

countries, have experienced the most improvements in their business and investment climates 

since the advent of the program.

Several observers view AGOA as having a positive influence on FDI in SSA. South Africa’s 

ambassador to the United States stated that 

373 Bureau van Dijk, Zephyr M&A database. 374 Capital investment values for most projects were not reported. Financial Times, FDIMarkets database. 375 World Bank, “Snapshot Africa,” 2006, 75–84. 376 McKinsey Global Institute, Lions on the Move, June 2010, 1.

189

 
South Africa, based on the liquidity developed through AGOA, has been able to invest in 

infrastructure, and it was particularly through investments from the United States, for 

example, in our energy infrastructure that we have been able to make gains. General 

Electric has just built for us 143 locomotives. The hospitality industry has just bought 77 

hotels in South Africa alone . . . and those are the kind of strides that we make that show 

that it is a win-win situation we’re speaking about and no longer a unilateral gift to Africa. 

Our NDP, our National Development Plan, has poised us to graduate agriculture to a new 

level, and that is why U.S. companies like John Deere from exporting the odd implement has 

now set up a presence in South Africa from which to export its implements across the 

African continent.377

A number of reports have supported the notion that preferential access to the U.S. market 

under AGOA has been important for attracting investment to SSA. According to a report by the 

African Union, $1 billion in FDI from the United States to SSA was directly linked to AGOA, and 

overall FDI inflows to AGOA beneficiary countries increased by 77 percent from 1999–2000 (just 

before AGOA) to 2004–2005.378 A study by the United Nations Industrial Development 

Organization that looked into FDI determinants and location decisions in SSA found “taking 

advantage of AGOA” was a leading factor, followed by “taking advantage of EBA,” suggesting 

that foreign investors used SSA as an export platform to penetrate the U.S. and EU markets 

through preferential access.379 In another survey, about three-fourths of respondents viewed 

AGOA as “important” or “very important” to SSA investment and trade, and strong linkage 

between AGOA and increasing FDI inflows was reported in those countries where Asian 

investment in the textile and apparel sector has increased.380

Another report on AGOA, commissioned by the South African government, attributed South 

Africa’s growth in automotive exports to a combination of South African government policies to 

attract automotive investment, preferential market access to the United States and the EU, and 

a depreciation of the rand.381 A similar point was expressed at the USITC public hearing on 

AGOA, with an observer noting that the tariff elimination under AGOA boosted U.S. auto 

imports from South Africa, resulting in increased investment in South Africa’s automotive 

sector.382

377 USITC, hearing transcript, January 14, 2014, 39–40 (testimony of Ebrahim Rasool, ambassador of South Africa to 

the United States).

378 African Union, “A Decade of African-US Trade,” November 2012, 4. 379 UNIDO, “Foreign Direct Investment in Sub-Saharan Africa,” 2008. EBA refers to the EU’s Everything but Arms 

preferential trade package offered to certain developing countries in Africa and elsewhere. 380 Karingi, Páez, and Degefa, “Report on a Survey,” May 2011. 381 Engineering News, “AGOA a Boon,” September 27, 2013. 382 USITC, hearing transcript, January 14, 2014, 152 (testimony of Edward Gresser, Progressive Economy).

190

 
Anecdotal news reports confirm the linkage between AGOA and FDI, especially in the textile 

and apparel industry in SSA. CNN reported that the textile and apparel industry in Lesotho, one 

of the largest in SSA, was boosted in recent years by the influx of Asian investors who have 

taken advantage of the AGOA program.383 Business Daily Africa reported that in early 2012, 

facing uncertainty over the potential expiration of AGOA’s third-country fabric provision, the 

level of capital investment in Kenya’s textile and apparel industries shrank by 9.4 percent from 

its 2011 level.384 After Madagascar lost its AGOA eligibility on January 1, 2010, FDI inflows in 

2010 suffered a 24.2 percent decline, and its $600-million-a-year textile and apparel industries 

collapsed.385

Although the importance of AGOA to investment in SSA has been acknowledged, various 

studies and observers have also pointed out the limitations of the program. For example, most 

respondents to a survey of investors did not report a strong link between AGOA and increasing 

FDI inflows in industries outside of textiles and apparel.386 Another observer pointed out that 

South Africa’s allowing six major bilateral investment treaties (BITs) with other trading partners 

to lapse indicates a decline in the investment environment, and expressed the view that signing 

additional BITs with SSA partners would do more to improve that environment than does 

AGOA.387

According to some observers, the short-term authorizations of the AGOA program and the 

uncertainty of its future make it difficult for the gains to be sustained through long-term 

investment and the creation of new regional value chains.388 Witnesses at the USITC hearing in 

connection with this investigation noted that the uncertain status of the program appears to be 

driving some existing investors to exit from Africa.389 The short-term AGOA renewals may 

actually have been detrimental to FDI in the region, and witnesses called for a 15-year renewal 

of AGOA, to attract investment into sectors that are more capital-intensive than apparel 

manufacturing. According to one witness, an investor generally needs significant time to 

amortize an investment: “Typically, you’re looking at 10 to 15 years to recoup your investment 

383 CNN, “Lesotho Plans for Life without U.S. Trade Lifeline,” February 15, 2011. 384 Business Daily Africa, “Textile Firms Resume Investments,” May 23, 2013. 385 UNCTAD, FDI database (accessed on January 17, 2014); IRIN, “Madagascar: Textile Industry Unravels,” February 

24, 2010.

386 Karingi, Páez, and Degefa. “Report on a Survey,” May 2011. 387 USITC, hearing transcript, January 14, 2014, 153 (testimony of J. Daniel O'Flaherty, National Foreign Trade 

Council); USITC, Hearing transcript, January 14, 2014, 158 (testimony of Katrin Kuhlmann, Corporate Council on 

Africa).

388 Asmah et al., AGOA at 10, July 2010. 389 USITC, hearing transcript, January 14, 2014, 17 (testimony of Somduth Soborun, ambassador of Mauritius to the 

United States); USITC, hearing transcript, January 14, 2014, 233 (testimony of Jaswinder Bedi, African Cotton and 

Textile Industries Federation); USITC, hearing transcript, January 14, 2014, 269 (testimony of Paul Ryberg, African 

Coalition for Trade); CRS, U.S. Trade and Investment Relations, November 2012. 

191

 
in a major new manufacturing plant. If you don’t have the time horizon [under the AGOA 

program] to amortize your plan, why would you invest in Africa?”390

390 USITC, hearing transcript, January 14, 2014, 223–24 (testimony of Paul Ryberg, African Coalition for Trade).

192

 
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Chapter 6

Reciprocal Trade Agreements: A 

Comparison with Unilateral Trade 

Preference Programs

Introduction

Since the 1970s, exports from sub-Saharan Africa (SSA) have benefited from unilateral (oneway) trade preference programs that increase market access to developed economies through 

lower tariffs. South Africa has also signed reciprocal trade agreements with industrialized 

countries, but such agreements are rare in SSA. Reciprocal agreements, including free trade 

agreements (FTAs), are generally far more comprehensive in scope than unilateral trade 

preferences. Typically, FTAs reduce or eliminate tariffs on most trade in goods between the 

parties, establish rules of origin, and address such issues as customs procedures, sanitary and 

phytosanitary (SPS) measures, investment rules, and dispute settlement. Developing countries 

around the world have used reciprocal trade agreements to lock in prior reforms, increase 

exports and inward investment, and promote further integration with their trading partners. 

By contrast, some of the reciprocal trade agreements entered into by SSA countries primarily 

focus on tariff reductions and border issues (e.g., customs) and include only a cursory 

treatment of issues such as intellectual property rights, SPS measures, and technical barriers to 

trade (TBTs). In many agreements between SSA countries and developed countries, the timing 

of tariff concessions is asymmetrical. Tariffs on SSA exports are reduced or eliminated 

immediately, while tariff concessions by SSA countries have a long phase-in period. Although a 

few reciprocal trade agreements involve only a single SSA country (e.g., EU-South Africa, 

Turkey-Mauritius), many of the agreements are regional (e.g., European Free Trade Association 

(EFTA)-Southern African Customs Union (SACU)). This is particularly true for the economic 

partnership agreements (EPAs) that the EU has been negotiating with certain African regional 

blocs.391

This chapter begins with a comparison of unilateral trade preference programs (e.g., AGOA and 

GSP) and reciprocal trade agreements (e.g., FTAs). The next section presents case studies of 

developing countries that have transitioned from unilateral trade preference programs to 

391 For more information on EPAs, see the section on EU EPAs later in this chapter.

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reciprocal trade agreements. They include Mexico and the North American Free Trade 

Agreement (NAFTA), Chile and its bilateral U.S. and EU FTAs, and Morocco and the U.S.-

Morocco FTA.392

The final section of the chapter provides information on the reciprocal trade agreements that 

have been entered into by SSA countries, including the parties involved, timing, and, where 

known, the tariff advantage conferred relative to SSA imports of U.S. products. The chapter 

concludes with a discussion of negotiations on EPAs between the EU and various SSA countries 

and regions. Some SSA countries have not yet concluded negotiations on an EPA but continue 

to benefit from unilateral preferences. 

Unilateral Trade Preference Programs versus 

Reciprocal Trade Agreements

Overview 

Since the late 1960s and 1970s, developed countries such as Australia (in 1966), member states 

of the EU (1971), Japan (1971), Canada (1974), and the United States (1976) have provided a 

system of unilateral trade preferences in the form of reduced duties or duty free entry to goods 

from low-income countries as a way to encourage economic development and political stability. 

Such programs generally follow the rationale adopted by the United Nations Conference on 

392 Other developing countries that had unilateral trade preferences but now have FTAs with the United States, 

such as Colombia, Peru, and CAFTA countries (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, 

and Nicaragua) were also potential case studies for this chapter. However, because of the recent nature of these 

FTAs, there is little information on the effects of these countries’ transitions from unilateral preferences to 

reciprocal trade agreements in the economic literature. Despite recent strong growth in income and reduced 

poverty rates, Chile is still classified as a developing country by the United Nations Conference on Trade and 

Development. UN, World Economic Situation and Prospects 2014, 2014, 146.

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Trade and Development (UNCTAD) in 1968.

393 The U.S. GSP program was authorized by the 

Trade Act of 1974 and made effective January 1, 1976.394

The United States, EU, and Japan receive over two-thirds of the value of imports covered under 

all national GSP programs.395 However, in recent years, several rapidly growing economies, 

including China, Korea, Russia, Taiwan, and Turkey, have established their own GSP programs. 

The United States has also established several regional unilateral trade preference programs 

including AGOA, the Andean Trade Preference Act (ATPA), and the Caribbean Basin Economic 

Recovery Act (CBERA).

Overtime, certain developed countries have changed their relationships with trading partners 

by replacing unilateral trade programs with reciprocal trade agreements, such as FTAs. A key 

difference between the two is that a reciprocal trade agreement, as the term implies, involves a 

negotiated agreement between parties where each incurs benefits and obligations generally for 

an indefinite period of time. The following section highlights some of the other practical 

differences between unilateral trade preference programs and reciprocal trade agreements, 

which are summarized in table 6.1. The second half of this section examines, in a case study 

format, selected examples of trading partners that transitioned from unilateral trade 

preferences to reciprocal trade agreements. 

393 The UNCTAD website provides the following explanation of the rationale for GSP programs:

As stated in Resolution 21 (ii) taken at the UNCTAD II Conference in New Delhi in 1968,

“... the objectives of the generalized, non-reciprocal, non-discriminatory system of preferences in favour 

of the developing countries, including special measures in favour of the least advanced among the 

developing countries, should be:

(a) to increase their export earnings;

(b) to promote their industrialization; and 

(c) to accelerate their rates of economic growth.”

Under GSP schemes of preference-giving counties, selected products originating in developing countries are 

granted reduced or zero tariff rates over the MFN rates. The least developed countries receive special and 

preferential treatment for a wider coverage of products and deeper tariff cuts. UNCTAD website, 

http://unctad.org/en/Pages/DITC/GSP/About-GSP.aspx (accessed March 16, 2014).

These programs also conform to the waiver initially granted by the GATT (the organization overseeing the 

General Agreement on Tariffs and Trade and precursor to the WTO) for a 10-year period in 1971 and made 

permanent in 1979. As explained on the WTO website, the 1979 “Enabling Clause” is “the WTO legal basis for 

the Generalized System of Preferences (GSP). Under the Generalized System of Preferences, developed 

countries offer non-reciprocal preferential treatment (such as zero or low duties on imports) to products 

originating in developing countries. Preference-giving countries unilaterally determine which countries and 

which products are included in their schemes.” WTO website, 

http://wto.org/english/tratop_e/devel/e/d2legl_e.htm (accessed March 16, 2014). 394 A list of GSP-type programs is maintained by the World Trade Organization http://ptadb.wto.org/ptaList.aspx

(accessed November 15, 2013).

395 Herz and Wagner, “The Dark Side,” 2011, 25.

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Table 6.1 Principal differences between unilateral trade preference programs and reciprocal trade 

agreements 

Unilateral trade preferences Reciprocal trade agreements

Nature and level of 

benefits

Benefits are extended by one country to another 

country or group of countries without receiving a 

similar level of benefits in return. 

The benefits extended are those in an 

agreement negotiated between two or 

more countries, with each country 

receiving a similar level of benefits.

Framework Unilateral preferences of the GSP type generally 

follow the approach adopted by UNCTAD in 1968 

and endorsed by GATT and the WTO, which is to 

help developing countries gain easier access to 

developed country markets through tariff 

preferences.

Reciprocal trade agreements generally 

address trade issues identified by the 

participating countries which they find to 

be in their best interests. Agreements must 

be notified to the WTO.

Countries involved Benefits are extended by individual developed 

countries generally to a broad range of developing 

countries in accordance with criteria established 

by the developed country. 

Agreements generally involve two or more 

countries with mutual economic or political 

interests, which may reflect historical trade 

relationships, integrated industries, 

complementary economies, common 

borders, or other considerations.

Trade benefits involved Benefits are principally in the form of tariff 

preferences such as duty-free treatment or 

reduced duties for eligible goods from beneficiary 

countries. 

Benefits generally include the reduction or 

elimination of duties but also may include 

the reduction or elimination of nontariff 

barriers that affect trade in goods and 

services, intellectual property protection, 

simplified customs procedures, and so 

forth. Benefits may take effect when the 

agreement enters into force or over a 

multi-year transitional period.

Duration, modification, 

termination

Generally the developed country providing the 

benefit will specify the duration of the benefit and 

reserve for itself the right, at any time, to modify 

or terminate a benefit, including with respect to a 

country or product eligible for benefits. Benefits 

are often provided for a period of 5 years or less, 

and either terminate at that time or are extended 

at the discretion of the developed country.

Generally the parties to the agreement will 

negotiate the term of the agreement, 

including rights and obligations regarding 

modification and termination; in practice, 

most reciprocal agreements remain in 

effect for an indefinite period of time.

Source: USITC staff.

Scope 

In practice, the scope of reciprocal trade agreements is generally broader than unilateral trade 

preference programs. Reciprocal trade agreements typically address not only tariff reductions 

but also nontariff measures and other conditions relating to trade in goods and services such as 

quotas, customs procedures, and administrative policies. Although reciprocal trade agreements 

can vary in scope, the NAFTA, for example, shows a list of 22 chapters dealing with topics 

ranging from government procurement to agriculture and SPS measures, investment, and 

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dispute settlement, and side agreements on labor and the environment.396 By contrast, 

unilateral trade preference programs generally have been limited to tariff preferences (and 

sometimes more liberal access under TRQs), even when the political objectives of the 

preference programs are ambitious. For example, AGOA is designed to promote trade between 

the United States and SSA countries, but it also aims to encourage investment and economic

development in the SSA region.397

Temporary versus Permanent Nature 

Most programs providing unilateral trade preferences are temporary, and must be extended by 

the country providing the preferences in order to continue. They can be eliminated with little 

warning to recipient countries. Even unilateral trade preference programs designed to be more 

permanent in nature have sunset provisions. In the case of the U.S. Caribbean Basin Initiative 

(CBI), for example, the expansion of CBI benefits under the U.S.-Caribbean Basin Trade 

Partnership Act (CBTPA) expires in 2020.398 Uncertainty about renewal can lead to 

underinvestment in benefiting industries, or to overcapacity if preferences are removed for 

long periods. By contrast, reciprocal trade agreements establish more permanent trading rules 

that are gradually codified into the laws of the member countries. Consequently the trading 

relationships between economic actors are also more permanent.

Product and Country Eligibility 

Eligibility for unilateral trade preference programs is typically subject to some form of regular 

review, and recipient countries can lose their trade preferences either in full or for specific 

products. By contrast, product and country eligibility rules are generally reassessed only as 

agreed to by the parties to the reciprocal trade agreement. 

Product Eligibility

Under unilateral trade preference programs, the developed country offering the program has 

the right to designate the products eligible for preferential treatment as well as to modify or 

withdraw that treatment for specific products. For example, under the U.S. GSP program 

legislation, the President can remove a product from GSP eligibility, such as in response to 

396 As the term implies, reciprocal agreements are the product of negotiations between two or more parties, and in 

practice, the types of concessions vary significantly among agreements. Modern reciprocal agreements reflect in 

many ways the evolution of multilateral agreements, negotiated under the GATT and WTO, increasingly addressing 

nontariff issues, particularly in light of the decline in tariff rates. NAFTA agreement, https://www.nafta-secalena.org/Default.aspx?tabid=97&language=en-US (accessed December 18, 2013). 397 The Trade and Development Act of 2000, sec. 102 (Pub. L. 106-200); Chutha and Kimenyi, “The Africa Growth 

and Opportunity Act,” May 2011, 4.

398 USTR, “Caribbean Basin Initiative.”

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petitions submitted by interested parties in an annual review, or when imports of a product 

from a beneficiary country exceed the so called competitive need limit, which happens when 

U.S. imports of the product exceed a dollar or import share threshold.399 For example, Chile was 

restricted in 2002 from exporting additional volumes of methanol to the United States under 

GSP because methanol imports exceeded the competitive need limit. However, after Chile 

entered into a free trade agreement with the United States in 2003, methanol from Chile was 

allowed to enter the United States duty free.400 

A similar feature was recently added to the EU’s GSP program. Starting in January 2014, the 

EU’s GSP program suspends tariff preferences for a product when the average value of EU 

imports of that product from the beneficiary country exceeds 17.5 percent of the total value of 

EU imports of that product from all GSP beneficiaries for three consecutive years (14.5 percent 

in the case of textiles and clothing).401

Country Eligibility

GSP beneficiary countries can also be subject to full graduation from the program, if a review 

determines that they have made sufficient strides to become a competitive and developed 

economy.402 For example, Switzerland withdrew its GSP benefits in March 1998 for The 

Bahamas, Bermuda, Brunei Darussalam (Brunei), the Cayman Islands, Cyprus, the Falkland 

Islands, Hong Kong, Kuwait, Mexico, Qatar, the Republic of Korea (Korea), Singapore, and the 

United Arab Emirates. Similarly, the United States graduated Hong Kong, Korea, Singapore, and 

Taiwan from its GSP program in 1989.403 

Unilateral trade preference programs often include noneconomic eligibility criteria, such as the 

degree to which the beneficiary country meets international standards of human rights, 

intellectual property rights, or labor standards. Programs often provide for periodic reviews of 

beneficiary country compliance. For example, in 1988, Chile was removed from the U.S. GSP 

program because U.S. officials determined that Chile’s labor practices did not meet 

internationally recognized standards.404 In June 2013, President Obama removed Bangladesh 

from the list of countries eligible for preferential tariffs under the U.S. GSP program because he 

399 See 19 U.S.C. § 2463(c)(2)(A); see also USTR, U.S. Generalized System of Preferences Guidebook, July 2013, 8, 12. 400 USITC, U.S.-Chile Free Trade Agreement, June 2003, xvii. 401 Regulation (EU) No 978/2012 of the European Parliament and of the Council, October 25, 2012. 402 Onguglo, “Developing Countries and Unilateral Trade Preferences,” 1999, 3. 403 Ibid. 404 See, e.g., “Chile Protests Its Exclusion From U.S. GSP Scheme,” February 4, 1988, 

http://www.sunsonline.org/trade/process/during/uruguay/gsp/02040288.htm (accessed February 13, 2014). U.S. 

legislation authorizing the U.S. GSP program prohibits the President from designating a country as a beneficiary 

developing country if the country “has not taken or is not taking steps to afford internationally recognized worker 

rights to workers in the country.” 19 U.S.C. 2462(b)(2)(G).

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determined that Bangladesh had not shown sufficient progress on workers’ rights and safety.405

By contrast, although the United States may require partners to meet certain basic criteria 

before negotiating an FTA, such requirements are not generally reviewed on an annual basis.406 

U.S. AGOA legislation requires the President to determine initially and then annually whether 

SSA countries meet eligibility requirements that range from progress toward a market-based 

economy and the rule of law, to poverty reduction, the elimination of barriers to U.S. trade and 

investment, the protection of internationally recognized worker rights, and efforts to combat 

corruption.407 In some cases, these requirements can be difficult for beneficiary countries to 

meet.408 By contrast, while reciprocal trade agreements generally allow a party to withdraw or 

terminate an agreement, in practice this rarely happens.

Modest Benefits of Unilateral Trade Preferences 

Although the economic literature often finds robust effects of FTAs on developing-country 

partners, it also finds that in many cases, unilateral trade preferences provide only modest 

benefits to recipient countries. For example, the literature is mixed on AGOA’s effectiveness in 

promoting trade because the program maintains volume restrictions for sensitive U.S. sectors 

such as sugar.409 Economic research also addresses short- and long-run effects, concluding that 

while unilateral trade preferences promote exports from low-income countries in the short 

term, they may actually decrease exports in the long run because of the ongoing effects of 

program-induced distortions in the beneficiary countries. These distortions are largely 

administrative costs associated with technical compliance with the trade preference rules.410 

In addition, because of the narrow focus of unilateral trade preference programs, NTMs are not 

covered. NTMs, however, can serve as substantial trade barriers. Gravity modeling of the EU’s 

Everything But Arms (EBA) program—the EU GSP program for least-developed countries—

highlights the negative impact of NTMs such as transaction costs associated with rules of 

origin.411 These NTMs offset the tariff benefits of unilateral trade preferences, particularly for 

the poorest beneficiary countries with few products to export. An example is Lesotho, which 

405 USTR, “U.S. Trade Representative Michael Froman Comments,” June 2013. 406 For example, the United States delayed implementation of its FTA with Colombia until Colombia’s labor 

practices improved.

407 See 19 U.S.C. § 2466a(a) and eligibility requirements in 19 U.S.C. § 3703. For more information, see chapter 1. 408 Onguglo, “Developing Countries and Unilateral Trade Preferences,” 1999, 2–3. 409 A comprehensive review of the literature examining AGOA’s performance is presented in chapter 7. Zappile, 

“Nonreciprocal Trade Agreements and Trade,” February 2011, 61–62; Mevel et al. The African Growth and 

Opportunity Act, July 2013, vi. 410 Herz and Wagner, “The Dark Side,” 2011, 763. 411 Aiello and Cardamone, “Analysing the Impact of Everything But Arms Initiative,” 2011, 149. For more 

information about gravity modeling, see the chapter 7 section on the role of AGOA in increasing and diversifying 

exports.

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receives duty-free access under the EBA, yet exports almost nothing to the EU. Research 

suggests that NTMs, such as restrictive rules of origin and complex administrative 

arrangements, constrain the growth of Lesotho’s exports.412 Lesotho’s capacity to produce 

tradable goods is likely limited by other factors as well, including a low-skilled work force, poor 

customs administration, high energy costs, poor physical infrastructure, limited government 

capacity for reform, and a lack of access to capital for small and medium-sized businesses.413

None of these factors are directly addressed by tariff preferences in unilateral trade preference 

programs.

Finally, because unilateral trade preference programs rely on tariff preferences alone, the 

advantages these programs grant to recipient countries can dwindle over time. Dozens of 

bilateral, regional, and multilateral trade agreements have been signed over the last 20 years, 

lowering tariffs between trading partners and reducing the tariff advantages beneficiary 

countries receive under programs such as GSP, AGOA, and CBERA. In addition, successive 

rounds of multilateral trade negotiations at the WTO have consistently lowered tariffs on all 

products to most-favored nation (MFN) countries.414 This reduction in the margin of tariff 

preferences is commonly known as “preference erosion” or “tariff erosion.”

Economic research indicates that tariff erosion is particularly a problem for low-income African, 

Caribbean, and Pacific (ACP) countries, exacerbated because these countries tend to specialize 

in only a few products for export (e.g., textiles and apparel or certain agricultural goods). The 

ACP countries normally have a very low capacity to expand their exports to other products due 

to limited and inefficient capital markets, obstacles to labor mobility, and the absence of safety 

nets and training for displaced workers.415 The WTO reports that Norway’s GSP program, which 

benefits least-developed countries and 14 other developing countries, is well utilized, but has 

not produced any major increase in exports from those countries since 2008.416 The stagnation 

is largely attributed to Norway signing reciprocal trade agreements with other trading partners, 

thereby eroding tariff preferences under its own GSP program.417 

The case of Norway is more the rule than the exception. Recipient countries under most 

unilateral trade preference programs are adversely affected by tariff erosion. EU imports of 

beef from ACP countries, particularly Botswana, have declined since 2010. This decline is likely 

related to increased access to the EU market for beef from the EU’s other trading partners. In 

2009, to settle trade disputes with the United States over hormone-treated beef, the EU 

412 Meyn, “The EU-South Africa FTA,” January 22–23, 2004, 9. 413 African Development Bank Group, Kingdom of Lesotho: Country Strategy Paper, 2013-2017, February 2013, 6. 414 Reynolds, “The Erosion of Tariff Preferences,” July 18, 2005, 2. 415 Bouët et al., “Is Erosion of Tariff Preferences,” September 2005, 6. 416 Keck and Lendle, “New Evidence on Preference Utilization,” September 3, 2012, 2. 417 WTO, Trade Policy Review Body, Norway: Trade Policy Review, August 21, 2012, vii.

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opened a tariff-rate quota for high-quality beef totaling 20,000 metric tons (mt).418 Total dutyfree quantities under the quota, now open to Argentina, Australia, Brazil, Canada, New Zealand, 

Paraguay, the United States, and Uruguay, increased to 48,200 mt in January 2012.419 Beef from 

developed nations now receives duty-free status along with ACP countries. As a result, 

Botswana’s beef exports to the EU have no tariff advantage to help them compete against highquality, lower-cost beef in the EU market.420 

Locking in Policy Reforms with Reciprocal Trade 

Agreements 

Citing the weak benefits to recipient countries associated with trade preference programs, 

some economists recommend that beneficiary countries negotiate reciprocal trade agreements 

instead, because many reciprocal trade agreements encourage economic restructuring that 

ultimately causes resources to be used more efficiently within beneficiary countries. For 

example, recent empirical research comparing the two approaches concludes that reciprocal 

trade agreements are preferable, because they “lock in” needed domestic reforms and enhance 

a government’s ability to commit to policies that may be unpopular with powerful domestic 

interests.421 

The next section will review an example of one such commitment to lock in reforms— Mexico’s 

membership in NAFTA. Other case studies follow, providing examples of transition from 

unilateral trade preferences to reciprocal trade agreements. Although direct economic effects 

are often difficult to quantify, each of the case studies shows that reciprocal trade agreements 

have largely resulted in increased trade and diversification of trade between the parties.

Case Study 1: The United States and Mexico

Mexico was a beneficiary country of the U.S. GSP program starting in 1976, the first year of the 

program. According to trade analysis, Mexico was the second-largest beneficiary of the U.S. GSP 

program in its early years because it exported many products to the United States that were 

418 Van Engelen et al., Botswana Agrifood Value Chain Project, 2013, 29. 419 Ibid. 420 Beef exports from Botswana suffer from several problems in the EU market. In addition to stiff competition 

amplified by tariff erosion, exports declined substantially from February 2011 to May 2012, when EU inspections 

identified problems with Botswana’s animal identification (traceability) system and EU standards of abattoir 

hygiene. Bungu, “Botswana Beef Exports Slump 89%,” April 28, 2011; Republic of Botswana, “Botswana Re-enters 

EU Market,” May 7, 2012; Van Engelen et al., Botswana Agrifood Value Chain Project, 2013 28, 30. 421 Conconi and Perroni, Reciprocal versus Unilateral Trade Preferences for Developing Countries, September 2009, 

3.

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subject to MFN tariff rates of more than zero.422 Mexico benefited despite the fact that its 

exports were heavily impacted by competitive need limitations and discretionary removal from 

the program by U.S. policymakers.423 

Since the U.S. GSP program was created, per capita gross domestic product in Mexico grew 

annually (in real terms) by 1.2 percent on average from 1976-2012.424 But the average growth 

rate has increased slightly over the last twenty years, rising from 1.0 percent between 1976–

1993 to 1.4 percent from 1993–2012. Many factors have played a role in Mexico’s 

development, including increased development of natural resources, government and 

educational reforms, and proximity to the large U.S. economy. However, a significant factor was 

Mexico’s inclusion in NAFTA with Canada and the United States, beginning in 1994. NAFTA 

spurred a significant increase in trade among the partner countries.425 Between 1994 and 2012, 

Mexico’s exports to the United States increased from $50 billion to $278 billion, and its trade 

balance with the United States shifted from a $1.3 billion deficit to a $61.7 billion surplus.426 

Mexico diversified its trade within the region following NAFTA’s implementation, with Mexican 

exports shifting toward manufactured goods. The country also increased vertical specialization 

and intra-firm trade among the NAFTA partners. While many factors contributed to the trend, 

NAFTA membership boosted foreign investment flows to Mexico and significantly improved 

productivity in that country.427 Average annual foreign direct investment (FDI) inflows into 

Mexico over the five-year period after NAFTA was implemented (1994–98) were $11.0 billion, 

compared to an annual average of $3.9 billion during the five years prior to NAFTA (1989–

93).428 

One difficulty in quantifying the economic impact of NAFTA on Mexico is that the Mexican 

government began the process of liberalizing its trade and investment policies before NAFTA 

negotiations began. Mexico joined GATT in 1986, capping its maximum tariffs at 50 percent.429

Then in the mid-1980s Mexico began phasing out import license requirements for nearly all 

imports, so that when NAFTA negotiations started, import licenses were only required on 230 

of the 12,000 separate goods in the Mexican tariff schedule.430 In addition, other economic 

shocks affected Mexico at the same time that NAFTA was finalized, including a severe financial 

422 Using that metric, Taiwan was the largest beneficiary. Sapir and Lundberg, “The U.S. Generalized System of 

Preferences,” 1984, 205.

423 Sapir and Lundberg, “The U.S. Generalized System of Preferences,” 1984, 207, 223. 424 Annual growth rates calculated by USITC staff from OECD, StatExtracts data series “GDP, US$, constant prices, 

constant PPPs, reference year 2005, millions.” (accessed March 10, 2014).

425 Kose et al., “How Has NAFTA Affected the Mexican Economy?” April 2004, 4-5. 426 Data are for U.S. imports and exports. GTIS, Global Trade Atlas database (accessed January 2, 2014). 427 Kose et al., “How Has NAFTA Affected the Mexican Economy?” April 2004, 5. 428 UNCTAD, UNCTADStat database (accessed February 13, 2014). 429 Villarreal and Fergusson, “NAFTA at 20,” February 21, 2013, 4. 430 Villarreal and Fergusson, “NAFTA at 20,” February 21, 2013, 29.

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crisis in 1994 (which resulted in a devaluation of the Mexican peso), other free trade 

arrangements NAFTA partners signed in the 1980s and 1990s, and a global economic recovery 

in the latter half of the 1990s. Even taking these major developments into account, NAFTA still 

played an important role in increasing regional trade and financial flows.431 

In hindsight, Mexico’s negotiation of NAFTA can be viewed as a means of anchoring prior policy 

commitments by the Mexican government. After Mexico’s GATT accession, its revisions to laws 

governing FDI in 1993,432 its debt restructuring in the 1989 Brady Plan, and its industry 

privatization between 1989 and 1992, the Mexican government finally created a policy 

environment in which gradual reductions in tariffs and NTMs with the United States and 

Canada could provide efficiency gains through the reallocation of domestic resources.433 In the 

end, the FTA with its North American neighbors ensured that Mexico’s policy decisions could 

not be easily undone.

For Mexico, NAFTA underpinned the government’s efforts to press ahead with structural 

reforms in the economy. In turn, these reforms allowed Mexican businesses to respond more 

quickly and forcefully to competitive pressures from overseas, such as competition from Asian 

and Latin American companies, to provide goods and services in global markets. Mexico’s 

experience in NAFTA demonstrates that developing countries can use reciprocal trade 

agreements as a stimulus to enact economic reforms that may be necessary to compete 

globally.434 These reforms have many impacts, but one of the most important is to offer 

investors the economic stability needed to support increased FDI.435 

Case Study 2: The United States and Chile

Like Mexico, Chile was a beneficiary country of the U.S. GSP program beginning with the 

program’s inception in 1976. From the outset, Chile benefited significantly from the program 

because nearly all of Chile’s exports to the United States under GSP would otherwise have been 

subject to non-zero MFN rates; in 1979, for instance, this affected $233 million out of 

$251 million in Chilean exports to the United States.436 But Chile’s preference margins—the 

difference between the preferential U.S. tariffs Chilean products faced and those faced by 

Chile’s competitors outside of the GSP program—were among the lowest for countries 

receiving U.S. GSP treatment, thereby limiting Chile’s trade advantage under GSP.437 

431 Kose et al., “How Has NAFTA Affected the Mexican Economy?” April 2004, 4. 432 Galan and Oladipo, “Have Liberalization and NAFTA,” May 2009, 161. 433 Ferrantino, “Policy Anchors,” April 2006, 10–11. 434 Kose et al., “How Has NAFTA Affected the Mexican Economy?” April 2004, 5. 435 Galan and Oladipo, “Have Liberalization and NAFTA,” May 2009, 177–78. 436 Sapir and Lundberg, “The U.S. Generalized System of Preferences,” 1984, 206. 437 Ibid., 207.

209

 
Chile’s economic development has slowed somewhat from the rapid growth rates of the 1980s 

and early 1990s, but rates of growth continue to be solid. Per capita GDP grew 5.8 percent 

annually (in real terms) between 1986 (the first year of Chile’s OECD data) and 1994. From 1994 

to 2003, real per capita GDP grew 3.4 percent annually, rising slightly to 3.7 percent from 2003 

to 2012.438 Many factors played a role in Chile’s economic growth over the entire period, 

including government reforms to labor markets, pension markets, worker training, and 

educational systems, as well as longstanding mining and agricultural endowments.439 

Yet another factor in the pace and timing of Chile’s economic development was the 

government’s policy of signing reciprocal trade agreements with its trading partners. Chile’s 

2004 FTA with the United States had many benefits, including lowered tariffs, codified rules for 

FDI, new protections for investors, and forums to address certain NTMs.440 Between 2003 and 

2012, Chile’s exports to the United States more than doubled, growing from $3.7 billion to 

$9.4 billion, primarily consisting of copper, fruit, fish, and wood products.441 Average annual FDI 

inflows into Chile over the five years after the U.S.-Chile FTA was implemented (2004–08) were 

$10.0 billion, compared to an annual average of $4.9 billion during the five years prior (1999–

2003).442 

Despite signing a number of reciprocal trade agreements over the past decade and expanding 

the value of total exports, Chile has not diversified its export portfolio. In fact, according to data 

from Chile’s industrial association, SOFOFA, the number of products Chile exports has fallen 

steadily from 5,302 in 2005 to 4,938 in 2010.443 Indeed, in 2013, copper still accounted for a 

large share–approximately 32 percent–of Chilean exports, in value terms.444 The Chilean 

government anticipated that Chile’s manufacturing exports would increase under its free trade 

agenda. But an increase in exports has yet to materialize because manufacturers still face 

technical barriers to trade related to quality standards. SOFOFA is now working closely with the 

Chilean government and the National Standardization Institute to develop norms and standards 

for a wide range of sectors to help them enter markets in Europe, North America, and Asia.445 

438 Annual growth rates calculated by USITC staff from OECD, StatExtracts data series “GDP, US$, constant prices, 

constant PPPs, reference year 2005, millions.” (accessed March 10, 2014).

439 OECD, OECD Economic Surveys: Chile 2013, October 4, 2013, 32–33, 37. 440 USTR, U.S.-Chile FTA: Final Text. 441 Data are for U.S. imports. GTIS, Global Trade Atlas database (accessed January 7, 2014). 442 UNCTAD, UNCTADStat database (accessed February 13, 2014). 443 Azzopardi, “Diversifying Chile’s Exports,” February 1, 2012, 1. 444 Over the last eight years (2005-2013), this percentage has increased about one point, as copper prices 

increased the value of copper relative to the value of other Chilean exports. GTIS, Global Trade Atlas (accessed 

March 11, 2014).

445 Azzopardi, “Diversifying Chile’s Exports,” February 1, 2012, 1.

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For Chile’s agricultural sector, however, reciprocal trade agreements have allowed exporters to 

make inroads into closed markets.446 Under the U.S.-Chile FTA, Chile and the United States have 

worked to develop a system of equivalence to replace the quarantine treatment for fruit 

currently in place.447 Several Chilean fruit exporters reported that the FTA with the United 

States—a country with stringent SPS risk analysis procedures—accelerated the authorization of 

their products to enter the U.S. market.448 

An OECD report on Chilean fruit exports concludes that reciprocal trade agreements like the 

U.S.-Chile FTA can also stimulate trade in new products. Econometric analysis conducted by the 

OECD in 2013 indicated that the mere presence of an FTA, even without a preferential margin, 

increases the probability of exporting at least one new product by approximately 2 percent 

relative to other countries. The development of new commercial contacts between the trading 

partners may explain why this occurs.449 A majority of Chilean fruit exporters interviewed for 

the OECD study (53 percent) agreed that FTAs, such as the U.S.-Chile FTA, have the capacity to 

promote trade in new products, although other factors such as consumer demand play a 

role.450 Moreover, 62 percent of the exporters noted that FTAs stimulate innovations in 

processes or outputs, particularly in improving logistical connections between the trading 

partners.451 

Case Study 3: EU and Chile

In addition to the U.S.-Chile FTA, the Chilean government has embarked on several other 

reciprocal trade agreements. The EU-Chile Association Agreement (“Agreement”) entered into 

force on February 1, 2003.452 A study funded by the EU Commission performed a product-level 

analysis that compared the trade benefits of the Agreement to Chile’s benefits under the EU 

GSP program before 2003. Using 2009 data, the study concluded that EU imports from Chile 

would have been €500 million ($700 million) lower per year if Chile’s goods had been subject to 

the EU’s GSP program rather than the Agreement. The difference is equal to 15 percent of the 

value of trade under the Agreement.453 The impact of the Agreement on EU imports, relative to 

the GSP program, is largest for wine, at €206 million ($288 million) or 36 percent of actual wine 

446 Ibid. 447 Fulponi and Engler, “The Impact of Regional Trade Agreements,” August 12, 2013, 18. 448 Ibid., 29. 449 Ibid., 23-24. 450 Ibid., 27. 451 Ibid. 452 WTO, Trade Policy Review Body, Chile: Trade Policy Review, WT/TPR/S/124, December 4, 2003, 25. 453 Jean, “Assessing the Impact of the EU-Chile FTA,” April 30, 2012, 16-17.

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imports; fruits, at €151 million ($211 million) or 15 percent of actual fruit imports; and fish, at 

€55 million ($77 million) or 15 percent of actual fish imports.454 

Economic research by the OECD on Chile’s fruit trade, using both econometrics and a survey of 

exporters, concluded that Chile’s agreement with the EU positively impacted Chile’s exports of 

those goods.455 While the econometric analysis focused only on the impacts of tariff reductions, 

the study also noted that the ability to comply with SPS measures appears equally important to 

Chilean exporters in boosting fruit exports to FTA trading partners. The SPS chapters of Chile’s 

FTAs effectively determine whether an agricultural product can be shipped to the trading 

partner. Although those chapters do not generally go beyond what is offered under the WTO’s 

SPS agreement, they often ensure closer contacts between regulatory agencies through the 

creation of technical committees and ad hoc committees that resolve procedural issues for 

specific products.456 

In Chile’s trade agreements with the EU, with Colombia, and with other members of the TransPacific Strategic Economic Partnership (P-4) Agreement (with Brunei, New Zealand, and 

Singapore), there is a commitment among the signatories to apply SPS equivalence beyond 

WTO requirements.457 The Chilean government is working to develop mechanisms that will 

gradually incorporate the SPS equivalence principle for a specific product or group of products. 

Chile is also working toward incorporating the principle of mutual recognition of SPS standards 

in its agreement with the EU.458 

Case Study 4: The United States and Morocco

Since the U.S.–Morocco free trade agreement (FTA) was signed in 2004, U.S. imports from 

Morocco have more than doubled, increasing from $385 million in 2003 to $932 million in 

2012.459 Much of the increase was in mined products such as fertilizers and chalk. Annual U.S. 

FDI in Morocco has also quadrupled over the same period, totaling $613 million in 2012.460 This 

investment is likely linked to trade and investment rules provided in the agreement for both 

signatories. In particular, the agreement requires that investor rights be backed up by an 

effective, impartial, and fully transparent procedure for dispute settlement. Submissions to 

454 Copper and ores were excluded from the analysis because the EU-Chile FTA was not expected to have an impact 

on these nondutiable products. Jean, “Assessing the Impact of the EU-Chile FTA,” April 30, 2012, 18. 455 Fulponi and Engler, “The Impact of Regional Trade Agreements,” August 12, 2013, 5-6. 456 Fulponi and Engler, “The Impact of Regional Trade Agreements,” August 12, 2013, 6-7. 457 Equivalence is defined as the acceptance of a partner’s SPS measure as equivalent to one’s own, even if 

different in many respects. Fulponi and Engler, “The Impact of Regional Trade Agreements,” August 12, 2013, 18.

458 Fulponi and Engler, “The Impact of Regional Trade Agreements,” August 12, 2013, 18. 459 GTIS, Global Trade Atlas database (accessed January 7, 2014). 460 Washington Trade Daily, “U.S.-Morocco Trade Facilitation,” November 22, 2013, 3–4.

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dispute panels and panel hearings will be open to the public, and interested parties will have 

the opportunity to submit their views.461 

In addition, Morocco recently became the first country in North Africa to conclude a bilateral 

trade facilitation agreement with the United States, building on the FTA. In November 2013, 

U.S. Trade Representative Michael Froman and Morocco’s Minister of Economy and Finance 

Mohamed Boussaid signed a trade facilitation agreement to modernize customs practices, 

including provisions covering Internet publication, transit, and transparency of penalties. 

Morocco is also the first North African country to endorse joint principles on investment and on 

trade in information and communications technology services.462 Such trade facilitation 

agreements between nations, as well as FDI linkages, can be enhanced with reciprocal trade 

agreements in effect; many reciprocal trade agreements establish rules for customs 

cooperation and trade facilitation among parties, and some even create committees to 

encourage more progress in this area.463 

Reciprocal Trade Agreements in Sub-Saharan 

African Countries 

Overview 

For several years, individual SSA countries and blocs of SSA countries have been actively 

involved in seeking reciprocal trade agreements with non-SSA country partners.464 The 

overarching purpose of these agreements is for economic growth through increased trade, 

investment, and integration into regional and global markets. These agreements deal primarily 

with trade in goods and rules of origin, although some address nontariff provisions involving 

such issues as SPS measures, TBTs, and intellectual property rights. However, other areas, such 

as customs procedures and investment, are rarely covered in these agreements. Many 

reciprocal trade agreements involving SSA countries are asymmetrical in nature, meaning that 

the trade concessions by African countries or regions are less extensive and/or take place much 

later than trade concessions offered by the partner countries or regions. A list of reciprocal 

trade agreements that SSA countries have completed or are in advanced stages of negotiating is 

provided in table 6.2. In addition, information on several potential agreements reportedly being 

negotiated by SSA countries is presented in table 6.3.

461 Amcham Morocco, Trade and Investment Guide 2007, 2007, 160. 462 Washington Trade Daily, “U.S.-Morocco Trade Facilitation,” November 22, 2013, 3–4. 463 Two EU agreements in particular which set up cooperative committees on trade facilitation are the EU-Mexico 

FTA and the EU-Chile FTA. Fasan, “Comparing EU Free Trade Agreements,” 2004. 464 WTO, Committee on Regional Trade Agreements, Factual Presentation: Free Trade Agreement, March 24, 2010, 

4.

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214

Table 6.2 Reciprocal trade agreements involving SSA countries (in force or provisional)

Agreement Participants Details of agreement Effective date Coverage

EU-South Africa Trade 

Development and 

Cooperation Agreement

EU, Republic of South Africa Primarily goods trade; some 

development

Trade-related articles provisionally 

applied 2000, fully entered into 

force 2004, liberalization 

completed 2012

Goods; limited treatment of TBTs and 

intellectual property rights; encourages 

investment and development

Free Trade Agreement 

between the European 

Free Trade Association 

(EFTA) States and the 

Southern African Customs 

Union (SACU) States

Iceland, Liechtenstein, Norway, 

Switzerland, Botswana, Lesotho, 

Namibia, South Africa, Swaziland

Combination of regional 

agreement and concessions 

between individual 

members

May 2008 Goods; limited treatment of SPS, TBTs, 

intellectual property rights; encourages 

cooperation on investment

Preferential Trade 

Agreement between the 

Common Market of the 

South (Mercosur) and the 

Southern African Customs 

Union (SACU)

Argentina, Brazil, Paraguay, Uruguay, 

Botswana, Lesotho, Namibia, South 

Africa, Swaziland

Reciprocal but less than a 

full FTA 

2009 Goods; limited treatment of TBTs and SPS

Free Trade Agreement 

between the Republic of 

Turkey and the Republic 

of Mauritius

Turkey, Mauritius Goods trade June 2013 Goods; limited treatment of SPS and TRIPS

EU Economic Partnership 

Agreements 

EU, Cameroon Provisionala Negotiated: provisional October 

2009 

Goods; limited treatment of investment, 

intellectual property rights, SPS, and TBTs

EU, Côte d’Ivoire Provisionala Negotiated: provisional 2009 Goods; limited treatment of SPS and TBTs

EU, Ghana Framework of an agreement Negotiated, not yet entered into 

force

Goods; limited treatment of SPS and TBTs

EU, East African Community (EAC) 

(Burundi, Kenya, Rwanda, Tanzania, and 

Uganda)

Framework of an agreement Negotiated, not yet entered into 

force

Goods

EU, Eastern and Southern African States 

(ESA) (Madagascar, Mauritius, 

Seychelles, and Zimbabwe) 

Provisionala Negotiated: provisional May 2012 Goods, calls for provisions on investment
215

Agreement Participants Details of agreement Effective date Coverage

EU, Southern African Development 

Community (SADC) (Botswana, Lesotho, 

Mozambique, Namibia, and Swaziland 

have participated in 

negotiations)

Provisionala Interim agreement signed June 

2009 by Botswana, Lesotho, 

Swaziland, Mozambiqueb

Goods; limited treatment of SPS and TBTs; 

pledge to negotiate on investment

Pan-Arab Free Trade Area 

(PAFTA)

Algeria, Bahrain, Egypt, Iraq, Jordan, 

Kuwait, Lebanon, Libya, Morocco, 

Oman, Qatar, Saudi Arabia, Sudan, 

Syria, Tunisia, United Arab Emirates, 

Yemen, Palestinian Authority

Goods; elimination of duties 1998; Least developed states to 

eliminate duties by 2010

Goods

Source: Compiled by USITC from the following texts:

“Agreement on Trade, Development and Cooperation between the European Community and Its Member States, of the One Part, and the Republic of South Africa, of the 

Other Part,” 1999

“Free Trade Agreement between the EFTA States and the SACU States,” 2006

“Preferential Trade Agreement between the Common Market of the South (Mercosur) and the Southern African Customs Union (SACU),” 2009

“Free Trade Agreement between the Republic of Turkey and the Republic of Mauritius,” http://www.mcci.org/trade_agreements_turkey.aspx (accessed January 28m 2014)

“Interim Agreement with a View to an Economic Partnership Agreement between the European Community and Its

Member States, of the One Part, and the Central Africa Party, of the Other Part,” 2009

“Stepping Stone Economic Partnership Agreement between Côte d'Ivoire, of the One Part, and the European Community and Its Member States, of the Other Part,” 2008

“Stepping Stone Economic Partnership Agreement between Ghana, of the One Part, and the European Community and Its Member States, of the Other Part,” 2007

“Agreement Establishing a Framework for an Economic Partnership Agreement between the European Community and Its Member States, on the One Part, and the East 

African Community Partner States on the Other Part,” 2007

“Interim Agreement Establishing a Framework for an Economic Partnership Agreement between the Eastern and Southern Africa States, on the One Part, and the European 

Community and Its Member States, on the Other Part,” 2009

“Interim Agreement with a view to an Economic Partnership Agreement between the European Community and Its Member States, of the One Part, and the SACU EPA States, 

of the Other Part,” 2009

“Agreement to Facilitate and Develop Trade among Arab States,” 1981. 

Notes: a Trade preferences of interim agreements are provisional on continued progress toward a comprehensive EPA. b Namibia participated in negotiations but 

did not sign the agreement.
Table 6.3 Potential agreements under negotiation by SSA countries

Agreement and partners Comments

Senegal, China Bilateral cooperation agreements signed in 2011.

Democratic Republic of the Congo, Turkey Negotiations begun

Cameroon, Turkey Negotiations begun

Ghana, Turkey Negotiations begun

Seychelles, Turkey Negotiations begun

Ethiopia, China “Agreement on Economic and Technical Cooperation Between the Government 

of the People's Republic of China and the Government of the Federal 

Democratic Republic of Ethiopia” signed June 2010

Ethiopia, Sudan Ethiopia-Sudan trade cooperation agreement

Kenya bilateral agreements Kenya reportedly has bilateral trade agreements with Argentina, Bangladesh, 

Bulgaria, China, Egypt, Hungary, India, Iraq, the Netherlands, Pakistan, Poland, 

Romania, Russia, Korea, and Thailand. Negotiations are underway with Belarus,

the Czech Republic, Iran, and Kazakhstan. These are not reciprocal

Tunisia, West African Economic and 

Monetary Union (WAEMU): customs union

Negotiations are underway

SACU, India, Brazil, South Africa Negotiations are underway

Sources: Republic of Turkey, Ministry of Economy, “Turkey’s Free Trade Agreements” (accessed January 9, 2014); Ministry of 

Foreign Affairs of the People’s Republic of China, “China and Ethiopia” (accessed January 8, 2014); Focus Africa, “Ethiopia” 

(accessed January 15, 2014); Export Promotion Council of Kenya, “Trade Agreements” (accessed January 8, 2014); 

AllAfrica.com, “Tunisia and WAEMU to Sign Free Trade Agreement” (accessed January 16, 2014); Bilaterals.org, “IBSA” 

(accessed February 6, 2014). 

Specific Agreements 

European Community-South Africa Trade Development and 

Cooperation Agreement (TDCA)

One of the most comprehensive trade agreements in Africa is the Trade, Development and 

Cooperation Agreement (TDCA) between the EU and the Republic of South Africa (RSA).465 The 

TDCA was signed in 1999. The trade-related articles became provisionally effective in 2000, and 

the TDCA was fully implemented in 2004. It covers trade in goods, although the parties also 

reaffirmed their commitments under the General Agreement on Trade in Services (GATS) and 

the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). The EU and 

South Africa agreed to improve on protection provided under these treaties where appropriate. 

Further, the parties agreed to cooperate in promoting and encouraging investment, not only in

South Africa but in the entire Southern African region. Lastly, the EU and South Africa 

encouraged trade in services and pledged to examine ways to harmonize SPS standards and 

465 Journal of the European Communities, Agreement on Trade, Development and Cooperation between the 

European Community and Its Member States, of the One Part, and the Republic of South Africa, of the Other Part,

Title 1, Article 1(c).

216
regulations. A detailed description of tariff commitments under the TDCA is included in 

Appendix H. 

A potential impact of the TDCA is to put the United States at a disadvantage vis-à-vis the EU in 

the South African market. However, any tariff disadvantage is likely small. Just over half of 

South Africa’s tariff lines have zero duties under normal trade relations (NTR), sometimes called 

most-favored nation (MFN) status. Many products with NTR tariffs of over 20 percent (including 

some vehicles and parts) did not receive duty free treatment under the TDCA. Also, according

to information provided by the government of South Africa, 75 percent of imports from the 

United States were duty-free in 2012, and a further 10 percent of imports had no tariff 

disadvantage relative to imports from the EU under the agreement.466Nonetheless, certain U.S. 

goods are disadvantaged against EU goods entering South Africa. In 2012, roughly 15 percent of 

South African imports from the United States faced NTR duties for which the EU received dutyfree treatment, as outlined in the tabulation below:

U.S. tariff disadvantage

vis-à-vis the EU (percent) Major products

Percent of South Africa’s imports 

from the United States

Tariff 5% or less Machinery parts, relays, iron and steel 1

Tariff >5% and <10% Peas, beans, fruits, and nuts 6

Tariff >10% and <15% Valves, control panels, tools, and machinery 

parts

4

Tariff >15% and <20% Bearings, electrical motors, generators, 

some automobiles

3

Tariff >20% plus non-ad valorem tariffs Prepared foods, appliances, spirits 1

Source: Government of South Africa, “Analysis of RSA Imports from the US,” January 22, 2014.

Free Trade Agreement between the European Free Trade 

Association (EFTA) States and the Southern African Customs 

Union (SACU) States

This agreement covers trade in goods between an individual EFTA state and an individual SACU 

state, and trade in goods between an individual EFTA state and the SACU as a whole.467

Preferential tariff reductions or eliminations by the EFTA states took place on May 1, 2008, 

when the agreement entered into force, and tariff concessions by the SACU states are to be 

fully implemented by January 1, 2015. Three separate agricultural arrangements were 

466 Information on tariff disadvantage of imports from the United States is derived from a submission from the 

government of South Africa to the USITC, “Analysis of RSA Imports from the US.” January 22, 2014. Trade flows 

may be affected by duties in place and may be substantially different in the absence of duties.

467 EFTA includes Iceland, Liechtenstein, Norway, and Switzerland. SACU includes Botswana, Lesotho, Namibia, 

South Africa, and Swaziland.

217

 
negotiated between the SACU states collectively with Iceland, Norway, and 

Switzerland/Liechtenstein.468 

Under the agreement, concessions offered by SACU states include duty reduction or 

elimination on most industrial products in the international Harmonized System (HS) chapters 

25–98, and certain processed agricultural products as specified in the agreement; and duty 

elimination on products of two HS 4-digit headings from Iceland, along with the immediate or 

progressive elimination of duties on agricultural products from Switzerland/Liechtenstein.469 

Meanwhile, concessions offered by EFTA states include immediate duty elimination on most 

industrial products (with the exception of goods in chapters 35 and 38 listed in Annex II); 

treatment no less favorable than that accorded to the EU for processed agricultural products; 

duty elimination by Iceland for many basic agricultural products; duty reduction or elimination 

by Norway on many basic agricultural products and a 500 metric ton tariff-rate quota (TRQ) for 

beef originating in Botswana or Namibia; and duty reduction or elimination by Switzerland and 

Liechtenstein for many basic agricultural products (many with seasonal restrictions or TRQs). 

The EFTA-SACU trade agreement provides for duty-free access into the SACU market for a large 

number of products that the United States currently exports to SACU countries and that 

account for a substantial share of U.S. exports to the region. This duty-free access creates tariff 

disadvantages for U.S. producers compared to EFTA producers in the SACU market for those 

products. Sectors in which EFTA producers have a tariff advantage include pharmaceuticals, 

chemicals, and machine parts.470 

Mercosur-SACU

The Preferential Trade Agreement between the Common Market of the South (Mercosur) and 

SACU was signed in December 2008, but is not currently in effect.471 Article 2 notes that, as a 

preferential agreement, it is to be viewed as the first step toward a free trade agreement. The 

agreement covers a wide range of products but is not all-inclusive for either side. With limited 

exceptions, rules of origin allow for articles produced in any Mercosur or SACU country to 

receive preferential tariffs. For the most part, the Mercosur-SACU agreement does not result in 

468 The text of the agreement can be found on the EFTA website, http://www.efta.int/free-trade/free-tradeagreements/sacu. 469 No concessions were provided for basic agricultural goods (HS 1–24) from Norway. WTO, Factual Presentation: 

Free Trade Agreement, March 24, 2010, 10. 470 Compiled by USITC. Trade flows may be distorted by duties in place and may have been substantially different 

in the absence of duties.

471 The agreement will enter into force 30 days after notification by all signatory parties. “Preferential Trade 

Agreement between the Common Market of the South (Mercosur) and the Southern African Customs Union 

(SACU),” Article 36.

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a tariff disadvantage for the U.S. products that accounted for the majority of the value of U.S. 

exports to SACU countries in 2012. Notable exceptions include certain front-end loaders 

classified in HS 8429.51 and parts for construction equipment classified in HS 8431.49.472 

Turkey-Mauritius FTA 

The Turkey-Mauritius FTA entered into force on June 1, 2013, and reduces or eliminates duties 

on imports of most industrial and agricultural products between the parties. Specific 

concessions offered by Turkey included the immediate elimination of duties on most industrial 

products from Mauritius, and elimination of duties on specified textiles and apparel (mainly 

classified in HS chapters 61 and 62) over four years. Meanwhile, specific concessions offered by 

Mauritius include immediate elimination of duties on some industrial products from Turkey, 

while some products with NTR duties of 10 percent are reduced to zero over four years, and 

other products with duties of 25 percent are reduced to zero over five years. However, more 

than 100 HS 6-digit products are excluded from the agreement, including most agricultural 

products. An exception is Turkey’s elimination or reduction of tariffs for some agricultural 

products (e.g., certain fresh and canned tuna) imported from Mauritius within a TRQ. 

Additionally, Mauritius committed to reduce duties on certain agricultural products with NTR 

tariffs of 10 percent to zero over four years (e.g., certain fisheries and dairy products), and 

committed to reduce duties on certain products with NTR tariffs of 25 percent to zero over five 

years (e.g., certain cheeses and canned tuna). 

EU Economic Partnership Agreements

The 2000 Cotonou Agreement superseded the Lomé Conventions between the European 

Community and countries of Africa, the Caribbean, and the Pacific (ACP). This agreement covers 

the period March 2000–February 2020, although it was revised in 2001 and 2010, primarily to 

take into account changes in regional integration and security. The Cotonou Agreement called 

for the negotiation of reciprocal, WTO-compatible economic partnership agreements (EPAs) to 

enter into effect no later than January 2008.473 Like the Cotonou Agreement, individual EPAs 

have economic development as a primary goal, as well as the reduction and eventual 

elimination of poverty in the ACP states and the integration of the ACP states into the world 

economy. For reasons of EU negotiating efficiency and to encourage regional cooperation, SSA 

countries were strongly encouraged by the EU Commission to negotiate their EPAs in groups 

472 Compiled by USITC. Trade flows may be distorted by duties in place and may have been substantially different 

in the absence of duties.

473 Journal of the European Communities, “Partnership Agreement Between the Members of the African, Caribbean 

and Pacific Group of States and the European Community,” December 15, 2000, Articles 36–37.

219

 
rather than separately.474 The EU has entered into negotiations for EPAs with five African 

regions: West Africa, Central Africa, Eastern and Southern Africa (ESA), the Eastern African 

Community (EAC), and the Southern African Development Community (SADC).475 

EPAs are designed to include a broad range of provisions on trade in goods and services and to 

be WTO-compatible.476 However, the reciprocal trade agreements are asymmetrical, with most 

products of ACP countries receiving duty-free, quota-free (DFQF) access to the EU market 

immediately, while preferential access to ACP markets for EU products is phased in over a long 

period (up to 25 years). EPAs also allow ACP countries to exclude sensitive products from 

liberalization.477 However, EPAs include an “MFN clause” that will result in ACP countries giving 

the EU the best trade access afforded any other trading partner. Most EPAs that have been 

negotiated are “interim” agreements dealing only with trade in goods; they do not address 

services, nor do they address rules of origin and other trade barriers. To date, no SSA 

negotiating region has concluded an EPA. Interim agreements have been negotiated with the 

countries of the EAC, one country in Central Africa, 4 of the 12 ESA countries, 2 countries in 

West Africa, and 4 of the 7 countries in the SADC.478 Information on the current status of the 

EPAs is presented in table 6.4.

Table 6.4 Status of EPA negotiations

SSA countries Type of agreement Status

Cameroon (Central Africa) Interim EPA Signed in 2009, not ratified.

Madagascar, Mauritius, Seychelles, and Zimbabwe (ESA) Interim EPA Provisionally applied May 2012. 

Negotiations continue.

Burundi, Kenya, Rwanda, Tanzania, and Uganda (EAC) Partial interim EPA Agreement reached in 2007, but 

has not been ratified and is not in 

effect. Negotiations continue.

Botswana, Lesotho, Mozambique, and Swaziland (SADC) Interim EPA Signed in 2009, not ratified. 

Negotiations continue.

Namibia (SADC) Interim EPA Participated in negotiations 

through 2009, but did not sign.

Côte d’Ivoire (West Africa) Interim EPA Negotiated 2007, signed 2008, not 

ratified.

Ghana (West Africa) Interim EPA Negotiated 2007, not signed or 

ratified.

Source: EU Commission, “Overview of EPA Negotiations,” updated October 16, 2013.

474 EU Commission, “Overview of EPA Negotiations,” updated October 16, 2013. 475 The ESA states consist of Comoros, Madagascar, Mauritius, Seychelles, Zambia, and Zimbabwe. The EU 

negotiations for a trade agreement with the SADC involve Angola, Botswana, Lesotho, Mozambique, Namibia, 

South Africa, and Swaziland. An interim EPA with the East African Community involves Burundi, Kenya, Rwanda, 

Tanzania, and Uganda.

476 European Council, 2437th Council Meeting, Luxembourg, 17 June 2002, 29, 

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/gena/71044.pdf. 477 Kuhlmann, “A New US-European Approach,” 2010, 6. 478 One additional SADC country, Namibia, participated in negotiations but did not sign an interim EPA.

220

 
The EU proposed in 2011 that preferential market access for ACP countries granted since 

January 2008 be rescinded for countries that have not concluded an EPA by January 2014.479

Least-developed countries, including Burundi, Comoros, Lesotho, Mozambique, Rwanda, 

Tanzania, Uganda, and Zambia, would continue to receive DFQF access under the EU’s existing 

Everything But Arms (EBA) program. For other SSA countries, including Cameroon, Ghana, Côte 

d’Ivoire, Kenya, and Swaziland, failure to ratify and implement EPAs would reportedly result in 

tariffs reverting to GSP levels, with far higher tariffs and stricter rules of origin for exports to the 

EU.480 

Also, according to the EU Commission’s latest reform of the GSP, which took effect in January 

2014, middle-income countries, such as Botswana and Namibia, will no longer qualify for GSP 

treatment if EPAs are not signed.481 These countries would revert to far higher MFN tariffs on 

their exports to the EU.482 In the case of Namibia, exporters would face an average 19.5 percent 

duty on exports to the EU. Dutiable exports from Namibia to the EU currently total nearly 

€300 million ($398 million) annually; additional duties paid would likely be more than 

€58 million ($77 million).483 Botswana and Namibia could lose substantial market access 

advantage and export revenue if an EPA is not implemented.

With limited progress on many EPAs, the deadline for the remaining African countries to ratify 

and implement comprehensive EPAs was delayed by the EU in early 2013 to October 1, 2014.484

As the October deadline draws closer, several SSA countries are gradually increasing efforts to 

complete their EPAs with the EU. The Secretary General of the East African Community (EAC), 

which includes Burundi, Kenya, Rwanda, Tanzania, and Uganda, has been stressing the benefits 

of an EPA to EAC members. In particular, he has noted its transparency and predictability, the 

25-year tariff phaseout for sensitive EAC imports, the ability of EAC members to negotiate with 

the EU rather than having rules imposed on them, and favorable rules of origin for textiles. The 

EAC is currently on track to meet the EU-imposed deadline.485 As noted, the Government of 

Ghana has signed an interim EPA. But the European Commission has not indicated whether 

such an agreement would be enough for Ghana to retain its EU trade preferences.

479 EU Commission, “Proposal for a Regulation of the European Parliament,” September 30, 2011. 480 Bartels and Goodison, “EU Proposals to End Preferences,” 2011, 3-4. 481 EU Commission, “Generalized System of Preferences” (accessed January 9, 2014); Government of the UK, 

Parliament, “Market Access for Exports from the ACP Countries,” October 26, 2011.

482 Bartels and Goodison, “EU Proposals to End Preferences,” 2011, 3-4; Lazzeri, “EU Wants to Force ACP Countries 

to Sign EPAs,” 2014.

483 Bartels and Goodison, “EU Proposals to End Preferences,” 2011, 3. 484 EU Commission, “Opinion of the Commission regarding the Proposal,” May 3, 2013. 485 East African Community, “EPA Negotiations on Course, EAC Interests Safeguarded,” May 24, 2012. Additional 

negotiations are planned for March 2014. See East African Community, “EAC-EU Economic Partnership Agreement 

Negotiations,” January 30, 2014.

221

 
According to some observers, hesitancy among SSA countries to ratify EPAs is the result of the 

EU’s negotiating posture and uncertainty about the perceived benefits of such agreements by 

African parties.486 For many SSA countries, tariffs generate a significant share of government 

revenues.487 For example, potential tariff losses of an EPA have been estimated at between 

2 percent and 16 percent of government revenues for countries in West Africa.488 SSA countries 

may therefore be reluctant to spend the time and resources to complete an EPA when the net 

additional benefits are perceived to be quite modest.489 As noted, the poorest beneficiary 

countries already benefit from the EU’s EBA preferences, including DFQF access to the EU 

market, even if they do not sign an EPA. NTR tariffs are very low or free for many raw materials 

and hydrocarbons; therefore, resource-rich African countries may not feel significantly 

disadvantaged by revisions to or removal from tariff preferences under an EPA. Further, 

allowing SSA countries to exempt up to 20 percent of trade from liberalization may lock these 

countries into current production and trading patterns.490 

An additional complicating factor is that EU negotiators focus on regional cooperation among 

ACP countries rather than bilateral discussions between the EU and each recipient country.491

But in most cases, Africa’s regional blocs have trouble negotiating with one voice. Within each 

region, countries with different levels of development face very different consequences of not 

concluding an EPA.492 Consequently, the beneficiary countries are unable to set common 

negotiating priorities, and talks eventually break down.

486 Dieye, “How to Overcome the EPA Stalemate?” March 2013, 17. 487 Kuhlmann, “A New US-European Approach,” 2010, 6. 488 Nielsen and Zouhon-Bi, “ECOWAS: Fiscal Revenue Implications,” April 2007, 12. 489 Dieye, “How to Overcome the EPA Stalemate?” March 2013, 17–18. 490 Kuhlmann, “A New US-European Approach,” 2010, 6. 491 The revised Cotonou agreement, http://ec.europa.eu/europeaid/where/acp/overview/cotonouagreement/cotonou_trade_en.htm. 492 Ramdoo and Bilal, “What Would it Take to Make an EPA Feasible?” 2014, 2.

222

 
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Chapter 7

AGOA Trade Performance: A Review of 

the Literature 

Now that AGOA has been in force for over a decade, there have been numerous economic 

analyses that have attempted to evaluate how it has impacted trade between sub-Saharan 

Africa (SSA) and the United States. The value of exports from the region to the United States 

has unequivocally grown between 2000 and 2013, but what part did AGOA play in this growth? 

And how did AGOA’s role in stimulating exports from SSA compare to the role of trade 

preference programs offered by third parties, such as the European Union (EU)? 

This chapter reviews literature aimed at answering the following five questions: 

• To what extent are beneficiary countries using the preferences granted under 

AGOA? 

• To what extent can the observed growth in trade be attributed directly to AGOA, 

and has this growth been only an increase in the volume of already traded products, 

or has the program helped to diversify exports by creating trade flows in new 

products? 

• How effective have the unilateral tariff preference programs of other countries been 

at both increasing and diversifying SSA exports? 

• How does the effect of AGOA in expanding and diversifying exports compare to the 

effect of trade preference programs offered by other parties, such as the EU?

• After having examined the effectiveness of AGOA, what recommendations does the 

literature make on how the program might be improved?

Based on the body of literature reviewed in this chapter, which is summarized in table 7.2 at 

the end of the chapter, the following broad conclusions are made about the AGOA program:

• Utilization rates (defined as the ratio of imports claiming preferences to imports of 

products eligible for preferences) for AGOA and other similar unilateral tariff 

preference programs covering SSA are very high on average (greater than 85 percent 

in most cases), but vary by country and sector.

• AGOA’s estimated impact on trade flows from SSA varied due to differences in study 

methodology, time period assessed, and level of aggregation, with some studies 

finding a positive total effect, some finding no effect, and some finding positive 

effects only in particular sectors.

231
• Various studies agreed that AGOA preferences led to increased SSA exports of 

apparel for some beneficiaries, with countries exporting higher volumes of apparel 

products and also diversifying into exports of new apparel products. Many of these 

studies emphasized that these gains were due to AGOA’s less restrictive rules of 

origin for apparel, requiring only a single transformation.

• When considering nonenergy products, AGOA was successful at generating new 

product export flows. However, many of these new exports occurred in product 

groups that represented only a small share of a country’s total exports.

• Other unilateral trade preference programs were also estimated to have varying 

effects in generating additional SSA exports due to variations in study methodology, 

time period, and level of aggregation. Some studies found that other unilateral 

preference programs did increase exports, some found no effect, and some found 

effects only for certain sectors. With respect to diversification, EU programs were 

found to increase the number of products exported in some sectors, but to decrease 

the number of products exported in other sectors.

• In general, EU unilateral preference programs were found to be more effective at 

increasing beneficiary country exports, while U.S. preference programs seemed to 

be more effective at diversifying beneficiary country exports. However, this may not 

be true for all countries or sectors; U.S. preferences were found to be more effective 

at both increasing and diversifying SSA apparel exports than EU preferences (as 

noted above, this was largely due to less stringent rules of origin in place under 

AGOA than under EU preference programs during the time periods analyzed). But EU 

preferences were more effective in increasing SSA agricultural exports.

• Although AGOA has helped generate additional SSA exports in some sectors, the 

literature concluded that the program could be further improved by making AGOA 

permanent, offering capacity-building assistance, offering full duty-free/quota-free 

access to beneficiary countries, and further relaxing rules of origin, among other 

recommendations.

Utilization of AGOA Preferences

Calculating the utilization of preferences under AGOA is complex.493 Particularly problematic is 

the fact that AGOA-eligible countries receive preferential tariffs under overlapping programs—

specifically the Generalized System of Preferences (GSP) and GSP for least-developed 

493 This section specifically covers to what extent AGOA countries export eligible products under AGOA or GSP 

preferences and not at the most favored nation (MFN) rate. Topics such as “exports of products not covered by 

AGOA” and “concentration of exports in a few sectors” are not included in this discussion. For more information on 

AGOA beneficiary countries’ use of the AGOA program, see chapter 2.

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beneficiary developing countries (LDBDCs).494 Because many products are eligible for 

preferential access under two regimes, a program’s preference utilization rate must be 

calculated by including all regimes that offer the best available tariff rate. Calculating 

preference utilization in this way is done under the assumption that in the absence of one 

overlapping program, all imports would enter under the other (i.e., if AGOA countries could not 

also utilize GSP, then all imports would enter under AGOA instead of some under AGOA and 

some under GSP). In their 2012 analysis of utilization rates for the unilateral preference 

programs of four industrialized countries, Keck and Lendle found that the ratio of imports 

claiming AGOA preferences495 to imports of products eligible for AGOA preferences in 2008 was 

92 percent.496 This utilization rate is higher than those of many U.S. bilateral free trade 

agreements, including U.S. free trade agreements (FTAs) with Australia, Israel, Singapore, and 

Morocco, as well as the Dominican Republic-Central America-United States FTA (CAFTA-DR).497 

While this overall utilization rate is high, it potentially masks country and product 

heterogeneities that have been noted in previous works. In their 2004 analysis using 2002 data, 

Brenton and Ikezuki noted that while average utilization rates for AGOA were over 80 percent 

(comparable to similar EU program utilization rates), one-third of countries had rates below 20 

percent, and 37 percent of countries had rates greater than 80 percent.498 Analyzing data from 

2005, Brenton and Hoppe found that overall combined AGOA/GSP utilization had risen to 95 

percent.499 Utilization rates continued to be highly variable by country, however, with 11 out of 

37 beneficiaries achieving utilization rates of at least 98 percent, while five countries did not 

use the preferences at all.500 

494 GSP LDBDCs are different from AGOA’s lesser-developed beneficiary sub-Saharan African countries (LDBCs) in 

SSA. See chapter 1 for more information. 495 This ratio includes AGOA-eligible products that claimed GSP preferences. The assumption is that in the absence 

of an identical preference under GSP, those products would otherwise claim preference under AGOA.

496 Keck and Lendle, “New Evidence on Preference Utilization,” September 3, 2012, 27. 497 Ibid. 498 Countries with utilization rates of less than 20 percent were Benin, Chad, Guinea-Bissau, São Tomé and 

Príncipe, Cabo Verde, Seychelles, Gambia, Mauritania, Eritrea, Rwanda, Niger, Guinea, and Uganda. Countries with 

utilization rates greater than 80 percent were Djibouti, Mali, Cameroon, Swaziland, Malawi, Madagascar, South 

Africa, Ethiopia, Ghana, Kenya, the Democratic Republic of the Congo, Nigeria, Mozambique, and Lesotho. For 

more information, see Brenton and Ikezuki, “Initial and Potential Impact,” April 2004, 21, 35.

499 Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 14. 500 Countries with preference utilization rates of at least 98 percent in 2005 were Swaziland, Lesotho, Madagascar, 

Kenya, Malawi, Mozambique, Namibia, Botswana, Uganda, Ethiopia, and Gambia. Countries not utilizing 

preferences were Chad, Djibouti, Guinea-Bissau, São Tomé and Príncipe, and Seychelles. For more information, see 

Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 14.

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Using data disaggregated at the Harmonized System (HS)501 8-digit level from 2003, Dean and 

Wainio found that utilization rates varied widely between beneficiary countries and sectors. 

With respect to non-agricultural products, among AGOA countries eligible for AGOA but not 

GSP-LDBDC, all countries except for Eritrea, Gabon, and Mauritius showed combined 

GSP/AGOA utilization rates of at least 75 percent.502 For AGOA countries eligible for GSPLDBDC, average nonagricultural combined GSP/AGOA utilization was estimated at above 50 

percent, but countries tended to either almost fully utilize their preferences or else not use 

them at all.503 This dichotomy also existed with respect to apparel. Among the 20 countries 

eligible for AGOA apparel benefits, five did not utilize their benefits at all, but 12 countries had 

apparel preference utilization rates above 80 percent, and six of these had utilization rates of at 

least 95 percent.504 Finally, in agricultural products, 14 countries had estimated GSP/AGOA 

utilization rates above 90 percent, but two did not use the preferences at all.505 

Bureau, Chakir, and Gallezot came to similar conclusions in their 2007 analysis of unilateral 

preferences for agricultural and food products, finding that in 2002, AGOA’s utilization rate for 

agricultural products was 85 percent.506 However, the authors noted that despite the fact that 

most U.S. agricultural imports from eligible countries enter under preferential schemes, export 

flows remain small (with the exception of South Africa), leaving the authors questioning 

whether use of the preferences in itself constitutes success.507 

Each of these authors offer several possible explanations for these variable utilization rates. A 

primary explanation is that countries not utilizing the preferences are simply not exporting 

501 The Harmonized System is an internationally-recognized product nomenclature developed by the World 

Customs Organization that is used by many countries as the basis for customs tariffs and for purposes of collecting 

international trade statistics, among other uses. Various studies highlighted in this chapter conduct their analyses 

using HS product codes; the higher the number of digits, the more granular the analysis. For more information, see 

http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx. 502 Dean and Wainio, “Quantifying the Value of U.S. Tariff Preferences,” August 2006, 10. 503 Ibid., 28–29. 504 Countries not using benefits were Cameroon, Côte d’Ivoire, Senegal, Mali, and Niger. Countries with utilization 

rates of at least 95 percent were Ghana, Ethiopia, Lesotho, Madagascar, Malawi, and Mozambique. Countries with 

utilization rates between 80 and 94 percent were Botswana, Kenya, Swaziland, Cabo Verde, Tanzania, and Uganda. 

For more information, see Dean and Wainio, “Quantifying the Value of U.S. Tariff Preferences,” August 2006, 10–

11, 28–29. 505 The authors do not list the countries with combined AGOA and GSP utilization of greater than 90 percent, 

although table 3 lists utilization by scheme for each country. Countries that achieved greater than 90 percent 

utilization in either GSP or AGOA were Cameroon, the Republic of the Congo, Côte d’Ivoire, Djibouti, Ghana, Kenya, 

Mauritius, Namibia, Senegal, South Africa, Swaziland, the Democratic Republic of the Congo, Ethiopia, Guinea, 

Mozambique, and Tanzania. Countries that did not utilize agricultural preferences were Benin and Niger. For more 

information, see Dean and Wainio, “Quantifying the value of U.S. tariff preferences for developing countries,” 

August 2006, 15, 32–33. 506 Bureau, Chakir, and Gallezot, “The Utilization of Trade Preferences,” 2007, 185. 507 Ibid., 194.

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products that are covered by the program. For example, Brenton and Ikezuki noted that for 

nine beneficiary countries, fewer than 5 percent of their exports were eligible for benefits 

under AGOA.508 Dean and Wainio further explored this question of coverage by distinguishing 

between product types. They found that although overall non-agricultural product coverage by 

GSP/AGOA was estimated at virtually 100 percent for many countries, it was lower for others, 

given their export portfolios—examples included Benin, Mauritania, and Sierra Leone.509

Combined coverage of agricultural products, however, approached 100 percent for all 

countries.510 At the same time, AGOA significantly improved product coverage as compared to 

GSP—Mattoo, Roy, and Subramanian estimated that 72 percent of U.S. imports from subSaharan Africa would be covered under AGOA, up from 17 percent under GSP (largely due to 

petroleum product coverage in AGOA).511 

Despite the fact that most exports from beneficiary countries were covered by AGOA, the value 

of these covered preferences was estimated to be low. This was partially due to the fact that 

U.S. most-favored-nation (MFN) tariffs are low: in 2001, the year AGOA was implemented, twothirds of tariff lines (representing 84 percent of U.S. imports) faced U.S. applied MFN tariffs of 

less than 5 percent.512 Taking into account the preference margin on each country’s exported 

basket of goods in 2005, Brenton and Hoppe estimated that for 26 out of 37 AGOA beneficiary 

countries, AGOA preferences were valued at less than 2 percent of the value of that country’s 

total exports to the United States.513 The value of AGOA preferences exceeded 10 percent of 

the total value of exports to the United States for only 8 beneficiaries. Both Dean and Wainio 

and Brenton and Ikezuki used similar methodologies but different years of data, and similarly 

concluded that the value of AGOA preferences varied across countries. However, one major 

508 These nine countries were Benin, Guinea-Bissau, Seychelles, Guinea, Chad, Uganda, Zambia, Rwanda, and São 

Tomé and Príncipe. At the same time, the authors note that these countries are producing and exporting products 

that already have a zero MFN duty rate. See Brenton and Ikezuki, “Initial and Potential Impact,” April 2004, 18.

509 Dean and Wainio, “Quantifying the Value of U.S. Tariff Preferences,” August 2006, 9, 28–29. 510 Ibid., 14. 511 WTO Tariff Analysis Online, http://tariffanalysis.wto.org (accessed January 22, 2014). As noted earlier, MFN 

status is also called normal trade relations (NTR) in the United States. 512 AGOA preferences were valued at less than 2 percent of the value of total exports to the United States for 

Angola, Burkina Faso, Benin, Cameroon, Djibouti, Chad, Congo, the Democratic Republic of the Congo, Ethiopia, 

Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Nigeria, Rwanda, São Tomé and Príncipe, 

Senegal, Seychelles, Sierra Leone, South Africa, Tanzania, and Zambia. All but seven of these countries had 

previously been eligible for GSP-LDBDC preferences, so AGOA provided little additional benefit for them. For most 

of the seven that were not eligible for GSP-LDBDC benefits, their exports were concentrated in products that had 

zero or very low tariffs, such as oil or cocoa beans. For more information, see Brenton and Hoppe, “AGOA, Exports, 

and Development,” August 2006, 15.

513 The value of AGOA preferences exceeded 10 percent of the total value of exports to the United States for Cabo 

Verde, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, and Swaziland. For more information, see 

Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 15.

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conclusion from both of these studies was that most of the value of preferences under AGOA 

was due to preferential access for apparel.514 

Utilization of Comparable Tariff Preference 

Regimes 

As noted in the previous section, preference utilization under AGOA is generally high, and in 

some cases is higher than utilization rates for U.S. bilateral trade agreements. When compared 

with other unilateral preference regimes aimed at developing countries granted by other 

developed countries, AGOA’s average utilization rate is high (table 7.1). Average overall 

utilization rates of programs for which sub-Saharan African countries are eligible are all at least 

70 percent, and all but one are within four percentage points of each other. (These programs 

include AGOA; the EU’s GSP-Least Developed Countries [LDC]; the EU’s GSP non-LDC for 

African, Caribbean, and Pacific [ACP] countries; Canada’s GSP-LDC; and Australia’s GSP-LDC.)515

This suggests that while AGOA achieved the highest overall “best regime” utilization rate in 

2008, the rate was not unusual compared to similar programs.

Two earlier studies focused on EU-granted preferences, which are of the greatest value with 

respect to beneficiary countries in sub-Saharan Africa, given current trade volumes. These 

studies corroborated the high utilization rates found by Keck and Lendle. In their 2009 study of 

EU preference utilization using 2001 data, Candau and Jean also grouped beneficiary countries 

according to overlapping preference schemes. They found that overall utilization rates for LDCs 

in sub-Saharan Africa were 92 percent, and were 94 percent for non-LDCs in the region.516 Even 

when various product groupings were considered, the results suggested that EU preferences for 

sub-Saharan Africa were used for the vast majority of imports—utilization rates were greater 

than 88 percent in all product groups examined, both for SSA LDCs and non-LDCs.517 Additional 

work specifically with respect to preferences on agricultural goods by Bureau, Chakir, and 

Gallezot confirmed that sub-Saharan Africa’s utilization of EU preferences in this sector was 

high, estimated at 95–96 percent in 2002.518

514 Dean and Wainio, “Quantifying the Value of U.S. Tariff Preferences,” August 2006, 21; Brenton and Ikezuki, 

“Initial and Potential Impact,” April 2004, 23, 27.

515 Keck and Lendle, “New Evidence on Preference Utilization,” September 3, 2012, 27. 516 Candau and Jean, “What Are EU Preferences Worth?” 2009, 77. 517 Ibid., 81. 518 Bureau, Chakir, and Gallezot, “The Utilization of Trade Preferences,” 2007, 183.

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Table 7.1 Preference utilization rates of selected nonreciprocal preference regimes for which SSA 

countries are eligible, 2008

Program519 Importer country Utilization rate520 (percent)

AGOA USA 92

GSP (LDC, ACP) EU 87

GSP USA 86

GSP (LDC) Canada 86

GSP (non-LDC, ACP) EU 86

GSP EU 77

GSP (LDC) Australia 70

GSP Canada 66

GSP Australia 58

Source: Keck and Lendle, “New Evidence on Preference Utilization,” September 3, 2012, 27.

Role of AGOA in Increasing and Diversifying 

Exports

Chapter 2 shows that exports from AGOA-eligible countries are increasing, and the previous 

section explains that beneficiaries are (on average) using the preferences granted by AGOA. 

However, neither of these facts directly links this export growth to the AGOA program. One tool 

that trade economists commonly use to evaluate the impact of trade policy changes, such as 

AGOA, is the gravity model, and variations of this framework comprise the bulk of the literature 

summarized in this chapter.521 In general, two approaches are used to model the effect of trade 

preferences in this gravity framework—either a dummy variable is used to indicate that 

preferences were in effect for a certain country in a given year, or else the margin of tariff 

519 Programs listed in parentheses refer to certain country groups. For example, GSP (LDC, ACP) for the EU refers to 

the utilization rate of GSP and other overlapping programs for countries that also qualified for preferences under 

GSP-LDC and ACP preferences under Cotonou. For more information, see Keck and Lendle, “New Evidence on 

Preference Utilization,” September 3, 2012, 27.

520 Because many schemes are overlapping, beneficiary countries can utilize various preferential regimes. As a 

result, defining utilization rates in isolation can lead to misleading conclusions about overall scheme utilization. 

Here the authors define “utilization rate” by the “best regime” available to a particular beneficiary country, or the 

ratio of all preferential imports from a set of beneficiary countries over all eligible imports from that country from 

any preference regime. For AGOA, this would include imports under AGOA and GSP, and in some cases under GSP 

for LDBDCs. For more information, see Keck and Lendle, “New Evidence on Preference Utilization,” September 3, 

2012, 8.

521 The gravity model of trade is a theoretical framework used to estimate bilateral trade flows between two 

partner countries on the premise that country pairs with certain characteristics will tend to trade more with each 

other. In these models, exports are expressed as a function of each partner’s economic size (typically gross 

domestic product (GDP)) and the distance between the two countries. Other explanatory variables are commonly 

added, including the presence of a common language between trade partners, a colonial relationship, tariff levels, 

trade agreements, or a common border, just to name a few. For more information on gravity models, see 

Anderson, “The Gravity Model,” December 2010, or Anderson and van Wincoop, “Gravity with Gravitas,” January 

2001.

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preferences for a specific product under a given agreement is included in the model. Both 

approaches are seen in the literature covered in this chapter. 

Additionally, when assessing the value of a trade agreement, economists increasingly measure 

trade effects not only on aggregate export values, but also on whether trade agreements have 

helped countries to export new products. These two effects are commonly referred to as trade 

intensification and trade diversification, respectively, and the literature with respect to both 

will be summarized in the following sections.522 

Role of AGOA in Increasing Exports

Regarding trade intensification, various post-implementation empirical investigations have 

attempted to measure the value of additional exports of already traded products created by 

AGOA preferences. On the whole they conclude that at the aggregate level, AGOA’s impact has 

been either positive (but typically small) or insignificant. At the sector and country-specific 

levels, however, significant and positive impacts have unequivocally been measured. For this 

reason, therefore, the discussion below is presented by examining AGOA’s effect in raising the 

volume of beneficiary country exports into effects on total trade versus more disaggregated 

approaches. 

Effect on Total Trade

Conclusions on AGOA’s effect on total exports are mixed, mostly due to variations in study 

methodologies and in the time period analyzed. Four studies were identified in which overall 

affects from AGOA were estimated to be positive, while three studies found no statistically 

significant effect. Nouve’s 2005 analysis on trade data from 1996–2004 using a gravity model523

found that AGOA had a statistically significant and positive effect on beneficiary country 

exports to the United States, estimating that every dollar increase in exports under AGOA led to 

a spillover effect of an additional $0.16 to $0.20 in overall SSA exports to the United States.524

Lederman and Özden analyzed AGOA beneficiary country export flows at the HS 2-digit level 

from 1997 to 2001 using a gravity model that included average AGOA utilization rates by 

522 Trade intensification is sometimes referred to as trade growth on the “intensive margin,” while trade 

diversification is sometimes referred to as trade growth on the “extensive margin.” Both terms are used in the 

literature.

523 The author used a gravity model in a dynamic panel setting. 524 Nouve, “Estimating the Effects of AGOA,” July 2005, 17–8.

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product instead of AGOA policy dummy variables.525 They found that participation in the 

program led to 5 percent higher exports for the average beneficiary country.526 

Two studies that did not use a modeling framework also supported the conclusion that AGOA 

did help to increase beneficiary country exports. A survey based assessment of the program’s 

performance by Karingi, Páez, and Degefa found that a majority of private sector respondents 

from various beneficiary countries believed that AGOA was very important to their trade and 

economic links, while a quarter reported that it was not important.527 At the same time, only 

about half of the firms surveyed reported that they had directly benefited from AGOA.528

Brenton and Hoppe concluded that only a small share of sub-Saharan Africa’s increased exports 

to the United States could be attributed to AGOA because most export growth under the 

program was crude oil, which would have been shipped even if the program had not existed.529 

In contrast to the papers highlighted above, three studies in the literature found that AGOA was 

not responsible for increased beneficiary country exports to the United States. Analyzing 

aggregate nonoil export data from 1995–2005 using a gravity model, Zappile found no 

statistically significant effect from AGOA on total nonoil exports.530 Using a gravity model531 on 

data from 1997–2004, Seyoum also found no link between AGOA and total exports (although 

the results pointed to significant effects in certain sectors, discussed in the following 

section).532 Lastly, Tadesse and Fayissa’s gravity model using aggregate trade data from 1991–

2006 found no statistically significant effect from AGOA on total exports. However, this study 

found significant effects at the product level, which is discussed in the following section.533 

Although four studies found positive effects and three found no effect of AGOA on aggregate 

AGOA beneficiary country export levels, Condon and Stern’s 2011 literature review (which 

encompasses many of the works described above) points out a further consideration in 

assessing the overall benefits of the program. They note: 

• The majority of the studies reviewed in the synthesis were conducted during the 

early years of AGOA and there is little evidence in the synthesis based on data 

beyond 2005. AGOA is still a relatively young initiative and supply responses from 

525 In this case, the dependent variable is exports of product x from beneficiary country i to the United States in 

year t. 526 Lederman and Özden, “U.S. Trade Preferences,” December 2004, 15. 527 Karingi, Páez, and Degefa, “Report on a Survey,” 2012, 8. 528 Ibid., 9. 529 Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 3–4. 530 Zappile, “Nonreciprocal Trade Agreements and Trade,” 2011, 61. 531 The author used an ARIMA variation of the gravity model. 532 Seyoum, “Export Performance of Developing Countries,” 2007, 523. 533 Tadesse and Fayissa, “Time Impact of AGOA on U.S. Imports,” 2008, 933.

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LDCs can take years to materialize, thus it is important that the impact of AGOA 

continues to be analyzed.534 

Effect on Disaggregated Trade

While the conclusions in the aggregate trade effects literature are mixed, disaggregated trade 

and sector-specific analyses have more consistent findings. Specifically, these studies found 

that AGOA helped to increase SSA exports in some sectors and products, but not others. 

Furthermore, much of the disaggregated effects literature is critical of analyses that focus on 

aggregated trade effects for two reasons. First, authors pointed out that estimations of 

aggregated effects are misleading, since trade preferences are granted at the product level and 

thus do not provide the same margin of preference for every product. Secondly, some of the 

aggregated analyses do not take into account zero trade flows—an approach that has been 

shown to substantially bias trade effects estimates.535 Cipollina, Laborde, and Salvatici made 

one of the most definitive statements arguing against using aggregated approaches that 

included dummy variables to represent preference programs, stating that this approach 

“cannot catch the variability of margins across countries and products, and it is likely to lead to 

an overestimation of the impact of the preferential scheme and cannot provide an accurate 

assessment of policies that (by definition) often discriminate among products.”536 

In their 2008 paper, Tadesse and Fayissa conducted both aggregated and disaggregated (at the 

HS 2-digit level) analyses of trade data from 1991–2006 using a Tobit537 specification of the 

gravity model. They highlighted the results of the disaggregated model because of its ability to 

capture product heterogeneities. They found that AGOA was responsible for statistically 

significant increases in exports to the United States in 19 of 99 product categories (including 

vegetables, fruits and nuts, coffee/tea/spices, beverages, plastics, fabrics, apparel, and tin). 

However, they also found that AGOA had no effect on export levels of the majority of product 

534 Condon and Stern, “The Effectiveness of AGOA in Increasing Trade,” March 2011, 17. 535 Gravity models are designed to predict positive values of trade, but trade data commonly contains zeroes, 

especially at highly disaggregated product levels. Not accounting for these zero trade flows is referred to as a 

“censoring problem,” and can substantially bias coefficients to the point that they can lead to unreliable 

conclusions. For this reason, the overall model must be modified in some way, or a particular estimator should be 

used that takes into account these products for which no trade occurs.

536 Cipollina, Laborde, and Salvatici, “Do Preferential Trade Policies (Actually) Increase Exports?” August 2013, 5. 537 A Tobit model is a type of model that censors a regression sample in cases where the dependent variable 

cannot be measured or observed. In this case, the sample is restricted to positive trade flows in order to analyze 

how much AGOA caused trade values to vary from their predicted values. This method also allowed the authors to 

estimate the likelihood that the dependent variable (trade) would change from zero to a positive value. For more 

information, see Kennedy, A Guide to Econometrics, 2003, 284.

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categories (including oilseeds, cocoa, ores, rubber, ceramics, and vehicles) and was even 

associated with reduced export flows in some cases.538 

Using a slightly different approach, Frazer and Van Biesebroeck came to similar conclusions. 

These authors used a triple difference-in-differences model539 disaggregated to the HS 6-digit 

level on trade data from 1998 to 2006, and assigned all products to one of five categories: 

apparel, agricultural, mineral, petroleum, and manufacturing. They found that AGOA did cause 

increased exports of agricultural goods, manufactures, and apparel products, but not of 

petroleum and mineral products.540 The authors also tested whether the increased post-AGOA 

export flows to the United States were simply the result of trade diverted from Europe. They 

found no evidence that increased exports to the United States resulted in lower exports to 

Europe, and in fact noted that AGOA was associated with increased exports of manufactures to 

Europe—likely the result of spillover effects.541 

Like Tadesse and Fayissa, Seyoum analyzed the effects of AGOA at both aggregate and 

disaggregated levels. Although Seyoum found no evidence of increased overall exports due to 

AGOA, the author also analyzed the effects of AGOA on the three sectors with the largest 

exports under AGOA—energy, textiles and apparel, and minerals—using a variation of the 

gravity model on data from 1997–2004. Seyoum’s results suggested that AGOA had a positive 

and significant impact only on exports of textiles and apparel; effects on energy and minerals 

were not significant.542 The author provided several explanations for this result. First, most 

beneficiary countries already enjoyed substantial preferences due to GSP, so AGOA may not 

have significantly changed their market access. Second, many products that were not already 

duty-free prior to AGOA had very low MFN tariff rates (particularly in energy products), so the 

preferences under AGOA did little to stimulate increased exports. Lastly, with only four years of 

trade data since the program’s implementation available at the time of the study, it may have 

been too early to determine whether beneficiary countries could successfully take advantage of 

the program.543 

538 Tadesse and Fayissa, “The Impact of AGOA on U.S. Imports,” 2008, 934–37. 539 A difference-in-differences model is an econometric method employed to measure the impact of a certain 

treatment wherein the impact is measured by calculating the difference between a group that received the 

treatment and one that did not, before and after the treatment. In this case, the triple difference-in-differences 

refers to differences in time (pre- and post-AGOA), products (products granted preferences under AGOA and 

products not granted preferences under AGOA), and countries (AGOA beneficiary countries and non-AGOA 

beneficiary countries). For more information, see Kennedy, A Guide to Econometrics, 2003, 414–15. 540 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 133, 135–36. 541 Ibid., 137. 542 Seyoum, “Export Performance of Developing Countries,” 2007, 523, 525. 543 Ibid., 527–28.

241

 
Cooke analyzed the effects of AGOA on trade from 1996–2009, using different levels of product 

aggregation, but for only a limited number of product categories (restricted to HS chapters 1, 2, 

25, 26, and 50–63). The author used a triple differences-in-differences type approach that 

included preferential tariff margins to compare the ratio of U.S. imports from beneficiary 

countries to the rest of the world’s imports from beneficiary countries. The author concluded 

that AGOA led to a statistically significant increase in exports of both apparel and non-apparel 

products in the categories included in the regressions—all other things being equal, AGOA 

raised beneficiary country exports of these products to the United States by 38.3–

57.8 percent.544 However, the volume effects were generally small, and greater for apparel 

products than for non-apparel products.545 

Although Nouve’s 2005 analysis was conducted using aggregated data, the author pointed out 

that given his results and the theoretical underpinnings of the gravity model, AGOA was more 

likely to raise exports of certain kinds of goods. He found that for highly substitutable products 

(such as commodities), AGOA would have no effect or even a negative effect on exports from 

beneficiary countries to the United States.546 Nouve suggested that for this reason, one way for 

countries to benefit from the program would be to make their exports more distinctive in the 

U.S. market.547 

Effects of AGOA Increase with Time

Another dimension of analysis of AGOA is its effect over time. Although many of the studies 

focused on the average effects of AGOA on beneficiary country exports, several of the studies 

also found evidence that the trade-increasing effects of AGOA grew over time. Tadesse and 

Fayissa’s analysis found that since AGOA’s implementation, the previous year’s export levels 

were found to be highly significant determinants of exports of various product groups in the 

following year, suggesting that experience gained in exporting a particular product tends to 

expand future exports.548 Each additional year exporting under AGOA resulted in a 2.5 percent 

increase in exports of essential oils and resinoids, a 1.6 percent increase in exports of 

coffee/tea/spices, a 4.5 percent increase in plastics exports, and a 4.9 percent increase in wood 

and wood article exports, just to name a few.549 Frazer and Van Biesebroeck found even larger 

time effects in their estimations. They estimated that apparel effects grew from a 22 percent 

increase in 2002 to a 44 percent increase by 2006.550 While the effects were not as large for 

544 Cooke, “The Impact of Trade Preferences,” November 2011, 18. 545 Ibid., 31, 43. 546 Nouve, “Estimating the Effects of AGOA,” July 2005, 19. 547 Ibid. 548 Tadesse and Fayissa, “The Impact of AGOA on U.S. Imports,” 2008, 932–33. 549 Ibid., 929–931. 550 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 135.

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non-apparel products, their growth rates also increased over time, from just a 6 percent 

increase in exports due to AGOA in 2001 to a 24 percent increase by 2006.551 

Sector-Specific Findings

Although the previous section mentioned how the implementation of AGOA affected export 

flows of various disaggregated products, the following section explores sector-specific findings 

in greater detail.

Apparel 

Because the greatest trade responses were seen in apparel, it follows that much of the 

literature has specific findings with respect to this sector. Frazer and Van Biesebroeck found 

that AGOA had a substantial impact on exports of apparel. Their model estimated that AGOA 

raised beneficiary country exports of apparel to the United States by a substantial 42 

percent.552 The authors also determined what portion of the growth in apparel was due to 

AGOA by multiplying this effect by pre-AGOA export levels, concluding that AGOA was 

responsible for 35 percent of the total growth in apparel exports.553 However, they noted that 

these effects varied widely by country. The effect of AGOA on apparel exports was only positive 

and significant for 14 beneficiary countries; for the remainder, AGOA was either not significant 

or was even negative and significant in two cases.554 Moreover, even among the countries 

where AGOA led to significantly increased exports of apparel products, the range of this 

increase varied substantially from a low of 9 percent to a high of 155 percent.555 Overall, the 

authors concluded that while apparel exports increased substantially due to AGOA, these 

benefits were not widespread among beneficiary countries. 

Several other authors, including Cooke, Tadesse and Fayissa, and Seyoum, supported the 

conclusions reached by Frazer and Van Biesebroeck. Although their investigations do not 

contain as much detail as Frazer and Van Biesebroeck, these authors all found that AGOA had a 

positive and significant effect on apparel exports.556 

551 Ibid. 552 Ibid., 141. 553 Ibid. 554 The two countries for which AGOA was correlated with a statistically significant negative affect on apparel 

exports were Côte d’Ivoire and Senegal. For more information, see Frazer and Van Biesebroeck, “Trade Growth 

under AGOA,” February 2010, 138.

555 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 138. 556 Cooke, “The Impact of Trade Preferences,” November 2011, 43–4; Tadesse and Fayissa, “The Impact of AGOA 

on U.S. Imports,” 2008, 933; Seyoum, “Export Performance of Developing Countries,” 2007, 523.

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Rules of Origin

While some authors concluded that apparel exports were in fact stimulated by AGOA, several 

others stressed that these gains were primarily the result of AGOA’s comparatively less 

restrictive rules of origin under its third-country fabric provision. Using panel data on 

beneficiary country apparel exports to Europe and the United States over 1996–2004, De Melo 

and Portugal-Perez estimated a model that disentangled beneficiary country apparel export 

responses caused by apparel tariff liberalization from those caused by rules of origin 

simplification under AGOA. Although the effects varied slightly depending upon the model’s 

specification, under their preferred estimator,557 the authors found that simplified rules of 

origin (single transformation) led to a 168 percent increase in apparel exports by the seven 

largest AGOA apparel exporters, while tariff removal alone caused only a 44 percent increase in 

exports.558 

Though their findings did not come from an empirical model, Brenton and Hoppe concluded 

that simple data analysis leads to the conclusion that all growth in apparel exports under AGOA 

must have been due to the third-country fabric provision.559 They pointed out that apparel 

exports from countries under the provision more than doubled from 2001 to 2005, while 

exports from countries not eligible for the provision actually declined over the same period.560 

While all sources agreed that AGOA significantly raised apparel exports to the United States, 

not all authors concluded that this was an overall positive development. For example, Nouve’s 

results suggested that the increase in beneficiary country apparel exports experienced under 

AGOA actually had a negative effect on total exports from the region. The author suggested 

that this result pointed to a reallocation of resources away from other export sectors toward 

textiles and apparel in order to sustain export gains in that sector, which may have had a 

positive or negative effect on the economy as a whole, depending upon the country.561 

Agriculture 

Frazer and Van Biesebroeck also contributed to the literature on AGOA’s effect on beneficiary 

country agricultural exports to the United States. They estimated that AGOA raised beneficiary 

country exports of agricultural goods to the United States by 8 percent, and found that 

557 The authors estimate various specifications of the model, but their preferred estimator is the fixed effects Tobit 

trimmed least absolute deviation (LAD). They also estimated the model using ordinary least squares (OLS), Tobit, 

Eaton and Tamura (ET)-Tobit, and Poisson Pseudo Maximum Likelihood (PPML). 558 De Melo and Portugal-Perez, “Preferential Market Access Design,” February 2013, 21. 559 Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 8. 560 Ibid. 561 Nouve, “Estimating the Effects of AGOA,” July 2005, 19.

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15 percent of the total growth in exports of agricultural products since AGOA’s implementation 

could be attributed to the act.562 While these effects were smaller than in other sectors 

examined, the benefits were more widespread; nearly two-thirds of AGOA beneficiaries 

experienced significant positive increases in their agricultural exports as a result of AGOA.563 

The only other post-implementation work that included specifics on the performance of 

agriculture comes from Nouve and Staatz, who estimated a gravity model (using an AGOA 

dummy variable) on trade in agricultural products using data from 1998–2002. They found that 

although the estimated effects were positive, they were not statistically significant.564 The 

authors offered several possibilities for this finding, including the fact that with only two years 

of post-implementation data, impacts did not have sufficient time to materialize.565 

Manufactures

Two studies provided a separate analysis of AGOA’s effects on exports of manufactured goods 

(including chemicals). Frazer and Van Biesebroeck found that AGOA raised beneficiary country 

manufacturing exports to the United States by 15 percent, and estimated that 20 percent of the 

total growth in such exports (which rose more than 70 percent from AGOA’s implementation 

through 2006) could be directly attributed to AGOA.566 Moreover, the authors found that for 35 

of the 41 countries analyzed, AGOA had a statistically significant, positive effect on 

manufactures exports.567 Additionally, for these countries where the effect was positive, AGOA 

increased these exports by an average of 17 percent.568 

Tadesse and Fayissa’s results with respect to manufacturing exports were twofold. First, they 

estimated the effect of AGOA on total manufacturing exports, concluding that AGOA did result 

in a positive and statistically significant increase in exports of this category.569 Subsequently, 

the authors conducted their analysis at the HS 2-digit level and found some specific 

manufactured products for which AGOA caused statistically significant increases in beneficiary 

country export flows to the United States, including pharmaceuticals, miscellaneous chemical 

products, and plastics.570 

562 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 141. 563 Ibid., 138. 564 Nouve and Staatz, “Has AGOA Increased Agricultural Exports?” September 2003, 12–13. 565 Ibid.,13. 566 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 141. 567 Ibid., 138. 568 Ibid. 569 Tadesse and Fayissa, “The Impact of AGOA on U.S. Imports,” 2008, 933. 570 Ibid., 935.

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Role of AGOA in Diversifying Exports 

Besides increasing the volume of trade between beneficiary countries and the United States, an 

additional goal of the AGOA program was to help diversify exports from the region. Export 

diversification—defined as the process of moving into exports of new goods, and sometimes 

referred to as trade initiation or creation—makes poorer countries less susceptible to external 

economic shocks by reducing their dependence on a limited number of products.571 As a region, 

Africa still largely exports mostly primary products, including minerals, raw materials, and 

primary agricultural goods. A 2012 analysis from the U.N. Economic Commission for Africa 

found that over the period 1998–2009, Africa’s exports were less diversified than those of any 

other region of the world.572 

Given the importance of export diversification in a country’s development process, it is not 

surprising that a sizable body of literature has examined AGOA’s role in helping the region to 

diversify its exports. As with export expansion, the aggregate effects of AGOA on export 

diversification seem unimpressive, but mask significant diversification effects in certain 

countries and industries.

Aggregate beneficiary country export statistics do not initially appear to support the conclusion 

that AGOA has helped to diversify the region’s exports. Páez et al. emphasized that 10 years 

after the Act’s implementation, diversification of AGOA exports remained a challenge. They 

noted that through 2010, 90 percent of U.S. imports under AGOA were energy-related 

products.573 

Within the other 10 percent of AGOA exports, however, the literature supports the conclusion 

that AGOA has had a statistically significant effect on the diversification of exports into new 

products. Frazer and Van Biesebroeck found that AGOA helped to diversify beneficiary country 

exports in various sectors. Moreover, they found that these trade diversification effects not 

only varied by product, but also that the probability of exporting a new product increased over 

time. For apparel products, the probability of exporting a new product rose from 1.8 percent in 

2002 to 3.0 percent in 2006.574 For non-apparel goods, AGOA increased the probability of 

exporting a new product from 0.5 percent in 2001 to 1.9 percent in 2006.575 When the nonapparel diversification effects were broken down into more specific sectors, the authors found 

that AGOA increased the probability of exporting a new agricultural product by more than one571 Ofa et al., “Export Diversification,” June 15, 2012, 5. 572 Ibid., 15. 573 Páez et al., “A Decade of African-US Trade,” 2010, 4. 574 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 135. 575 Ibid.

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half and raised the probability of exporting a new manufactured product by two-thirds.576

Given these effects, the authors concluded, “While AGOA countries export notably fewer

products than most other countries, this gap decreased tremendously following the Act. This 

large increase in the probability of exporting is consistent with the AGOA effect growing over 

time.”577 

Tadesse and Fayissa reported these effects on a more disaggregated level, disentangling 

AGOA’s trade creation effects (these authors’ term for diversification) from its trade 

intensification effects (increase in existing exports) by identifying the HS 2-digit product 

categories that went from no export flows before AGOA implementation to positive export 

flows afterward, with one observation for each country-product pair per year. The analysis 

found that AGOA had significant trade initiation effects across 24 of 99 different product 

categories (including vegetables, milling products, miscellaneous chemical products, plastics, 

cotton, knitted fabrics, knit apparel, and non-knit apparel).578 However, the majority of these 

newly created exports occurred in products that represented a small proportion of a country’s 

total exports. Interestingly, AGOA resulted in both trade initiation and trade intensification in 

just 13 of 99 categories.579 Overall, their results led the authors to conclude that the trade 

initiation effect of AGOA was much greater than its intensification effect.

One sector-specific analysis by de Melo and Portugal-Perez supported the export diversification 

findings of the two investigations outlined above. In their analysis of the apparel sector, they 

estimated the effect of AGOA (specifically, the third-country fabric provision) on the diversity of 

apparel exports to the United States, using a model specified at the HS 6-digit level. The authors 

estimated that AGOA’s third-country fabric provision helped to increase the varieties of apparel 

exported by between 39 and 61 percent.580 The authors stressed that this increase in export 

diversification was not due to tariff preferences granted under the program, but rather to a 

relaxing of the rules of origin for apparel products. They hypothesized that the reduced costs of 

complying with AGOA’s simplified origin rules (as compared to the rules under GSP, for 

example) freed up firms’ resources and allowed them to expand their export product lines, 

leading to the increased diversification.581 

576 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 135–36. 577 Ibid., 136. 578 Because the estimation was done on a country-product pair basis, this result does not suggest that there were 

no exports of these products from any AGOA country before the program. Rather, they mean that in these product 

categories, some countries that had not previously exported these products began to export them after the 

program’s implementation. See Tadesse and Fayissa, “The Impact of AGOA on U.S. Imports,” 2008, 934–37. 579 Tadesse and Fayissa, “The Impact of AGOA on U.S. Imports,” 2008, 934–37. 580 De Melo and Portugal-Perez, “Preferential Market Access Design,” February 2013, 20. 581 Ibid., 21.

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Raw data analysis by Brenton and Hoppe also reinforced the conclusions that AGOA had helped 

some countries diversify their exports, but mostly through increased apparel exports. They 

noted that exports of apparel have grown much faster than exports of other non-oil products, 

and that countries that had historically exported few apparel products (such as Botswana, 

Tanzania, and Uganda) had all increased their apparel exports.582 

Survey-based evidence also supports the empirical analyses presented above. Karingi, Páez, and 

Degefa noted that 39 percent of private sector respondents in their survey reported 

diversification in their enterprise or sector due to AGOA.583 But even with this evidence that 

AGOA was responsible for increased export diversification, it is not clear that this diversification 

was due to new firms entering the export market. Although firm-level transaction data were 

not available to answer this question, the 2012 Karingi, Páez, and Degefa survey found that the 

companies that were able to take advantage of the benefits of AGOA were in general larger 

firms that were already exporting.584 This finding was indirectly supported by Brenton and 

Hoppe’s 2006 work, where they noted that small firms have a more difficult time complying 

with rules of origin provisions, such as those in place under AGOA.585 

Role of Other Unilateral Tariff Preference 

Programs in Increasing and Diversifying 

Exports

As noted in chapter 6 of this report, the United States is not the only country to grant unilateral 

tariff preferences like those available under AGOA and the U.S. GSP to developing African 

economies. In fact, 13 countries currently operate GSP programs similar to that of the United 

States, including Australia, Canada, the EU, and Japan. Various other unilateral preference 

regimes also exist outside of the GSP.586 This section focuses on recent analyses of non-U.S. 

preference regimes, and their effects on expanding and diversifying exports. Studies evaluating 

EU trade preference programs make up the bulk of this section for two main reasons. First, the 

EU remains the primary export destination for sub-Saharan Africa’s goods (due both to colonial 

582 Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 6–7. 583 Karingi, Páez, and Degefa, “Report on a Survey,” 2012, 12. 584 Ibid., 13. 585 Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 11-2. 586 Some of those schemes outside of GSP are now defunct, including ACP preferences granted by the EU. Aside 

from those listed here, the remaining national schemes notified to UNCTAD include those of Belarus, Bulgaria, 

Estonia, New Zealand, Norway, Russia, Switzerland, and Turkey. http://unctad.org/en/Pages/DITC/GSP/AboutGSP.aspx. 

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ties and the region’s relative proximity to the EU).587 Second, beneficiary countries in subSaharan Africa have a long history of utilizing various trade preference programs for their 

exports to the EU, including GSP preferences, GSP preferences for LDCs (designated as 

“Everything But Arms” or EBA, since 2001), and ACP preferences under the now defunct 

Yaoundé, Lomé, and Cotonou agreements.

Role of Other Unilateral Tariff Preference Programs 

in Increasing Exports 

As with the AGOA literature examined in the previous section, literature on the effectiveness of 

other preference programs in increasing trade can be divided into analyses that consider effects 

on total exports (mostly using policy dummy variables) and those that use more disaggregated 

approaches (typically involving preference margins). Another similarity of the “other programs” 

literature to the AGOA literature is that authors came to mixed conclusions about the 

effectiveness of such programs (i.e., some concluded that these programs increased trade, 

while others concluded that they did not). However, in contrast to the work discussed in the 

previous section, one study attempted to analyze the wide range of estimates on trade effects 

by conducting a meta-analysis on study results. We examine each of the three approaches 

(total trade, disaggregated, and meta-analysis) in turn.

Effects on Total Trade

Persson and Wilhelmsson’s 2006 analysis covered perhaps the longest time period in analyzing 

how EU preferences affected developing-country export flows. The authors used EU import 

data from 1960–2002 to estimate a gravity model, augmenting it with a time trend and 

controlling for EU enlargement while also differentiating countries covered by overlapping 

programs. Because the data ended in 2002, the trade effect estimates from the regressions are 

for the GSP-LDC program, which was the precursor to EBA. Additionally, they estimated trade 

effects for ACP preferences under both the Lomé and Yaoundé agreements. Their results 

indicated that preferences for ACP-only (Lomé) countries raised exports by 30 percent, and 

preferences for countries benefiting from both ACP and GSP-LDC raised exports by 

33 percent.

588 The GSP program alone was not found to have a significant effect on developingcountry exports.589 

587 In 2012, the EU remained the largest export destination for sub-Saharan Africa ($118 billion), but China is not 

far behind ($98 billion). Since 2007, China’s share of sub-Saharan Africa’s total exports has nearly doubled, from 12 

percent to 23 percent. See GTIS, GTA database (accessed March 4, 2014). 588 Persson and Wilhelmsson, “Assessing the Effects of EU Trade,” June 26, 2006, 18. 589 Ibid., 16.

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In their 2009 analysis, Gradeva and Martínez-Zarzoso analyzed total trade data from 1995–2005 

using a variety of estimators. Their results consistently found a negative and statistically 

significant relationship between a country participating in EBA and export performance, 

suggesting that participation in the program was actually associated with lower exports to the 

EU.590 However, the estimations also found a positive and statistically significant relationship 

between the interaction of EBA preferences and the amount of official development assistance 

received in the previous year and exports in the current year, suggesting that trade preferences 

alone were not enough to spur increased exports, but when coupled with other development 

assistance did lead to export growth.591 The authors concluded that aid and trade preferences 

were complements and should be used in tandem by developed countries in their global 

development strategies.592 

Although Pishbahar and Huchet-Bourdon’s 2008 study focused on the agricultural sector, the 

analysis was done on total agricultural trade and was not disaggregated at the product level. 

The authors used a gravity model to estimate how 11 different trade agreements (both bilateral 

and unilateral) had affected EU agricultural imports from beneficiary countries over the period 

2000–2004. Although most agreements were found to increase total agricultural export flows, 

the authors found that both EU GSP and EBA were associated with reduced beneficiary country 

agricultural exports to the EU.593 They offered several possible explanations for this result, 

including rules of origin and more administrative constraints under EBA than under the 

alternative Cotonou ACP preferences.594 

Effects on Disaggregated Trade

Much of the more recent analyses eschew the total trade approaches described above because 

of their tendency to bias the overall estimation results. Using disaggregated data instead, these 

recent analyses focus more on trade effects by product and sector, with varying study periods, 

estimation strategies, and program coverage. These analyses conclude that the trade effects of 

EU trade preference programs vary significantly by sector or product. 

Nilsson and Matsson conducted their analysis at a highly disaggregated level (HS 8-digit tariff 

line) and modeled preferences using product preference margins. They concluded that EU trade 

590 The authors suggest that this negative relationship could be the result of rules of origin or other administrative 

requirements under EBA with which LDCs may have a hard time complying. This would in theory explain a negative 

relationship, as the tariffs under EBA were not different from previous ACP arrangements, but cumulation 

requirements were altered. For more information, see Gradeva and Martínez Zarzoso, “Trade as Aid,” August 

2009, 28–9. 591 Gradeva and Martínez-Zarzoso, “Trade as Aid,” August 2009, 26, 28, 30. 592 Ibid., 30. 593 Pishbahar and Huchet-Bourdon, “EU’s Preferential Trade Agreements,” 2008, 116–17. 594 Ibid., 119.

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preferences played a positive role in increasing developing-country exports. In their 2009 

analysis of data from 2003–07, the authors used a gravity model595 to investigate the impact of 

the preferential margin on EU preferential imports, on both global and regional levels. Not only 

were EU preferences found to increase preferential imports on average, but effects were also 

positive and significant for all developing-country partner groups, with the exception of 

countries that had a bilateral FTA with the EU.596 Using regression estimates, the authors then 

calculated the contribution of trade preferences toward explaining total EU imports from the 

various developing-country regions. For ACP LDC countries, the authors found that preferences 

alone explained 19 percent of total imports, while for ACP non-LDCs, preferences explained 

10 percent of EU imports from the region.597 

Cirera, Foliano, and Gasiorek used an even more disaggregated dataset in their analysis, and 

concluded that EU preferences have only a small impact on trade. Their 2011 analysis used 

import data from 2002–08 disaggregated at the Combined Nomenclature (CN)598 10-digit level, 

and listed the actual regime of entry of a product, in contrast to other analyses, which assume 

the entry regime is based on which offers the most beneficial tariff. The authors estimated 

trade effects using various measures of preferences, and the results varied depending upon the 

choice of preference margin. However, their results suggested that the now-defunct ACP 

preferences under Cotonou were more effective at raising exports than other regimes, and that 

the effectiveness of EBA depended upon how the margin was defined.599 The authors 

concluded that while EU trade preferences had a positive but small impact on beneficiary 

country exports, GSP and EBA appeared less effective at raising exports than ACP preferences 

or FTAs.600 The authors offered several potential explanations for this result, including more 

595 The authors estimated a gravity model using a Poisson Pseudo Maximum Likelihood (PPML) estimator, noting 

that the alternative log-linearized OLS model may be biased because it is not defined for zero trade flows, and that 

OLS estimates may be biased and inefficient in the presence of heteroskedasticity, even when controlling for fixed 

effects. 

596 Countries with bilateral FTAs at the time of the analysis included Chile, Mexico, and South Africa. The authors 

explain that this result is likely due to the composition of South African exports, which accounts for about half of all 

EU imports from these three countries. Most imports are of base metals and mechanical appliances, which already 

have a very low preferential margin. As further evidence, when the authors excluded South Africa from the 

grouping, the coefficient estimate for FTA partners became positive and significant. Other groups for which 

positive trade effects were found (aside from ACP LDCs and ACP non-LDCs) include the Association of Southeast 

Asian Nations (ASEAN), Latin America, LDC non-ACP economies, and Mediterranean economies. See Nilsson and 

Matsson, “Truths and Myths,” April 2009, 17.

597 The authors do not report estimates for the other explanatory variables. For further information, see Nilsson 

and Matsson, “Truths and Myths,” April 2009, 19. 598 The EU uses the Combined Nomenclature (CN) system, which is comprised of the HS nomenclature explained 

above in footnote 10 and further EU subdivisions. For more information, see 

http://ec.europa.eu/taxation_customs/customs/customs_duties/tariff_aspects/combined_nomenclature/index_e

n.htm. 599 Cirera, Foliano, and Gasiorek, “The Impact of GSP Preferences,” 2011, 12–15. 600 Ibid., 12, 21.

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stringent rules of origin under GSP601 and the possibility that since FTAs are negotiated 

bilaterally, preferences are more likely to reflect a country’s export basket.602 

In their 2013 analysis, Cipollina, Laborde, and Salvatici estimated a gravity model603 with 2004 

cross-sectional trade data disaggregated at the HS 8-digit level. They did not differentiate 

import regimes, but assumed that imports from all countries entered under the lowest 

available rate (which would cover EBA, GSP, and ACP preferences). The authors computed a 

relative preference margin as a ratio of the tariff applied to beneficiary countries versus a 

weighted average of the tariffs applied to their competitors. They computed this weighted 

average as a constant elasticity of substitution (CES) index—not the MFN rate—in order to 

account for beneficiary countries’ comparative advantage with respect to their competitors.604

Their results suggested that EU trade preferences in general (including EBA, GSP, ACP, and 

bilateral agreements) have different impacts across sectors, and these impacts are not 

necessarily related to the size of the preference margin.605 Sectors where EU preferences 

resulted in large trade responses included ceramics and glassware, textiles,606 and footwear.607 

Additionally, the authors noted that in many cases, preferences for agricultural products did 

not have a significant impact, likely due to either preference scheme compliance costs or other 

preference regime restrictions, such as rules of origin requirements.608 Overall, the authors 

noted that EU trade preferences generated additional beneficiary country exports representing 

about 3 percent of total EU imports, but that these increased imports from beneficiaries also 

displaced imports from non-beneficiaries.609 Earlier work from these authors came to similar 

conclusions.610 

Various other studies also used a disaggregated analysis, but focused their investigations on a 

particular sector or set of products. In their 2011 analysis using data from 1995–2006, Aiello 

and Cardamone focused on the effects of the EU’s EBA program with respect to five agricultural 

601 Since this analysis was conducted, the EU has revised its rules of origin for apparel for LDCs and now only 

requires single transformation to confer origin, which is similar to the rules of origin under AGOA. However, this 

provision is only applicable to LDC beneficiaries, meaning that major apparel exporters such as Kenya and 

Mauritius are not eligible for these less restrictive the rules of origin. For more information, see Naumann, “The EU 

GSP Rules of Origin,” November 2011, 8–9. 602 Cirera, Foliano, and Gasiorek, “The Impact of GSP Preferences,” 2011, 12. 603 The authors estimated the gravity model using a Poisson Pseudo Maximum Likelihood (PPML) estimator. 604 Cipollina, Laborde, and Salvatici, “Do Preferential Trade Policies (Actually) Increase Exports?” August 2013, 5. 605 Ibid., 18. 606 Although the author uses the term “textiles,” the section referred to in the text are HS chapters 50–63, which 

include textiles and apparel.

607 Cipollina, Laborde, and Salvatici, “Do Preferential Trade Policies (Actually) Increase Exports?” August 2013, 18. 608 Ibid. 609 Ibid., 20, 28. 610 Cipollina and Salvatici, “Trade Impact of European Union Preferences,” 2011, 121.

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goods.611 The authors used a gravity model which included the margin of preference for each 

specific product to represent the effect of the preference program, and differentiated LDC 

preferences pre- and post-2001 in order to isolate the effect of EBA.612 The analysis found 

mixed results with respect to how EBA had affected the exports of these products from ACP 

countries. EBA did not have a statistically significant effect on exports of coffee or molluscs, and 

it was associated with reduced exports in the case of cloves, but it was found to have a positive 

and statistically significant effect on exports of vanilla beans and crustaceans.613 Although the 

authors did not draw any overarching conclusions on the overall effectiveness of EBA from 

these product case studies, they emphasized that their approach shows that EBA preferences 

have been effective in increasing exports of some products but not others. They concluded that 

studies like theirs may be useful in diagnosing why this is the case (they suggest nontariff 

barriers and rules of origin as possibilities).614 

Cardamone also followed this case study approach in a gravity model setting, but using monthly 

import data on various fresh fruits over 2001–04. In line with the conclusions of Aiello and 

Cardamone, the author found that EU preference programs benefited some products but not 

others. For example, EU GSP was found to have a positive and significant effect on EU imports 

of apples and grapes, but a negative effect on EU pear and mandarin imports.615 The author 

concluded that the impact of preferential margins on trade flows differs depending upon the 

commodity, which could be due to nontariff barriers or quality standards demanded by the 

importer.616 

Aiello and Demaria conducted a broader sectoral analysis in their 2010 paper, investigating the 

effects of various EU preference programs on beneficiary country agricultural exports over the 

period 2001–04. The authors used specific program preference margins in a gravity analysis of 

the effects of various EU trade preference programs (including GSP, EBA, and ACP), using a 

variety of different estimators.617 Their results suggested that GSP and EBA had a positive and 

significant effect on total beneficiary country agricultural exports, while the effects of the other 

programs varied across estimators.618 When the authors examined trade effects in different 

611 These products were selected based on three criteria: LDCs were important exporters of the product, tariffs on 

these products were positive under GSP, and the product did not display inter-year tariff variability. Products 

meeting the authors’ conditions were cloves, vanilla beans, coffee, crustaceans, and molluscs.

612 EBA went into effect in 2001, but the EU offered specific GSP-LDC preferences before that time. 613 Aiello and Cardamone, “Analysing the Impact of EBA,” 2011, 145–47. 614 Ibid., 148–49. 615 Cardamone, “Trade Impact of European Union Preferences,” 2011, 166–67. 616 Ibid., 168–69. 617 The different estimators used included ordinary least squares (OLS), least squares dummy variable (LSDV), 

Pseudo Quasi Maximum Likelihood (PQML), Negative Binomial Regression (NBR), and Zero Inflated Poisson (ZIP) 

regressions.

618 Aiello and Demaria, “Do Preferential Agreements Enhance the Exports?” January 2010, 24.

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agricultural sectors, their results suggested that GSP was correlated with a significant rise in 

exports of live trees, sugar, fruits, tropical fruits, and residues from the food industry, while EBA 

only had a positive significant effect on beneficiary country exports of lacs-gums.619 

Although the bulk of the non-U.S. preference program literature concentrates on the 

effectiveness of EU preference programs, one recent paper analyzed the effectiveness of 

China’s new unilateral preference program (begun in 2005, extended in 2008) on SSA exports to 

China. In their 2013 analysis, Co and Dimova used the triple difference-in-differences estimation 

technique of Frazer and Van Biesebroeck to analyze trade flows from 2002–10 at the HS 6-digit 

level. Their results indicated that while trade effects of Chinese preferences were 

heterogeneous by country and product group, they were only positive and significant for “other 

primary products,” a category that includes beverages, tobacco, animal and vegetable oils and 

fats, inedible crude materials, and mineral fuels.620 The authors concluded that outside of this 

product category, Chinese trade preferences have not contributed to increased imports from 

SSA.

Meta-Analysis Approach

In contrast to the studies examined above, Cipollina and Pietrovito’s 2011 analysis combined all 

the estimates they could collect from the literature regarding the effect of EU trade preference 

programs on developing-country exports into one meta-analysis. Their goal was to determine 

why different studies purporting to investigate the same phenomenon could yield such widely 

varying results. They constructed a Meta-Regression Analysis (MRA) model that accounted for 

differences in 36 studies on EU preferential trade regimes and estimated the average 

preference program effect on trade, separated into two groups of studies: those that used a 

dummy variable to symbolize trade preference and those that used the preference margin 

instead. 

Their analysis suggested that EU preferential trade agreements do, on average, positively 

impact trade flows, but that those impacts varied according to an author’s chosen specification. 

On average, papers that used dummy variables to indicate the presence of preferences 

predicted that preferences increased trade by 2 percent in a fixed-effects621 setting and by 

619 Ibid., 25. 620 Co and Dimova, “Preferential Market Access into the Chinese Market,” October 2013, 10–11, 25, 27. 621 Fixed-effects settings control for unobserved, time-invariant characteristics of individual observations (such as 

one country’s ability to do business more efficiently than another country), on the assumption that an individual 

effect is correlated with an explanatory variable. Random-effects models, in contrast, assume that these individual 

effects are not correlated with explanatory variables, and are thus part of the error term. For more information, 

see Kennedy, A Guide to Econometrics, 2003, 303–7.

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22 percent in a random-effects setting.622 Papers using preference margins estimated that a 

10 percent increase in preference margin was associated with increased exports of 0.6 percent 

and 0.7 percent, respectively, for the fixed- and random-effects specifications.623 

However, the authors cautioned against comparing estimates from the two analyses, stressing 

that one represented aggregate effects while the other was an elasticity based on tariff 

preference margins. Singling out the EBA program, the meta-analysis found that a 10 percent 

increase in the preference margin under this program increased trade by 2 percent, but 

analyses using dummy variables indicated that EBA decreased trade by 28 percent.624 Taking 

into account all of the results of the meta-analysis, the authors concluded that when analyzing 

the effect of a particular preferential trade agreement (such as EBA), aggregating the data and 

using a dummy variable to simulate the presence of preferences tended to bias the results and 

underestimate the impact of the agreement in question.625 

Role of Other Unilateral Tariff Preference Programs 

in Diversifying Exports 

Various authors have also analyzed the role of EU trade programs in helping to diversify 

developing-country exports. In his 2003 analysis, Brenton expressed skepticism that EU trade 

preference programs were an effective tool in helping beneficiary countries diversify their 

export basket, given that for many developing countries, trade preferences resulted in 

preference margins of less than 1 percent.626 The author argued that strict rules of origin in EU 

preference programs likely acted as a constraint to LDC export diversification,627 since many 

countries eligible for preferences did not claim them.628 

Other authors found more specific results using econometric estimation. Using Tobit and 

probit 629 estimation on HTS 6-digit trade data from 1994–2005, Gamberoni concluded that the 

extent to which an EU unilateral trade preference program led to export diversification was 

622 Cipollina and Pietrovito, “Trade Impact of EU Preferential Policies,” 2011, 102. 623 Ibid. 624 Cipollina and Pietrovito, “Trade Impact of EU Preferential Policies,” 2011, 102–3. 625 Ibid., 107. 626 Brenton, “Integrating the Least Developed,” April 2003, 19–20. 627 As noted above, EU apparel rules of origin for LDCs have since been revised and now require only single 

transformation. 

628 Brenton, “Integrating the Least Developed,” April 2003, 19–20. 629 The Tobit model is a sample selection model described previously. A probit model estimates the probability of a 

certain outcome based on a given set of explanatory variables. In this case, the dependent variable is the 

probability of a positive trade flow in a given product. For more information, see Kennedy, A Guide to 

Econometrics, 2003, 259–61.

255

 
dependent upon both the program and the sector analyzed.630 The author’s results suggested 

that while EU GSP increased the number of products exported to the EU by beneficiary 

countries, GSP-LDC/EBA631 had no statistically significant effect on the number of products 

exported, and ACP actually led to greater export concentration (i.e., fewer products exported) 

over time.632 The author noted that this result for ACP preferences “supports the hypothesis 

that preferences could lock countries into existing structural capacities, rather than encourage 

export diversification.”633 However, when the author analyzed trade-creating effects for 

agriculture and textiles separately from total exports, ACP preferences were shown to increase 

the probability of exporting a new agricultural product by 7 percent; GSP was estimated to have 

similar magnitudes of probability for trade creation, while GSP-LDC showed no statistically 

significant diversification effect.634 With respect to textiles, GSP was estimated to increase the 

probability of exporting a new product by 2 percent, while GSP-LDC and ACP preferences 

showed no statistically significant trade diversification effect.635 The author noted that this 

result for GSP-LDC with respect to textiles in particular supported the idea that rules of origin 

under this regime at the time of the analysis636 prevented countries from taking advantage of 

available preferences.637 

Although their 2011 analysis did not single out any particular EU preference program, Cipollina 

and Salvatici concluded that EU trade preferences in general have an ambiguous impact on 

developing countries’ export diversification. The authors analyzed trade data for 2004 at the HS 

6-digit level using relative preference margins in a gravity model setting.638 Although their 

model estimated that preferences on average have a positive and significant impact on export 

diversification, the impacts varied greatly by sector. Out of 16 sectors analyzed, preferences 

were found to have positive, significant impacts only on the number of products traded in 6 

categories: animals and animal products, vegetable products, fats and oils, prepared foodstuffs, 

plastics, and vehicles.639 For 7 of the sectors analyzed, EU trade preferences were found to 

630 Gamberoni, “Do Unilateral Preferences Help?” July 2007, 22. 631 Because the data straddled the line between when EBA was implemented in 2001, the author refers to these 

preferences as “GSP-LDC.” 632 These represent the results from the “best available regime” regression. When preferences were not treated as 

exclusive, EBA was estimated to have a statistically significant negative effect on export diversification. The author 

attributes this difference to the fact that the EBA beneficiaries that also received ACP preferences tended to use 

ACP instead of EBA, likely due to either nontariff barriers, restrictive rules of origin, or high administrative costs 

associated with accessing EBA preferences. See Gamberoni, “Do Unilateral Preferences Help?” July 2007, 16–18. 633 Gamberoni, “Do Unilateral Preferences Help?” July 2007, 16. 634 Ibid., 20–21. 635 Gamberoni, “Do Unilateral Preferences Help?” July 2007, 21. 636 As noted above, EU apparel rules of origin for LDCs have since been revised and now require only single 

transformation. 

637 Gamberoni, “Do Unilateral Preferences Help?” July 2007, 21. 638 The authors use a Heckman sample selection specification for their model. 639 Cipollina and Salvatici, “Trade Impact of European Union Preferences,” 2011, 120–22.

256

 
actually result in significantly greater export concentration.640 Based on these results, the 

authors concluded that EU preferences would likely lead to developing-country export 

diversification in agricultural goods, but discourage diversification of industrial good exports.641 

In their 2013 work, Persson and Wilhemsson came to the overall conclusion that the extent of 

export diversification under unilateral trade preferences varies by preference program. 

However, using a long time series of data (1962–2007), the authors arrive at slightly different 

conclusions about which programs were more effective at increasing the number of products 

exported. Using a gravity model642 to analyze various measures of diversification, the authors 

found that all GSP program variations (including GSP and GSP-LDC) were associated with 

statistically significant increases in the number of products exported, while ACP preferences at 

first led to an increase in the number of products exported, but over time led to greater export 

concentration.643 At the same time, using various export diversification indices, the authors also 

demonstrated that while GSP programs led to countries exporting a greater number of 

products, most programs did not result in statistically significant differences in export earnings 

over time.644 In other words, although beneficiaries were exporting more products, the value of 

exports remained concentrated in the same products over time.

Comparative Effectiveness of AGOA and Other 

Unilateral Preference Programs in Increasing 

and Diversifying Exports

As noted in the previous two sections, the literature regarding the effectiveness of many types 

of unilateral trade preferences (AGOA and otherwise) present a range of different conclusions 

based upon the study methodology, time period, and, in some cases, the sector under 

investigation. For this reason, it is difficult to make “apples-to-apples” comparisons of the 

aforementioned studies in order to determine in what ways one particular preference regime 

was more or less successful than a similar regime offered by a different country. In order to 

investigate comparative successes, this section examines studies that specifically analyze 

multiple preference regimes in a comparative setting, with respect to both trade intensification 

and trade diversification effects.

640 These sectors included footwear; articles of stone or ceramics; precious stones or metals; base metals; 

machinery; optical or photographic equipment, medical or surgical instruments, clocks and watches; and 

miscellaneous manufactured articles. See Cipollina and Salvatici, “Trade Impact of European Union Preferences,” 

2011, 120.

641 Cipollina and Salvatici, “Trade Impact of European Union Preferences,” 2011, 122. 642 The authors used a fixed effect Poisson Pseudo Maximum Likelihood (PPML) specification of the gravity model. 643 Persson and Wilhelmsson, “EU Trade Preferences and Export Diversification,” September 2013, 17–19. 644 Ibid., 21.

257

 
Intensification 

Effects on Total Trade

Cipollina, Laborde, and Salvatici specifically compared the effects of U.S. and EU trade 

preferences in a gravity setting. Using cross-sectional data from 2004 in a gravity model645

where an explicit measure for preference margin is calculated on a country-pair basis at the HS 

8-digit level, the authors estimated how both U.S. and EU preferential trade policies affected 

beneficiary country export flows, with respect to both intensification and diversification.646

While the trade intensification effects varied by product sectors, the results suggested that in 

most cases, EU and U.S. trade preferences both positively impacted trade flows.647 However, 

the effect of preferences tended to be larger for products with greater price competition (i.e., 

products with higher price elasticities) rather than greater quality competition.

648 Overall, the 

authors concluded that in most cases, EU preferences were more effective at increasing trade 

than were U.S. preferences.649 The authors noted that this finding was likely due to the fact that 

EU imports were more responsive to price changes than were U.S. imports, particularly when it 

came to imports of live animals and animal products, animal or vegetable fats and oils, and 

ceramics and glassware.650 

A 2013 analysis from the European Commission Director General for Trade office by Davies and 

Nilsson came to a similar conclusion regarding the trade intensification effects of the respective 

EU and U.S. trade preference regimes. The authors estimated a gravity model on low-income 

and middle-income country export data from 2007–10, using policy dummies to examine total 

beneficiary country export flows and export flows with mineral fuels excluded. The authors 

found no statistically significant relationship between EU or U.S. trade policy and total exports

of AGOA beneficiary countries.651 However, when trade flows excluding mineral fuels were 

examined, the authors estimated that for AGOA beneficiary countries, EU trade policy led to 

two times more non-mineral fuel exports than U.S. policy.652 Earlier work by Nilsson based on 

trade flows from 2001–03 also concluded that EU policy had been more successful in 

generating developing-country exports than U.S. policy. His 2005 gravity model analysis 

concluded that EU policy generated 35 percent more developing-country exports over that 

645 The authors used a zero-inflated Poisson (ZIP) specification of the gravity model. 646 Although the authors do not provide results with respect to specific trade preference regimes, bilateral trade 

flows representing all preference regimes are included in the data set.

647 Cipollina et al., “Do Preferential Trade Policies (Actually) Increase Exports?” September 2010, 16–18. 648 Ibid. 649 Cipollina et al., “Do Preferential Trade Policies (Actually) Increase Exports?” September 2010, 16. 650 Ibid. 651 Davies and Nilsson, “A Comparative Analysis of EU and US Trade,” February 2013, 14. 652 Ibid., 13–14.

258

 
period, and that the effects were even higher for low-income countries.653 Additionally, the 

analysis showed that both distance and colonial ties to an EU member state also had significant, 

statistically positive effects on export flows—results which help explain the stronger trade 

relationship between the EU and SSA as compared to the U.S. trading relationship with the 

region.654

Sector-Specific Findings

Although the foregoing analyses concluded that EU policy has been better at increasing 

developing-country trade flows, various other authors came to different conclusions when 

examining the trade effects of different sectors. For instance, Collier and Venables argued that 

for trade preference programs to be effective at raising manufacturing exports, they needed to 

be designed to be consistent with international trade in fragmented tasks. The authors 

emphasized that restrictive rules of origin prevent countries from exploiting their comparative

advantage in fragmented tasks.655 In order to illustrate the trade-creating effects of more 

flexible rules of origin, they compared U.S. and EU apparel imports from SSA over the period 

1991–2005 using both triple difference-in-differences and quadruple difference-indifferences656 approaches. The triple difference-in-differences approach results suggested that 

the AGOA apparel provision created about seven times more apparel exports to the United 

States relative to the EU, and the quadruple difference-in-differences estimates confirmed the 

finding that AGOA apparel treatment had a large, statistically significant impact on apparel 

exports.657 The authors concluded that trade policy needs to take into account rules of origin 

that do not discourage specialization, and that AGOA’s special apparel provision has 

demonstrated its effectiveness at increasing trade in apparel products vis-à-vis EU trade policy 

through 2005.658 It is worth noting here that the EU has since relaxed its apparel rules of origin 

for LDCs, requiring only single transformation to confer origin—similar to AGOA.659 

In their 2013 analysis, de Melo and Portugal-Perez also focused on how differences in rules of 

origin between U.S. AGOA and EU EBA affected trade flows. The authors modeled the 

653 Nilsson, “Comparative Effects of EU and US,” December 2005, 12–13. 654 Ibid. 655 Collier and Venables, “Rethinking Trade Preferences,” May 2007, 5. 656 This is similar to the triple difference-in-differences methodology, but adds an additional dimension. In this 

case, the four dimensions are the difference in import market total apparel demand between the United States 

and the EU, differences in exporter relationship to the import market between the United States and the EU 

(including distance), differences in time (pre- and post-preferences), and differences in product (in this case, 

apparel relative to textiles).

657 Collier and Venables, “Rethinking Trade Preferences,” May 2007, 17–19. 658 Ibid., 20. 659 As noted above, EU apparel rules of origin for LDCs have since been revised and now require only single 

transformation. 

259

 
relationship between apparel exports from AGOA beneficiary countries at the HS 4-digit level 

(where rules of origin are specified) and preferential access under the various rules of origin 

contained within both the EBA and AGOA agreements over the period 1996–2004. Controlling 

for other factors and recognizing that preference margins under the two regimes were similar, 

the authors found that the single transformation rule under AGOA was associated with a 168 

percent increase in apparel exports from the seven largest AGOA apparel exporters.660 In other 

words, the authors found that a U.S. rules of origin change under AGOA had caused increased 

beneficiary country exports, but the lack of a similar simplification in EU rules under EBA during 

that time period meant that the EU program produced no corresponding export increase.661 

The 2008 analysis of Di Rubbo and Canali focused on the comparative effect of trade 

preferences on developing-country agricultural exports. The authors used a gravity model to 

investigate the comparative effect of EU trade policy versus U.S. trade policy on such exports 

from 1996–2005, subdividing these effects by country income level and time period (with a 

structural break between 2000 and 2001 to account for various trade reforms). The model’s 

results suggested that the EU’s trade policies have created more developing-country 

agricultural exports than have U.S. policies, but this effect varied substantially by country 

income group; EU policies seemed to be most effective at increasing exports from upper-middle 

income countries, followed by low-income countries, then lower-middle income countries.662

Specifically, the authors calculated that EU trade policy led to 69 percent more agricultural 

exports from developing countries over 1996–2000, and 73 percent more agricultural exports 

over 2001–05.663 These effects were even higher for the low-income country group to which 

most nations in SSA belong: EU policy led to 76 percent greater agricultural exports from lowincome countries than did U.S. policy over 1996–2000, and to 81 percent greater agricultural 

exports than did U.S. policy over 2001–05—the period when AGOA came into effect.664 

The findings of Bureau, Chakir, and Gallezot provide some possible explanations as to why EU 

policy was more effective in increasing developing-country agricultural exports. The authors 

focused solely on comparing the way developing countries utilized U.S. and EU trade 

preferences in the agricultural sector. The authors pointed out that developing countries have 

similarly high preference utilization rates for both U.S. and EU programs, but that preference 

schemes overlap such that developing countries can export to the EU and United States under 

various regimes. To determine why a certain regime was chosen, the authors estimated a probit 

660 De Melo and Portugal-Perez, “Preferential Market Access Design,” February 2013, 15, 21. 661 As noted above, EU apparel rules of origin for LDCs have since been revised and now require only single 

transformation. 

662 Di Rubbo and Canali, “A Comparative Study of EU and US Trade Policies,” August 2008, 7. 663 Ibid., 8. 664 Ibid.

260

 
model that accounted for the preferential tariff of a regime, the degree of processing of the 

product, and the size of the export flow. The results of this regression offered some insights 

into why EU preferences were found to be more effective at raising agricultural exports than 

U.S. preferences. First, the authors noted that for the EU on average, agricultural imports with 

higher degrees of processing were more likely to utilize preferences, while U.S. agricultural 

imports with a higher degree of processing were more likely to enter the United States under 

MFN treatment, suggesting that complying with U.S. rules of origin on processed agricultural 

products was either difficult or cost more than the gains from utilizing available preferences.665

Second, the authors noted that beneficiary country exports under AGOA were in very small 

volumes, so that even though utilization was high, the authors questioned whether the 

preferences alone were successful in creating trade.666 

Diversification 

While various studies compared the effectiveness of EU and U.S preferences programs on trade 

intensification, fewer comparisons exist that explore the issue of how the programs affect SSA 

trade diversification. Nicita and Rollo gave one reason why this may be the case, stating that 

“one important feature of export growth in sub-Saharan Africa is that export diversification has 

been largely absent. . . . In 2011, more than three-quarters of export growth in sub-Saharan 

Africa was in products and destinations that were already exported in 2001.”667 In spite of this 

low trade diversification for the region over the period, one analysis was identified that 

compared EU and U.S. trade policy with respect to diversification, and one analysis specifically 

compared the efficacy of EBA and AGOA in diversifying SSA textile exports.

Without reporting results specific to each program, Cipollina, Laborde, and Salvatici concluded 

that U.S. trade preference programs are more successful than European ones at helping to 

diversify exports of trading partners. Using data from 2004, the authors estimated a highly 

disaggregated model, with trade in products defined at the HS 8-digit level and including all U.S. 

and EU preference programs. The authors found that U.S. preferences significantly increased 

the probability of exporting in every sector except for mineral products.668 In contrast, although 

EU trade preferences significantly increased the probability of exports in most categories, they 

also decreased the probability of exports of hides and skins, wood, and footwear.669

Additionally, they estimated that U.S. trade preferences increased the probability of a positive 

665 Bureau, Chakir, and Gallezot, “The Utilization of Trade Preferences,” 2007, 191. 666 Ibid., 194. 667 Nicita and Rollo, “Tariff Preferences as a Determinant,” 2013, 4. 668 Cipollina et al., “Do Preferential Trade Policies (Actually) Increase Exports?” September 2010, 14. 669 Ibid., 15.

261

 
export flow in any given product by between 7 and 28 percent, while EU probabilities were 

found to be slightly smaller at between 3 and 23 percent.670 

The rules of origin-centric analysis from de Melo and Portugal-Perez quantified the comparative 

effectiveness of AGOA and EBA at increasing the number of apparel products exported by 

beneficiary countries through 2004. Using a negative binomial regression model and product 

data at the HS 6-digit level, the authors found that the less-restrictive rules under AGOA during 

the time period in question671 were associated with an increase in the number of products 

exported of between 39 and 61 percent.672 While the authors noted that export diversification 

also took place with respect to products shipped to the EU, the magnitude of the diversification 

was less than for the U.S. market.673 

Although their work does not uniquely deal with the United States and the EU, Nicita and 

Rollo’s 2013 analysis offer some insights as to why EU programs seem to be better at increasing 

trade flows from SSA, while U.S. programs are more effective at diversifying their trade. The 

authors noted that export diversification requires not only expansion into new products, but 

also the survival of pre-existing export flows. For this reason, they investigated both the 

probability of new export flows and the probability of survival of existing flows using probit 

estimation. Their analysis specified data at the HS 6-digit level at two points in time, separating 

exports into primary, intermediate, and consumer goods, and taking into account both relative 

and direct market access.674 The authors found that direct market access changes (such as 

reduced tariffs under AGOA) are important only for new export flows—in other words, reduced 

tariffs lead to greater export diversification.675 Since EBA did not offer further reduced tariffs 

(indeed, it was a continuation of the EU’s GSP-LDC program), Nicita and Rollo’s work would 

suggest that few new export flows would manifest under the EBA program. However, relative 

market access (tariff advantages over competitor countries) matters for both new export flows 

and the survival of existing flows, suggesting that for sub-Saharan Africa, keeping its tariff 

advantages in the U.S. market relative to other developing countries is now paramount to 

sustained exports.676 

670 Cipollina et al., “Do Preferential Trade Policies (Actually) Increase Exports?” September 2010, 15. 671 As noted above, EU apparel rules of origin for LDCs have since been revised and now require only single 

transformation. 

672 De Melo and Portugal-Perez, “Preferential Market Access Design,” February 2013, 20. 673 Ibid., 21. 674 These data points are 2000–2001 averaged and 2010–11 averaged. 675 Nicita and Rollo, “Tariff Preferences as a Determinant,” 2013, 10, 16. 676 Ibid., 16.

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Recommendations on How to Improve AGOA

Given the literature’s findings on AGOA’s effectiveness and authors’ hypotheses as to why they 

found the results they did, it is unsurprising that many authors offered recommendations on 

how the program could be improved. The empirical literature focuses on the factors that 

authors perceived as the greatest constraints to increased trade, given the results of their 

estimations. Seyoum provided some of the most comprehensive recommendations, based on 

both the author’s own results and suggestions from other sources. The author made three 

major recommendations: improving supply capacity (including seeking out foreign direct 

investment (FDI) and capacity-building assistance); making AGOA permanent and binding; and 

improving the business climate of beneficiary countries (including improved rule of law and 

protection of intellectual property rights).677 Additionally, the author advocated expanding the 

list of eligible products, ending country eligibility requirements to aid beneficiary countries in 

formulating long-term export strategies, and increasing trade assistance to improve both 

institutional and trade capacity.678 Brenton and Ikezuki made similar broad-based 

recommendations, including recommending that AGOA should be made permanent or at least 

have a longer horizon, that all countries should be made eligible for clothing preferences with 

liberal rules of origin, that all products should be made duty-free/quota-free, and that 

beneficiary countries should address domestic constraints on trade and investment.679 

Other authors were more focused in their recommendations, building them on particular 

estimation results. Tadesse and Fayissa focused on their result of increasing trade gains over 

time due to AGOA, advocating that policymakers should concentrate on ways to build on the 

trade-initiation momentum of the agreement.680 They suggested that investments in 

networked communication, efficient transportation hubs, and training and capacity building 

would all be means to arrive at that result.681 In contrast, Frazer and Van Biesebroeck 

advocated for wider product inclusion under AGOA. In formulating their recommendation, they 

combined two results—that AGOA helped to increase trade in various products and that at the 

time of the study, imports of non-oil products not included under AGOA were four times larger 

than imports of non-oil products that were covered by AGOA—to suggest that further 

liberalization on the part of the United States could greatly impact beneficiary countries’ 

GDP.682 Concluding his 2005 study, Nouve suggested that trade gains under AGOA would be 

substantially greater if beneficiary countries made an effort to maintain and promote the 

677 Seyoum, “Export Performance of Developing Countries,” 2007, 530. 678 Ibid., 529. 679 Brenton and Ikezuki, “Initial and Potential Impact,” April 2004, 28–29. 680 Tadesse and Fayissa, “Time Impact of AGOA on U.S. Imports,” 2008, 939. 681 Ibid. 682 Frazer and Van Biesebroeck, “Trade Growth under AGOA,” February 2010, 140.

263
distinctiveness of their products, based on his finding that less substitutable goods benefit 

more under AGOA.683 

Condon and Stern’s 2011 review of AGOA-related literature summarized the findings of a wide 

variety of works and concluded the following: (1) AGOA should be extended to cover all 

products, including full duty-free, quota-free access for sensitive agricultural goods; (2) AGOA 

preferences should be made permanent to allow firms to plan for the future and make 

investments accordingly; and (3) AGOA would be more effective with less restrictive rules of 

origin, which would allow firms more flexibility in sourcing inputs in order to exploit their 

comparative advantage in low-cost labor.684 Brenton and Hoppe also strongly emphasized 

Condon and Stern’s third finding, noting that rules of origin are preventing LDCs from becoming 

integrated into global production networks.685 

Results from Mevel et al.’s joint Brookings-U.N. Economic Commission for Africa (UNECA) CGE 

modeling exercises also pointed to a number of recommendations for policymakers. The 

authors recommended that the program be extended beyond 2015 because they found that 

ending it would result in export losses and reduced employment in beneficiary countries.686

They also recommended that the program be extended to grant full duty-free/quota-free 

access for eligible countries, given that their simulations suggested that such access would have 

little adverse impact on U.S. producers.687 Aside from recommendations directed at the United 

States, the authors also stressed the importance of various reforms by the beneficiary countries 

themselves, including reducing tariffs on imports of intermediate goods in order to better take 

advantage of preferences granted by AGOA, and pursuing greater economic integration on the 

African continent in order to increase the region’s competitiveness. The latter would need 

significant investments in trade facilitation to be successful, and the authors suggested that the 

U.S. should consider including trade facilitation and trade assistance in any new incarnations of 

the program.688 

In their 2010 assessment looking back at AGOA’s first decade of implementation, Páez et al., of 

UNECA, made various recommendations, including helping beneficiary countries comply with 

sanitary and phytosanitary (SPS) rules, reducing supply-side constraints (such as poor 

infrastructure), and a longer time horizon for the agreement in order to reduce firm 

uncertainty.689 However, many of the authors’ comments focused on easing the regulatory 

683 Nouve, “Estimating the Effects of AGOA,” July 2005, 22–23. 684 Condon and Stern, “The Effectiveness of AGOA in Increasing Trade,” March 2011, 3. 685 Brenton and Hoppe, “AGOA, Exports, and Development,” August 2006, 12. 686 Mevel et al., “AGOA: An Empirical Analysis,” July 2013, 32. 687 Ibid. 688 Ibid. 689 Páez et al., “A Decade of African-US Trade,” 2010, 18–22.

264
burden for African firms wishing to comply with AGOA. The authors noted that some sources 

estimate that benefits accrued by African countries under AGOA would have been five times 

higher if rules of origin were less stringent.690 Additionally, the authors stressed that “in this 

myriad of preferences offered, AGOA appears to be one of the more stringent schemes, 

burdening beneficiaries with compliance requirements and unpredictable market access 

opportunities for their products.”691 

Survey-based opinions from Karingi, Páez, and Degefa were in a similar vein, with threequarters of respondents recommending increased technical assistance and capacity building on 

standards and SPS measures.692 In fact, respondents reported that complying with U.S. SPS 

regulations was one of the principal regulatory impediments preventing firms from accessing 

the benefits of the program.693 Other recommendations included extending benefits beyond 

the 2015 expiration date, relaxing social and political criteria for countries emerging from 

conflict, providing greater support for small firms so that they can access the program’s 

benefits, expanding the list of eligible products, and promoting U.S. investment in Africa.694 

A summary of the literature on the effectiveness of AGOA and other similar unilateral tariff 

preference programs in this chapter is presented in table 7.2.

690 Páez et al., “A Decade of African-US Trade,” 2010, 6. For more information, see Mattoo, Roy, and Subramanian, 

“The African Growth and Opportunity Act,” 2003, 830. 691 Páez et al., “A Decade of African-US Trade,” 2010, 12. 692 Karingi, Páez, and Degefa, “Report on a Survey,” 2012, 20. 693 Karingi, Páez, and Degefa, “Report on a Survey,” 2012, 16–17. 694 Karingi, Páez, and Degefa, “Report on a Survey,” 2012, 20–23.

265
266 

Table 7.2 Summary of the literature on the effectiveness of AGOA and other similar unilateral tariff preference programs

Author Title Years Model Findings Impact

Utilization of Preferences

Keck and Lendle 2012 "New evidence on 

preference utilization"

2008 Raw data analysis AGOA's preference utilization rate was estimated at 

92 percent. Utilization rates of similar programs directed 

toward LDCs was also estimated to be high. EU programs 

for LDCs or EU programs designated for ACPs all had 

estimated utilization rates of 86 percent or higher.

Brenton and Ikezuki 2004 "The initial and potential 

impact of preferential 

access to the U.S. market 

under the African Growth 

and Opportunity Act"

2002 Raw data analysis Average AGOA utilization rates were over 80 percent, but 

one-third of countries had utilization rates below

20 percent while 37 percent of countries had utilization 

rates greater than 80 percent.

Brenton and Hoppe 2006 "The African Growth and 

Opportunity Act, exports, 

and development in SubSaharan Africa"

2005 Raw data analysis AGOA utilization was estimated at 95 percent, but 

utilization rates are highly variable by country. Eleven of 

37 beneficiaries were estimated to have utilization rates 

of at least 98 percent, but five countries did not utilize 

preferences at all.

Dean and Wainio 2006 "Quantifying the value of 

U.S. tariff preferences for 

developing countries"

2003 Raw data analysis All non-LDBDCs except three had estimated utilization 

rates of at least 75 percent for non-agricultural products. 

For LDBDCs, average the average utilization rate for nonagricultural products was above 50 percent. For 

agricultural exports, 14 countries were estimated to have 

utilization rates above 90 percent, but two did not use 

preferences at all.

Bureau et al. 2007 "The utilization of trade 

preferences for developing 

countries in the agri-food 

sector"

2002 Raw data analysis AGOA preference utilization rates for agricultural goods 

were estimated at 85 percent in 2002. SSA utilization of 

EU preferences on agricultural goods in the same year was 

estimated at 95–96 percent.

Candau and Jean 2009 "What are EU trade 

preferences worth for SubSaharan Africa and other 

developing countries?"

2001 Raw data analysis EU preference program utilization is high. In 2001, 

utilization rates for LDCs in SSA were estimated at 

92 percent, while utilization rates for non-LDCs in SSA 

were estimated at 94 percent.

Cooke 2011 "The impact of trade 

preferences on exports of 

developing countries: the 

case of the AGOA and CBI 

preferences of the USA"

1996–2009 Triple difference-indifferences type 

regression, HS-6 

level for selected HS 

chapters

Overall, AGOA raised beneficiary country exports of 

selected products to the United States by 38.3-

57.8 percent. AGOA led to statistically significant increases 

in exports of both apparel and non-apparel product 

categories, but the effects were small and greater for 

apparel than for non-apparel.
267 

Author Title Years Model Findings Impact

Effects of AGOA

Nouve 2005 "Estimating the effects of 

AGOA on African exports 

using a dynamic panel 

analysis"

1996–2004 Dynamic panel 

gravity model using 

Difference and 

System GMM 

estimators

AGOA had a significant and positive effect on beneficiary 

country exports to the United States. Every dollar increase 

in exports under AGOA led to spillover effects of an 

additional $0.16 to $0.20 in exports. Trade flows of highly 

substitutable products would either not be affected by 

AGOA or be affected negatively. Less substitutable 

products would likely experience positive effects from 

AGOA. Further, exports of capital-intensive industries have 

benefitted more from AGOA than have exports of laborintensive industries.

Positive

Lederman and Ozden 2004 "U.S. trade preferences: all 

are not created equal"

1997, 2001 Gravity model, 

disaggregated at the 

HS-2 level, using 

product program 

utilization rate as 

AGOA instrument

Participation in AGOA led to a five percent increase in 

exports for the average beneficiary country

Positive

Brenton and Hoppe 2006 "The African Growth and 

Opportunity Act, exports, 

and development in SubSaharan Africa"

2005 Raw data analysis Effects from AGOA had to be small, since most trade 

growth was in crude oil, which would have been shipped 

even in the absence of AGOA. All growth in apparel 

exports must have been due to the third country fabric 

provision, as exports from countries not eligible actually 

declined over the period examined.

Positive, but small

Zappile 2011 "Nonreciprocal trade 

agreements and trade: does 

the African Growth and 

Opportunity Act (AGOA) 

increase trade?"

1995–2005 Gravity model, 

aggregated trade 

data and AGOA 

dummy

AGOA had no statistically significant effect on aggregate 

beneficiary country nonoil exports. 

No effect

Seyoum 2007 "Export performance of 

developing countries under 

the African Growth and 

Opportunity Act: experience 

from U.S. trade with SubSaharan Africa"

1997–2004 ARIMA variation of 

the gravity model, 

using AGOA dummy 

on aggregated trade 

data; separate 

models for textiles 

and apparel, energy, 

and minerals

AGOA had no effect at the aggregate level, but did have a 

positive and significant effect on exports of textiles and 

apparel. Effects on both energy and minerals were not 

significant.

No aggregate 

effect, positive

effect on textiles 

and apparel
268 

Author Title Years Model Findings Impact

Tadesse and Fayissa 2008 "The impact of African 

Growth and Opportunity 

Act (AGOA) on U.S. imports 

from Sub-Saharan Africa 

(SSA)"

1991–2006 Tobit specification 

of the gravity 

model using AGOA 

dummy var; models 

estimate at both 

aggregated and 

disaggregated (HS2) levels

In the aggregate, AGOA did not have a statistically 

significant effect on beneficiary country exports to the 

United States. At the HS-2 level, AGOA was responsible for 

a statistically significant increase in exports to the United 

States in 19 of 99 product categories, including 

vegetables, fruits and nuts, coffee/tea/spices, beverages, 

plastics, fabrics, apparel, and tin. Further, trade increasing 

effects of AGOA grew over time. Manufacturing sectors 

experiencing positive trade effects as a result of AGOA 

included pharmaceuticals, miscellaneous chemical 

products, and plastics. Additionally, AGOA had significant 

trade initiation effects in 24 of 99 different product 

categories, including vegetables, milling products, 

miscellaneous chemicals, plastics, cotton knitted fabrics, 

knit apparel, and non-knit apparel.

No aggregate 

effect, mixed 

effects by product

Condon and Stern 2011 "The effectiveness of 

African Growth and 

Opportunity Act (AGOA) in 

increasing trade from least 

developed countries: a 

systematic review"

Various Literature review Exports from AGOA countries have increased substantially 

since the program's implementation, and countries are 

utilizing the preferences. AGOA did have a positive impact 

on beneficiary country exports of apparel, but outside of 

apparel there is little evidence that AGOA helped to 

increase trade. 

Positive for 

apparel, not 

conclusive for 

other sectors

Frazer and Van Biesebroeck 

2010 

"Trade growth under the 

African Growth and 

Opportunity Act"

1998-2006 Triple difference-indifferences 

regression, 

disaggregated at 

HS-6 level

AGOA had a positive effect on exports of agricultural 

goods, manufactures, and apparel, but trade effects for 

petroleum and mineral products were not significant. 

Additionally, positive trade effects grew over time. AGOA 

raised beneficiary country apparel exports by 42 percent 

on average, but effects were positive for only 14 

beneficiaries. AGOA was estimated to raise agricultural 

product exports by 8 percent on average, and nearly 2/3 

of beneficiaries experienced a significant positive increase 

in agricultural exports due to AGOA. In manufactures, 

AGOA was estimated to result in a 15 percent increase in 

beneficiary country exports, with significant positive 

effects for 35 beneficiaries. AGOA helped diversify 

beneficiary country exports, and the probability of 

exporting a new product increased over time - particularly 

in apparel.

Mixed, depending 

upon product 

group and 

country
269 

Author Title Years Model Findings Impact

Karingi et al. 2012 "Report on a survey of 

AGOA's past, present, and 

future prospects: The 

experiences and 

expectations of SubSaharan Africa"

2011 Survey A majority of private sector respondents from beneficiary 

countries believed that AGOA was very important to their 

economic and trade links, but only about half of firms 

reported that they had directly benefitted from AGOA. 

Also, 39 percent of private sector respondents reported 

diversification in their sector or enterprise due to AGOA.

Majority positive

de Melo and Portugal-Perez 

2013 

"Preferential market access 

design: evidence and 

lessons from African apparel 

exports to the US and the 

EU"

1996–2004 Panel estimation 

with various 

specifications

Simplified rules of origin under the third country fabric 

provision was correlated with a 168 percent increase in 

apparel exports by the seven largest AGOA apparel

exporters. Furthermore, the third-country fabric provision 

helped to increase the varieties of apparel exported by 

between 39 and 61 percent.

Positive for 

apparel

Nouve and Staatz 2003 "Has AGOA increased 

agricultural exports from 

Sub-Saharan Africa to the 

United States?"

1998–2002 Fixed effects 

gravity model, 

using AGOA 

dummy

AGOA was estimated to have a positive effect on 

agricultural exports, but not a statistically significant one.

Positive, but not 

statistically 

significant

Páez et al. 2010 "A decade (2000-2010) of 

African-U.S. trade under the 

African Growth and 

Opportunity Act (AGOA): 

challenges, opportunities 

and a framework for postAGOA engagement"

2000–2010 Descriptive 

analysis

Through 2010, 90 percent of U.S. imports under AGOA 

were energy-related products, suggesting that there has 

been little overall product diversification. 

Little product 

diversification

Other preference programs

Gamberoni 2007 "Do unilateral preferences 

help export diversification?"

1994–2005 Tobit and probit 

estimation

Export diversification effects of preferences are 

dependent upon the program and sector. GSP improved 

export diversification, EBA did not have a statistically 

significant effect on export diversification, and ACP 

preferences were estimated to have an anti-diversification 

effect. The analysis also estimates sector-specific 

diversification effects for agriculture and textiles.

GSP-LDC did not 

increase 

diversification, 

ACP led to 

increase export 

concentration

Persson and Wilhemsson 2013 "EU trade preferences and 

export diversification"

1962–2007 Gravity model 

using fixed effect 

Poisson Pseudo 

Maximum 

Likelihood (PPML) 

estimator

EU trade preference programs vary in their effect on 

export diversification of beneficiary countries. GSP and 

EBA were found to increase export diversification, while 

ACP preferences were first associated with export 

diversification, but resulted in greater product 

concentration by the end of the period of analysis. 

However, although GSP led to increased product 

diversification, most GSP programs did not lead to 

significant diversification of overall export earnings.

GSP-LDC 

increased 

diversification, 

but ACP led to 

increased 

concentration
270 

Author Title Years Model Findings Impact

Brenton 2003 "Integrating the least 

developed countries into 

the world trading system: 

the current impact of EU 

preferences under 

Everything but Arms"

2001 Raw data analysis Low take-up of EBA preferences in their first year of 

implementation suggest that either countries do not see 

value in the preferences or else have difficulty in 

complying with the requirements of accessing 

preferences. For the range of developing countries 

analyzed, EBA preferences were found to have either no 

relevance, low relevance, or high relevance based on a 

country's export basket. However, even for countries with

high relevance, take-up was nearly non-existent for ACP 

countries.

Aiello and Cardamone 2011 "Analysing the impact of 

Everything But Arms 

initiative using a gravity 

model"

1995–2006 Gravity model, 

fixed effects 

negative binomial 

estimator; 

programs modeled 

by margin of 

preference

Effects of EBA were found to be mixed among the five 

products analyzed, suggesting that the trade-stimulating 

effects of EBA were heterogeneous by product and, by 

extension, country. EBA was found to increase exports of 

crustaceans and vanilla, had no effect on exports of coffee 

or molluscs, and reduced exports of cloves.

Mixed, based on 

product

Cardamone 2011 "Trade impact of European 

Union preferences: an 

analysis with monthly data"

2001–2004 

(monthly 

data)

Gravity model, 

fixed effects 

Poisson estimator; 

programs modeled 

by margin of 

preference

GSP preferences were found to have a positive and 

marked effect on EU imports of apples and grapes, but 

were estimated to have a negative effect on imports of 

pears and mandarins.

Mixed, depending 

upon product and 

regime

Gradeva and Martinez-Zarzoso 

2009 

"Trade as aid: the role of 

the EBA-trade preferences 

regime in the development 

strategy"

1995–2005 Various gravity 

specifications using 

EBA dummy, but 

Heckman selection 

model is preferred 

estimator

The authors found a statistically significant negative 

relationship between EBA and exports from LDCs. At the 

same time, they find a significant positive relationship 

between the interaction of EBA participation and amount 

of development aid received in the previous year and 

current year exports, suggesting that trade preferences 

alone are not enough to positively impact export 

performance, but coupled with aid can be successful.

EBA negative

EBA plus official 

development 

assistance 

positive

Cipollina and Pietrovito 2011 "Trade impact of EU 

preferential policies: a 

meta-analysis of the 

literature"

Range 

covering 

1970s–2000s 

Meta regression 

analysis

Combined estimates imply that PTAs cause a substantial 

increase in trade flows, but these flows vary widely 

depending on the estimation method used. Approaches 

using dummy variables to signify preferences result in a 

wide range of estimates, both positive and negative. 

Approaches using margins of preferences estimate more 

modest PTA effects, but significant and positive effects 

nonetheless.

Varied based on 

specification
271 

Author Title Years Model Findings Impact

Co and Dimova 2013 "Preferential market access 

into the Chinese market: 

how good is it for Africa?"

2002–2010 Triple differences 

regression

Chinese preferences led to greater SSA exports of “other 

primary products,” but did not have a significant effect on 

trade in any other category.

Mixed, based on 

product

Cipollina et al. 2013 "Do preferential trade 

policies (actually) increase 

exports? An analysis of EU 

trade policies"

2004 Gravity model 

using a PPML 

estimator, 

preferences 

modeled as 

relative margins vs. 

competitors

EU preferences have different impacts across sectors, 

which are not necessarily related to the size of the margin. 

EU preferences have large impacts on the ceramics, 

glassware, textiles, and footwear industries, but 

agricultural preferences in many cases do not seem to 

have any impact. Overall, EU preferences seem to have 

generated additional trade flows of around 3 percent of 

total EU imports.

Mixed, based on 

product

Aiello and Demaria 2010 "Do trade preferential 

agreements enhance the 

exports of developing 

countries? Evidence from 

the EU GSP"

2001–2004 Gravity model 

using preferential 

margins, using five 

different 

estimators

Results indicate that EU GSP has a positive and significant 

impact on exports of agricultural goods from beneficiary 

countries. Similar results emerged for EBA. However, at 

the product level, results are mixed.

For total ag 

exports: GSP and 

EBA positive. 

Product effects 

are mixed

Cirera et al. 2011 "The impact of GSP 

preferences on developing 

countries' exports in the 

European Union: bilateral 

gravity modelling at the 

product level"

2002–2008 Gravity model 

using preference 

margins, PPML 

estimator

Estimated trade effects vary depending upon how the 

preferences under various regimes are measured. ACP 

preferences were effective at raising trade regardless of 

how they were measured, but EBA's effectiveness 

depended upon how the margin was defined.

ACP positive

EBA (effect 

dependent upon 

pref. definition)

Pishbahar and HuchetBourdon 2008"European Union's 

preferential trade 

agreements in agricultural 

sector: a gravity approach"

2000–2004 Gravity model 

using preference 

program dummies

EBA and GSP were estimated to have a negative and 

significant impact on beneficiary country agricultural 

exports to the EU. However, Cotonou preferences were 

associated with higher beneficiary country exports.

EBA negative

GSP negative

Cotonou positive

Cipollina and Salvatici 2011 "Trade impact of European 

Union preferences"

2004 Heckman selection 

gravity model 

using preference 

margins

EU preferences generally have a positive impact on trade, 

but various sectors are affected differently. For 

manufactures, preferences have increased trade on the 

intensive margin, but has reduced the number of products 

exported. For agriculture, intensive margin impacts have 

been smaller, but the number of products exported has 

increased.

Intensive effects 

positive, but vary 

in magnitude. 

Extensive effects 

are mixed.

Nilsson and Matsson 2009 "Truths and myths about 

the openness of EU trade 

policy and the use of EU 

trade preferences"

2003–2007 Gravity model 

using a PPML 

estimator and 

preference 

margins

EU preferences have had a positive and significant impact 

on preferential trade flows for all developing country 

groups except FTA partners. Additionally, 19 percent of EU 

imports from ACP LDC countries are due to preferences, 

while 10 percent of imports from ACP non-LDC countries 

are due to preferences.

ACP LDC positive 

ACP non-LDC 

positive
272 

Author Title Years Model Findings Impact

Comparative studies

Persson and Wilhemlsson 2006 "Assessing the effects of 

EU trade preferences for 

developing countries"

1960–2002 Gravity model 

augmented with 

time trend, using 

dummies

Preferences raised exports from ACP only (Lome) 

countries by 30 percent, raised exports from LDC non-ACP 

countries by 21 percent, and raised exports from LDC and 

ACP countries by 33 percent.

Cipollina et al. 2010 "Do preferential trade 

policies (actually) increase 

exports? A comparison 

between EU and US trade 

policies"

2004 Zero-Inflated 

Poisson (ZIP) 

specification of 

gravity model, 

measure of 

preference margin

Both U.S. and EU preferences positively impact beneficiary 

country exports. EU preferences are more effective at 

increasing trade in most cases. U.S. preferences 

significantly increase the probability of exporting in almost 

all cases (between 7 percent and 28 percent). EU 

preferences increased import concentration in three 

product sections, but increased the probability of 

exporting in many cases, ranging from 3 percent to 23 

percent. 

LDC positive

GSP (none)

ACP positive

de Melo and Portugal-Perez 

2013 

"Preferential market 

access design: Evidence 

and lessons from African 

apparel exports to the US 

and the EU"

1996–2004 Log-linear model 

under various 

specifications, with 

LAD as preferred 

estimator

EBA and AGOA offer similar tariff preferences for apparel, 

but simplified U.S. rules of origin under AGOA were 

associated with a 168 percent increase in beneficiary 

country apparel exports. The AGOA rules of origin 

simplification also resulted in an increase in the number of 

products exported of between 39 and 61 percent.

U.S. preferences 

better at 

diversification, EU 

preferences 

better at 

intensification

Collier and Venables 2007 "Rethinking trade 

preferences: How Africa 

can diversify its exports"

1991–2005 Triple differencein-differencesIn a relative setting utilizing two different approaches, the 

authors find that the AGOA apparel provision created 

around 7 times more apparel exports to the United States 

relative to apparel exports to the EU.

AGOA RoOs 

improved both 

trade amount and 

number of 

apparel products 

compared to EBA

Davies and Nilsson 2013 "A comparative analysis of 

EU and US trade 

preferences for the LDCs 

and the AGOA 

beneficiaries"

2007–2010 Gravity model, 

total trade dummy 

variables

EU and U.S. trade preference regimes had no effect on 

total exports, but EU trade policy was found to generate 

approximately twice the non-mineral fuel imports from 

AGOA beneficiary countries as did U.S. trade policy.

AGOA apparel 

provision 

significantly 

increased apparel 

exports

Gil-Pareja et al. 2012 "Do nonreciprocal 

preference regimes 

increase exports?"

1990–2008 (at 

3-year 

intervals)

Various 

specifications, but 

two-stage 

Helpman, Melitz, 

and Rubinstein 

(HMR) gravity 

model is preferred

Using various specifications, the authors investigate 

whether unilateral preference regimes have a positive 

impact on trade flows. They find that on average, they do, 

but these effects vary by program: ACP-EU, EBA, GSP-EU, 

GSP-US, GSP-Canada, GSP-Japan, GSP-Norway, GSPRussia, GSP-Switzerland are all found to have a positive 

and significant effect on total exports, while AGOA is not 

found to have a statistically significant impact on total 

exports from beneficiary countries.

EU preferences 

generated more 

trade than AGOA
273 

Author Title Years Model Findings Impact

Di Rubbo and Canali 2008 "A comparative study of 

EU and US trade policies 

for developing countries: 

The case of agri-food 

products"

1996–2005 Generalized least 

squares gravity 

model with 

country-specific 

binary variables

EU trade policy with respect to agricultural goods from 

developing countries was found to increase exports more 

than U.S. trade policy. These differences varied by income 

group. Over the period 2001-2005, EU policy raised lowincome ag exports by 81 percent, lower-middle by 63 

percent, and upper-middle by 91 percent compared to 

U.S. policy.

AGOA does not 

have a statistically 

significant 

relationship with 

total beneficiary 

country exports

Bureau et al. 2007 "The utilisation of trade 

preferences for developing 

countries in the agri-food 

sector"

2002 Bivariate and 

multinomial probit 

models

On average, EU agricultural imports with a higher degree 

of processing were more likely to utilize preferences, 

while U.S. imports with a higher degree of processing 

were less likely to utilize preferences. Additionally, smaller 

shipments to both are less likely to utilize preferences.

EU trade policy 

raised developing 

country 

agricultural 

exports more 

than U.S. policy

Nicita and Rollo 2013 "Tariff preferences as a 

determinant for exports 

from Sub-Saharan Africa"

2000–2001, 

2010-11 

Comparative static 

approach using 

probit estimation

Changes in direct market access affects the probability of 

initiating trade in a new product, but relative market 

access is important to ensure that a country continues to 

export that product.

Processed 

agricultural goods 

are less likely to 

utilize U.S. 

preferences; the 

opposite is true 

for the EU.

Nilsson 2005 "Comparative effects of EU 

and US trade policies on 

developing country 

exports"

2001–2003 Gravity model EU trade policy resulted in around 35 percent more trade 

flows in total from developing countries as compared to 

U.S. trade policy over this period. These effects were 

higher with respect to low-income and upper-middle 

income countries, but were not significant for lowermiddle income countries. Colonial ties and distance were 

also major determinants of higher trade flows.

(no specific U.S. 

or EU effects 

reported)

Nilsson 2005 "Comparative effects of EU 

and US trade policies on 

developing country 

exports"

2001–2003 Gravity model EU trade policy resulted in around 35 percent more trade 

flows in total from developing countries as compared to 

U.S. trade policy over this period. These effects were 

higher with respect to low-income and upper-middle 

income countries, but were not significant for lowermiddle income countries. Colonial ties and distance were 

also major determinants of higher trade flows.

EU trade policy 

resulted in higher 

developing 

country exports 

vis-à-vis U.S. 

policy

Source: Compiled by USITC staff.

Note: More information about each article appears in the bibliography for chapter 7 of this report.
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Keck, Alexander, and Andreas Lendle. “New Evidence on Preference Utilization.” World Trade 

Organization Staff Working Paper ERSD-2012-12, September 3, 2012. 

http://www.wto.org/english/res_e/reser_e/ersd201212_e.pdf. 

Kennedy, Peter. A Guide to Econometrics. 5th ed. Cambridge, MA: MIT Press, 2003.

Lederman, Daniel and Çağlar Özden. “U.S. Trade Preferences: All Are Not Created Equal.” 

Central Bank of Chile Working Paper No. 280, December 2004. 

http://www.bcentral.cl/estudios/documentos-trabajo/pdf/dtbc280.pdf. 

Mattoo, Aaditya, Devesh Roy, and Arvind Subramanian. “The African Growth and Opportunity 

Act and Its Rules of Origin: Generosity Undermined?” The World Economy 26, no. 6 June 

2003: 829–51.

277
Mevel, Simon, Zenia A. Lewis, Mwangi S. Kimenyi, Stephen Karingi, and Anne Kamau. “The 

African Growth and Opportunity Act: An Empirical Analysis of the Possibilities Post2015.” Joint publication of the Africa Growth Initiative at the Brookings Foundation and 

the United Nations Economic Commission for Africa, July 2013. 

http://www.brookings.edu/~/media/research/files/reports/2013/07/agoa%20beyond/1

30729%20agoa%202013webfinal.pdf. 

Naumann, Eckart. “The EU GSP Rules of Origin: An Overview of Recent Reforms.” Trade Law 

Centre for Southern Africa Working Paper No. S11WP12/2011, November 2011. 

http://www.tralac.org/files/2011/11/D11WP122011-EU-GSP-Rules-of-Origin-Naumannfin20111102.pdf. 

Nicita, Alessandro, and Valentina Rollo. “Tariff Preferences as a Determinant for Exports from

Sub-Saharan Africa.” UNCTAD Policy Issues in International Trade and Commodities 

Study Series No. 60, 2013. http://unctad.org/en/PublicationsLibrary/itcdtab61_en.pdf. 

Nilsson, Lars. “Comparative Effects of EU and U.S. Trade Policies on Developing Country 

Exports.” European Commission Director General for Trade Working Paper, December 

2005. http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_129998.pdf. 

Nilsson, Lars, and Nanna Matsson. “Truths and Myths about the Openness of EU Trade Policy 

and the Use of EU Trade Preferences.” European Commission Director General for Trade 

Working Paper, April 2009. 

http://trade.ec.europa.eu/doclib/docs/2009/july/tradoc_143993.pdf. 

Nouve, Kofi. “Estimating the Effects of AGOA on African Exports Using a Dynamic Panel 

Analysis.” World Bank Policy Research Working Paper Series, July 2005. 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1026204. 

Nouve, Kofi, and John Staatz. “Has AGOA Increased Agricultural Exports from Sub-Saharan 

Africa to the United States?” Michigan State University Department of Agricultural 

Economics Staff Paper 2003–08, September, 2003. 

http://ageconsearch.umn.edu/bitstream/11573/1/sp03-08.pdf. 

Ofa, Siope V., Malcolm Spence, Simon Mevel, and Stephen Karingi. “Export Diversification and 

Intra-industry Trade in Africa.” United Nations Economic Commission for Africa Draft, 

June 15, 2012. 

http://www.afdb.org/fileadmin/uploads/afdb/Documents/Knowledge/Export%20Divers

ification%20and%20Intra-Industry%20Trade%20in%20Africa.pdf. 

Páez, Laura, Stephen Karingi, Mwangi Kimenyi, and Mekalia Paulos. “A Decade (2000–2010) of 

African-U.S. Trade under the African Growth and Opportunity Act (AGOA): Challenges, 

Opportunities and a Framework for Post-AGOA Engagement.” African Trade Policy 

Center Work in Progress No. 81. United Nations Economic Commission for Africa, 2012. 

http://www.uneca.org/sites/default/files/publications/81.pdf. 

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Persson, Maria, and Fredrik Wilhelmsson. “Assessing the Effects of EU Trade Preferences for 

Developing Countries.” Lund University Department of Economics, School of Economics 

and Management Working Paper 2006:4, June 26, 2006. 

http://project.nek.lu.se/publications/workpap/Papers/WP06_4.pdf. 

——— “EU Trade Preferences and Export Diversification.” Lund University Department of 

Economics, School of Economics and Management Working Paper 2013:32, September 

2013. http://project.nek.lu.se/publications/workpap/papers/WP13_32.pdf. 

Pishbahar, Esmaeil, and Marilyne Huchet-Bourdon. “European Union’s Preferential Trade 

Agreements in Agricultural Sector: A Gravity Approach.” Journal of International 

Agricultural Trade and Development 5, no. 1 (2008): 107–27.

Seyoum, Belay. “Export Performance of Developing Countries under the African Growth and 

Opportunity Act: Experience from US Trade with Sub-Saharan Africa.” Journal of 

Economic Studies 34, no. 6 (2007): 515–33.

Tadesse, Bedassa, and Bichaka Fayissa. “The Impact of African Growth and Opportunity Act 

(AGOA) on U.S. Imports from Sub-Saharan Africa (SSA).” Journal of International 

Development 20, no. 7 (October 2008): 920–41.

Zappile, Tina M. “Nonreciprocal Trade Agreements and Trade: Does the African Growth and 

Opportunity Act (AGOA) Increase Trade?” International Studies Perspectives 12, no. 1 

(February 2011): 46–67.

279

Appendix A 

Request Letter 

281

283

EXECUTIVE OFFICE OF THE PRESIDENT 

THE UNITED STATES TRADE REPRESENTATIVE 

WASHINGTON , D . C. 20508 

The Honorable Irving Williamson 

Chairman 

U.S. International Trade Commission 

500 E Street SW 

Washington, DC 20436 

SEP 3 0·2.013 

OOC~ET 

NliMSER 

...................................... Office of the 

Secretary H lnt"l rrade Commission 

Dear Chairm iamson: 

First, let me thank you for the Commission's excellent work. The ITC is a key partner for USTR 

and I look forward to working with you on our many areas of common interest. I am writing today 

regarding the African Growth and Opportunity Act (AGOA). 

The United States promotes trade and investment with sub-Saharan Africa and supports economic 

development through preference programs like A GOA. Since its enactment in 2000, AGOA has 

created opportunities to increase U.S.-sub-Saharan African trade and investment. As the 

Administration works with its partners in the region and Congress to renew and potentially modify 

AGOA, it is vital to have accurate factual information to (i) assess the impact AGOA has had on 

the economies of sub-Saharan Africa, and (ii) identify factors that have impacted trade, 

investment, and the economic climate in the region. 

Therefore, pursuant to section 332(g) of the Tariff Act of 1930, and the authority delegated by the 

President to the United States Trade Representative (USTR), I request that the U.S. International 

Trade Commission (the Commission), conduct four investigations and provide four reports as 

follows: 

Investigation 1: That the Commission conduct an investigation and provide a report addressing the 

following topics for sub-Saharan African countries, as defmed in AGOA, and, where applicable, 

those AGOA beneficiary countries that are designated as a lesser developed beneficiary country 

(LDBCs), covering the period 2000-13: 

1. AGOA trade performance, utilization and competitiveness factors. Specifically, the report 

should: 

• Provide a review of the literature on the AGOA preference program, in temis of expanding 

and diversifying the exports of AGOA beneficiary countries to the United States, compared 

to preference programs offered by third parties such as the EU. 

• Identify the non-crude petroleum sectors (i.e., manufacturing and agricultural) in AGOA 

beneficiary countries in which exports to the United States, under AGOA and under the ,... _- . 

... : ~ 

•.. 

- .. ~ 

:-·-

1 

.... .., 

., . 

U.S. Generalized System of Preferences program, have increased the most, in absol~e 

terms, since 2000, and identify the key factors behind this gro~ C) r'O 

::g 

-.. •. 
284

Chairman Williamson 

Page Two 

• Describe the main factors affecting AGOA trade in the principal non-crude petroleum 

products that AGOA beneficiary countries export and that the United States principally 

imports from non-sub-Saharan African sources; and 

• Based on a review of literature, identify products with potential for integration into regional 

or global supply chains, and export potential to the United States under AGOA, as well as 

factors that affect AGOA beneficiary countries' competitiveness in these sectors. 

2. AGOA's effects on the business and investment climate in sub-Saharan Africa. Specifically, 

the report should: 

• Identify and describe changes, if any, in the business and investment climates in subSaharan African countries since 2000, including removal of barriers to domestic and 

foreign investment; and 

• Describe U.S. goods and services-related investment trends in sub-Saharan African 

countries since 2000 and compare these trends with investments by other countries in subSaharan African countries, including investments by the EU, China, Brazil, and India. 

Identify any links between these investment trends and the AGOA program. 

3. Current or potential reciprocal trade agreements between sub-Saharan African and non-subSaharan African partners and the relationship of these agreements to the objectives of AGOA. 

Specifically, the report should: 

• Provide a list of reciprocal trade agreements that sub-Saharan African countries have 

completed or are under negotiation. For the reciprocal trade agreements that have entered 

into force and, to the extent information is available in the case of those that are pending or 

under negotiation, provide a brief description of areas covered or likely to be covered under 

the agreements; identify U.S. sectors/products impacted or potentially impacted, including 

any tariff differentials; and 

• Provide examples of developing countries that have moved from unilateral trade 

preferences to reciprocal trade agreements, and any effects of the change for the developing 

country in terms of expansion and diversification of its trade. 

I anticipate that this report will be made available to the public in its entirety. Therefore, the report 

should not contain any confidential business or national security information. This report should 

be delivered six months from the date of this letter. 

In addition, to further inform USTR's analysis, I request that the Commission provide three 

confidential reports, as follows: 
285

Chairman Williamson 

Page Three 

Investigation 2: That the Commission conduct an investigation and provide a confidential report 

containing an assessment of the economic effects of providing duty-free treatment for imports of 

products from AGOA beneficiary countries on U.S. industries producing like or directly 

competitive products and on U.S. consumers. The report should include an assessment of the 

economic effect on U.S. industries and consumers of imports of articles already eligible for dutyfree treatment under AGOA, as well as an assessment of the probable economic effect on U.S. 

industries and consumers of the extension of duty-free treatment to the remaining articles in 

chapters 1 through 97 ofthe Harmonized Tariff Schedule ofthe United States (HTS). The 

assessment should take into account implementation of U.S. commitments in the World Trade 

Organization and should be based on the HTS in effect during 2013 and trade data for 2012. 

This report should be delivered six months from the date of this letter. 

Investigation 3: That the Commission conduct an investigation and provide a confidential report 

that, to the extent practicable, identifies possible changes to the rules of origin under AGOA that 

could have the potential to promote regional integration and increase exports to the United States, 

and the leading manufactured or processed goods (non-petroleum) which might benefit from such 

changes. 

This report should be delivered seven months from the date of this letter. 

Investigation 4: That the Commission conduct an investigation and provide a confidential report 

containing, to the extent practicable, an assessment of the impact of the EU-South Africa Free 

Trade Agreement on U.S. exports to South Africa. This analysis should also identify the U.S. 

sectors/products with potential for increased U.S. exports if South Africa were to reduce its MFN 

tariffs for those U.S. products to the tariff levels of the EU-South Africa FTA. 

This report should be delivered six months from the date of this letter. 

In accordance with Office of the U.S. Trade Representative (USTR) policy on implementing 

Executive Order 13526, as amended, entitled "Classified National Security Information" and 

published January 5, 2010, I direct you to mark or identify as "confidential," for a period often 

years, such portions of the Commission's reports and its working papers that deal with the 

assessments and analyses, as identified by USTR, provided in the three confidential reports. 

Consistent with this Executive Order, this information will be classified on the basis that it 

concerns economic matters relating to the national security of the United States. USTR also 

considers the Commission's three confidential reports to be inter-agency memoranda that will 

contain pre-decisional advice and be subject to the deliberative process privilege. 
286

Chairman Williamson 

Page Four 

I also request kindly that you submit outlines of these confidential reports as soon as possible to 

enable an appropriate USTR official with original classification authority to provide. you with 

further written guidance on their classification, including the extent to which portions of the 

reports will require classification and for how long. 

The Commission's assistance in this matter is greatly appreciated. 

Sincerely, 

Ambassador Michael B. G. Froman 
Appendix B 

Federal Register notice

287

69438 Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices 

Historic Landmarks Program, National 

Park Service, 1201 Eye Street NW., 8th 

Floor, Washington, DC 20005; telephone 

(202) 354–2216 or email: Patty_Henry@

nps.gov. 

SUPPLEMENTARY INFORMATION: The 

purpose of the meeting of the 

Landmarks Committee of the National 

Park System Advisory Board is to 

evaluate nominations of historic 

properties in order to advise the 

National Park System Advisory Board of 

the qualifications of each property being 

proposed for National Historic 

Landmark (NHL) designation, and to 

make recommendations regarding the 

possible designation of those properties 

as National Historic Landmarks to the 

National Park System Advisory Board at 

a subsequent meeting at a place and 

time to be determined. The Committee 

also makes recommendations to the 

National Park System Advisory Board 

regarding amendments to existing 

designations and proposals for 

withdrawal of designation. The 

members of the Landmarks Committee 

are: 

Ms. Belinda Faustinos, Acting Chair 

Dr. James M. Allan 

Dr. Cary Carson 

Mr. Luis Hoyos, AIA 

Dr. Barbara J. Mills 

Dr. William J. Murtagh 

Dr. William D. Seale 

Dr. Michael E. Stevens 

The meeting will be open to the 

public. Pursuant to 36 CFR Part 65, any 

member of the public may file, for 

consideration by the Landmarks 

Committee of the National Park System 

Advisory Board, written comments 

concerning the National Historic 

Landmarks nominations, amendments 

to existing designations, or proposals for 

withdrawal of designation. 

Comments should be submitted to J. 

Paul Loether, Chief, National Register of 

Historic Places and National Historic 

Landmarks Program, National Park 

Service, 1201 Eye Street NW., 8th Floor, 

Washington, DC 20005, email: Paul_

Loether@nps.gov. 

Before including your address, phone 

number, email address, or other 

personal identifying information in your 

comment, you should be aware that 

your entire comment—including your 

personal identifying information—may 

be made publicly available at any time. 

While you can ask us in your comment 

to withhold your personal identifying 

information from public review, we 

cannot guarantee that we will be able to 

do so. 

Dated: November 13, 2013. 

; 8:45 am] 

nvestigation 

o. 332–545, 

ment 

AGOA: 

viding Dutyts, U.S. AGOA 

 Changes To 

ation and 

nited States; 

pact on U.S. 

NCY: United States International 

de Commission. 

ON: Institution of investigations, 

eduling of public hearing, and 

ortunity to provide written 

missions. 

RY: Following receipt of a request 

eptember 30, 2013 (received 

r 17, 2013) from the United 

Trade Representative (USTR) 

ection 332(g) of the Tariff Act of 

9 U.S.C. 1332(g)), the U.S. 

tional Trade Commission 

ission) instituted four 

gations for the purpose of 

ng the requested information: 

gation No. 332–542, AGOA: 

and Investment Performance 

w; investigation No. 332–544, 

 Economic Effects of Providing 

ee Treatment for Imports; 

gation No. 332–545, U.S. AGOA 

f Origin: Possible Changes to 

e Regional Integration and 

e Exports to the United States; 

estigation No. 332–546, EUAfrica FTA: Impact on U.S. 

 to South Africa. 

ember 13, 2013: Deadline for filing 

quests to appear at the public 

earing. 

ember 17, 2013: Deadline for filing 

e-hearing briefs and statements. 

uary 14, 2014: Public hearing. 

uary 21, 2014: Deadline for filing 

ost-hearing briefs and statements. 

uary 21, 2014: Deadline for filing all 

her written submissions. 

il 17, 2014: Transmittal to USTR of 

ommission reports on investigation 

os. 332–542, 332–544, and 332–546. 

il 30, 2014: Transmittal to USTR of 

report on Commission investigation 

No. 332–545. 

Alma Ripps, 

Chief, Office of Policy. 

[FR Doc. 2013–27565 Filed 11–18–13

BILLING CODE 4312–51–P 

INTERNATIONAL TRADE

COMMISSION 

[Investigation No. 332–542, I

No. 332–544, Investigation N

Investigation No. 332–546] 

AGOA: Trade and Invest

Performance Overview; 

Economic Effects of Pro

Free Treatment for Impor

Rules of Origin: Possible

Promote Regional Integr

Increase Exports to the U

EU-South Africa FTA: Im

Exports to South Africa 

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Octobe

States 

under s

1930 (1

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Trade 

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AGOA:

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Rules o

Promot

Increas

and inv

South 

Exports

DATES:

Dec

re

h

Dec

pr

Jan

Jan

p

Jan

ot

Apr

C

N

Apr

ADDRESSES: All Commission offices, 

including the Commission’s hearing 

rooms, are located in the United States 

International Trade Commission 

Building, 500 E Street SW., Washington, 

DC. All written submissions should be 

addressed to the Secretary, United 

States International Trade Commission, 

500 E Street SW., Washington, DC 

20436. The public record for these 

investigations may be viewed on the 

Commission’s electronic docket (EDIS) 

at https://edis.usitc.gov/edis3-internal/

app. 

FOR FURTHER INFORMATION CONTACT: For 

information with respect to specific 

investigations: 

(1) Investigation No. 332–542, Project 

Leader Joanna Bonarriva (202–205–3312 

or Joanna.Bonarriva@usitc.gov) or 

Deputy Project Leader Joanne Guth 

(202–205–3264 or Joanne.Guth@

usitc.gov); 

(2) Investigation No. 332–544, Project 

Leader Kathryn Lundquist (202–205– 

2563 or Kathryn.Lundquist@usitc.gov) 

or Deputy Project Leader Andrew David 

(202–205–3368 or Andrew.David@

usitc.gov); 

(3) Investigation No. 332–545, Project 

Leader Deborah McNay (202–205–3425 

or Deborah.McNay@usitc.gov) or Deputy 

Project Leader Heidi Colby-Oizumi 

(202–205–3391 or Heidi.Colby@

usitc.gov); 

(4) Investigation No. 332–546, Project 

Leader David Riker (202–205–2201 or 

David.Riker@usitc.gov) or Deputy 

Project Leader Kyle Johnson (202–205– 

3229 or Kyle.Johnson@usitc.gov). 

For information on the legal aspect of 

each of these investigations, contact 

William Gearhart of the Commission’s 

Office of the General Counsel (202–205– 

3091 or william.gearhart@usitc.gov). 

The media should contact Margaret 

O’Laughlin, Office of External Relations 

(202–205–1819 or margaret.olaughlin@

usitc.gov). Hearing-impaired individuals 

may obtain information on this matter 

by contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background: As requested, the 

Commission has instituted four 

investigations for the purpose of 

providing four reports as follows: 


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289
Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices 69439 

Investigation No. 332–542, AGOA: 

Trade and Investment Performance 

Overview 

In its first report (investigation No. 

332–542), the Commission will, as 

requested by the USTR, address the 

following topics for sub-Saharan Africa

countries, as defined in the African 

Growth and Opportunity Act (19 U.S.C

3701 et seq.) (AGOA), and, where 

applicable, those AGOA beneficiary 

countries that are designated as lesser 

developed beneficiary countries, 

covering the period 2000–13: 

• AGOA trade performance,

utilization and competitiveness factors

including (1) a review of the literature 

on the AGOA preference program, in 

terms of expanding and diversifying th

exports of AGOA beneficiary countries

to the United States, compared to 

preference programs offered by third 

parties such as the EU; (2) identificatio

of non-crude petroleum sectors (i.e., 

manufacturing and agricultural) in 

AGOA beneficiary countries in which 

exports to the United States, under 

AGOA and under the U.S. Generalized

System of Preferences program, have 

increased the most, in absolute terms, 

since 2000, and the key factors behind

this growth; (3) a description of the 

main factors affecting AGOA trade in 

the principal non-crude petroleum 

products that AGOA beneficiary 

countries export and that the United 

States principally imports from nonsub-Saharan African sources; and (4) 

based on a review of literature, 

identification of products with potentia

for integration into regional or global 

supply chains, and export potential to 

the United States under AGOA, as well

as factors that affect AGOA beneficiary

countries’ competitiveness in these 

sectors. 

• AGOA’s effects on the business an

investment climate in sub-Saharan 

Africa, including (1) the identification 

and description of changes, if any, in 

the business and investment climates i

sub-Saharan African countries since 

2000, including removal of barriers to 

domestic and foreign investment; and 

(2) a description of U.S. goods and 

services-related investment trends in 

sub-Saharan African countries since 

2000 and a comparison of these trends 

with investments by other countries in 

sub-Saharan African countries, 

including investments by the EU, China, 

Brazil, and India, and identification of 

any links between these investment 

trends and the AGOA program. 

• Current or potential reciprocal trade

agreements between sub-Saharan 

African and non-sub-Saharan African 

partners and the relationship of these 

n 

. 

, 

e 

n 

l 

d

n 

agreements to the objectives of AGOA, 

including (1) a list of reciprocal trade 

agreements that sub-Saharan African 

countries have completed or are under 

negotiation, a brief description of areas 

covered or likely to be covered under 

the agreements, and identification of 

U.S. sectors/products impacted or 

potentially impacted, including any 

tariff differentials; and (2) examples of 

developing countries that have moved 

from unilateral trade preferences to 

reciprocal trade agreements, and any 

effects of the change for the developing 

country in terms of expansion and 

diversification of its trade. 

The Commission will deliver this first 

report to the USTR by April 17, 2014. 

The USTR also stated that it intends to 

make this report public. 

Investigation No. 332–544, AGOA: 

Economic Effects of Providing DutyFree Treatment for Imports 

In its second report the Commission 

will, as requested by the USTR, provide 

an assessment of the economic effects of 

providing duty-free treatment for 

imports of products from AGOA 

beneficiary countries on U.S. industries 

producing like or directly competitive 

products and on U.S. consumers. The 

report will include an assessment of the 

economic effect on U.S. industries and 

consumers of imports of articles already 

eligible for duty-free treatment under 

AGOA, as well as an assessment of the 

probable economic effect on U.S. 

industries and consumers of the 

extension of duty-free treatment to the 

remaining articles in chapters 1 through 

97 of the Harmonized Tariff Schedule of 

the United States (HTS). The assessment 

n 

e 

will take into account implementation

of U.S. commitments in the World 

Trade Organization and will be based o

the HTS in effect during 2013 and trad

data for 2012. 

The Commission will provide this 

second report to the USTR by April 17, 

2014. The USTR stated that this report 

will be classified. 

Investigation No. 332–545, U.S. AGOA 

Rules of Origin: Possible Changes To 

Promote Regional Integration and 

Increase Exports to the United States 

As requested by the USTR, in its third 

report the Commission will, to the 

extent practicable, identify possible 

changes to the rules of origin under 

AGOA that could have the potential to 

promote regional integration and 

increase exports to the United States, 

and the leading manufactured or 

processed goods (non-petroleum) which 

might benefit from such changes. 

The Commission will provide this 

third report to the USTR by April 30, 

2014. The USTR stated that this report 

will be classified. 

Investigation No. 332–546, EU-South 

Africa FTA: Impact on U.S. Exports to 

South Africa 

As requested by the USTR, in its 

fourth report the Commission will, to 

the extent practicable, provide an 

assessment of the impact of the EUSouth Africa Free Trade Agreement on 

U.S. exports to South Africa. 

This analysis will also identify the 

U.S. sectors/products with potential for 

increased U.S. exports if South Africa 

were to reduce its MFN tariffs for those 

U.S. products to the tariff levels of the 

EU-South Africa FTA. 

The Commission will provide this 

fourth report to the USTR by April 17, 

2014. The USTR stated that this report 

will be classified. 

The USTR indicated that those 

sections of the Commission’s three 

confidential reports that relate to 

assessments and analyses will be 

classified. The USTR also indicated that 

he considers the Commission’s three 

confidential reports to be inter-agency 

memoranda that will contain predecisional advice and be subject to the 

deliberative process privilege. 

Public Hearing: A public hearing in 

connection with these investigations 

will be held at the U.S. International 

Trade Commission Building, 500 E 

Street SW., Washington, DC, beginning 

at 9:30 a.m. on January 14, 2014. 

Requests to appear at the public hearing 

should be filed with the Secretary no 

later than 5:15 p.m., December 13, 2013. 

All pre-hearing briefs and statements 

should be filed no later than 5:15 p.m. 

December 17, 2013; and all post-hearing 

briefs and statements should be filed no 

later than 5:15 p.m. January 21, 2014. 

All such briefs and statements should 

otherwise comply with the filing 

requirements in the ‘‘Submissions’’ 

section below. In the event that, as of 

the close of business on December 13, 

2013, no witnesses are scheduled to 

appear at the hearing, the hearing will 

be canceled. Any person interested in 

attending the hearing as an observer or 

nonparticipant should contact the Office 

of the Secretary at 202–205–2000 after 

December 13, 2013, for information 

concerning whether the hearing will be 

held. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning any of 

the four investigations. Each written 

submission should identify the one or 

more of the four investigations to which 

the submission relates. All written 

submissions should be addressed to the 


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69440 Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices 

Secretary, and should be received not 

later than 5:15 p.m., January 21, 2014. 

All written submissions must conform 

to the provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Section 201.8 

and the Commission’s Handbook on 

Filing Procedures require that interested 

parties file documents electronically on 

or before the filing deadline and submit 

eight (8) true paper copies by 12:00 

noon eastern time on the next business 

day. In the event that confidential 

treatment of a document is requested, 

interested parties must file, at the same 

time as the eight paper copies, at least 

four (4) additional true paper copies in 

which the confidential information 

must be deleted (see the following 

paragraph for further information 

regarding confidential business 

information). Persons with questions 

regarding electronic filing should 

contact the Secretary (202–205–2000). 

Any submissions that contain 

confidential business information (CBI) 

must also conform with the 

requirements of section 201.6 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.6). Section 201.6 

of the rules requires that the cover of the 

document and the individual pages be 

clearly marked as to whether they are 

the ‘‘confidential’’ or ‘‘non-confidential’’ 

version, and that the confidential 

business information be clearly 

identified by means of brackets. All 

written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. In his request letter 

the USTR said that it is the intent of his 

office to make the Commission’s report 

in the first investigation, No. 332–542 

AGOA: Trade and Investment 

Performance Overview, available to the 

public in its entirety, and asked that the 

Commission not include any 

confidential business information or 

national security classified information 

in the report that it sends to the USTR. 

Any confidential business information 

received by the Commission in this 

investigation and used in preparing this 

report will not be published in a manner 

that would reveal the operations of the 

firm supplying the information. The 

Commission may include some or all of 

the confidential business information 

submitted in the course of investigation 

Nos. 332–544, 332–545, and 332–546 in 

the reports it sends to the USTR in those 

investigations. The Commission will not 

otherwise publish any confidential 

business information in a manner that 

would reveal the operations of the firm 

supplying the information. 

By order of the Commission. 

Issued: November 13, 2013. 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2013–27575 Filed 11–18–13; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 337–TA–850] 

Certain Electronic Imaging Devices; 

Notice of Request for Statements on 

the Public Interest 

AGENCY: U.S. International Trade 

Commission. 

ACTION: Notice. 

SUMMARY: Notice is hereby given that 

the presiding administrative law judge 

has issued a Final Initial Determination 

and Recommended Determination on 

Remedy and Bonding in the abovecaptioned investigation. The 

Commission is soliciting comments on 

public interest issues raised by the 

recommended relief, specifically the 

limited exclusion order (‘‘LEO’’) 

recommended by the ALJ. This notice is 

soliciting public interest comments from 

the public only. Parties are to file public 

interest submissions pursuant to 19 CFR 

210.50(a)(4). 

FOR FURTHER INFORMATION CONTACT: Jia 

Chen, Office of the General Counsel, 

U.S. International Trade Commission, 

500 E Street SW., Washington, DC 

20436, telephone (202) 708–4737. The 

public version of the complaint can be 

accessed on the Commission’s 

electronic docket (EDIS) at http://

edis.usitc.gov, and will be available for 

inspection during official business 

hours (8:45 a.m. to 5:15 p.m.) in the 

Office of the Secretary, U.S. 

International Trade Commission, 500 E 

Street SW., Washington, DC 20436, 

telephone (202) 205–2000. 

General information concerning the 

Commission may also be obtained by 

accessing its Internet server (http://

www.usitc.gov). The public record for 

this investigation may be viewed on the 

Commission’s electronic docket (EDIS) 

at http://edis.usitc.gov. Hearingimpaired persons are advised that 

information on this matter can be 

obtained by contacting the 

Commission’s TDD terminal on (202) 

205–1810. 

SUPPLEMENTARY INFORMATION: Section 

337 of the Tariff Act of 1930 provides 

that if the Commission finds a violation 

it shall exclude the articles concerned 

from the United States: 

unless, after considering the effect of such 

exclusion upon the public health and 

welfare, competitive conditions in the United 

States economy, the production of like or 

directly competitive articles in the United 

States, and United States consumers, it finds 

that such articles should not be excluded 

from entry. 

19 U.S.C. 1337(d)(1). A similar 

provision applies to cease and desist 

orders. 19 U.S.C. 1337(f)(1). 

The Commission is interested in 

further development of the record on 

the public interest in these 

investigations. Accordingly, members of 

the public are invited to file 

submissions of no more than five (5) 

pages, inclusive of attachments, 

concerning the public interest in light of 

the administrative law judge’s 

Recommended Determination on 

Remedy and Bonding issued in this 

investigation on September 30, 2013. 

Comments should address whether 

issuance of a LEO in this investigation 

would affect the public health and 

welfare in the United States, 

competitive conditions in the United 

States economy, the production of like 

or directly competitive articles in the 

United States, or United States 

consumers. 

In particular, the Commission is 

interested in comments that: 

(i) Explain how the articles 

potentially subject to the recommended 

orders are used in the United States; 

(ii) identify any public health, safety, 

or welfare concerns in the United States 

relating to the recommended orders; 

(iii) identify like or directly 

competitive articles that complainant, 

its licensees, or third parties make in the 

United States which could replace the 

subject articles if they were to be 

excluded; 

(iv) indicate whether complainant, 

complainant’s licensees, and/or third 

party suppliers have the capacity to 

replace the volume of articles 

potentially subject to the recommended 

exclusion order and/or a cease and 

desist order within a commercially 

reasonable time; and 

(v) explain how the LEO would 

impact consumers in the United States. 

Written submissions must be filed no 

later than by close of business on 

November 21, 2013. 

Persons filing written submissions 

must file the original document 

electronically on or before the deadlines 

stated above and submit 8 true paper 

copies to the Office of the Secretary by 

noon the next day pursuant to section 

210.4(f) of the Commission’s Rules of 

Practice and Procedure (19 CFR 

210.4(f)). Submissions should refer to 

the investigation number (‘‘Inv. No. 

337–TA–850’’) in a prominent place on 

the cover page and/or the first page. 

TKELLEY on


 DSK3SPTVN1PROD with NOTICES

Frm 00079 Fmt 4703 Sfmt 4703 E:\FR\FM\19NON1.SGM 19NON1

291

Appendix C 

Calendar of Hearing Witnesses 

293

295

Those listed below appeared as witnesses at the United States International Trade Commission’s hearing: 

Subject: AGOA: Trade and Investment Performance Overview

AGOA: Eco

Imports 

 nomic Effects of Providing Duty-Free Treatment for

U.S. AGOA Rules of Origin: Possible Changes to Promote 

Regional Integration and Increase Exports to the United States

EU-South Africa FTA: Impact on U.S. Exports to South Africa

Inv. Nos.: 332-542, 332-544, 332-545, and 332-546 

Date and Time: January 14, 2014 - 9:30 a.m. 

Sessions were held in connection with these investigations in the Main Hearing Room (room 101), 

500 E Street, S.W., Washington, DC. 

EMBASSY WITNESSES: 

Embassy of the Republic of Mauritius 

Washington, DC

His Excellency Somduth Soborun, Ambassador of the Republic of Mauritius to the United States 

Embassy of the Federal Democratic Republic of Ethiopia 

Washington, DC 

His Excellency Girma Birru, Ambassador of the Federal Democratic Republic of Ethiopia to the 

United States 

Embassy of the Republic of South Africa 

Washington, DC 

His Excellency Ebrahim Rasool, Ambassador of the Republic of South Africa to the United States 

Embassy of the Republic of Kenya 

Washington, DC 

Her Excellency Ambassador Jean Kamau, Charge D’Affaires of the Republic of Kenya to the 

United States 
296

PANEL 1 

ORGANIZATION AND WITNESS: 

Common Market of Eastern and Southern 

Africa (“COMESA”) 

Dennis Matanda, Head of Government Relations, 

Manchester Trade Limited, Inc. 

New Markets Lab (“NML”) 

Washington, DC 

Katrin Kuhlmann, President and Founder, Senior Advisor, 

Corporate Council on Africa 

Manchester Trade Limited, Inc. 

Washington, DC 

Stephen Lande, President 

Progressive Economy 

Washington, DC 

Edward Gresser, Director 

Africa Business Initiative 

U.S. Chamber of Commerce 

Washington, DC 

Scott Eisner, Vice President 

National Foreign Trade Council, Inc. 

Washington, DC 

J. Daniel O’Flaherty, Vice President 
297

PANEL 2 

ORGANIZATION AND WITNESS: 

American Sugar Alliance 

Arlington, VA 

Don Phillips, Trade Adviser 

Covington & Burling LLP 

Washington, DC 

Dr. Witney Schneidman, Senior International Advisor 

African Coalition for Trade Inc. 

Washington, DC 

Paul Ryberg, President 

African Cotton and Textile Industries Federation (“ACTIF”) 

Nairobi, Kenya 

Jaswinder Bedi, Chairman 

American Apparel & Footwear Association (“AAFA”) 

Arlington, VA 

Stephen Lamar, Executive Vice President 

National Chicken Council 

USA Poultry & Egg Export Council 

Washington, DC 

William P. Roenigk, Consultant 

Kevin Brosch, Principal, DTB Associates 

McDermott Will & Emery 

Washington, DC 

on behalf of 

California Cling Peach Board 

Rich Hudgins, President and Chief Executive Officer, 

California Canning Peach Association 

Carolyn B. Gleason ) 

) – OF COUNSEL 

Pamela D. Walther )

-END-

Appendix D 

Positions of Interested Parties

299

Introduction

The following summaries of the positions of interested parties are based on information 

provided at a public hearing held on January 14, 2014, in Washington, DC, and material 

submitted to the Commission in conjunction with investigation Nos. 332-542, AGOA: Trade and 

Investment Performance Overview; 332-544, AGOA: Economic Effects of Providing Duty-Free 

Treatment for Imports; 332-545, U.S. AGOA Rules of Origin: Possible Changes to Promote 

Regional Integration and Increased Exports to the United States; and 332-546, EU-South Africa 

FTA: Impact on U.S. Exports to South Africa. The summaries express the views of the submitting 

parties and not those of the Commission, whose staff did not attempt to confirm the accuracy 

of, or make corrections to, the information provided. The full text of the hearing transcript and 

written submissions associated with the investigations can be found by searching the 

Commission’s Electronic Docket Information System.695 

Embassy of the Republic of Madagascar696

In a written submission to the Commission related to all four Commission investigations, 

Andriantiana Ulrich, Minister of Foreign Affairs, Embassy of the Republic of Madagascar, 

addressed the four AGOA reports generally and recommended that the United States do the 

following: (1) extend AGOA for 10 years; (2) extend AGOA’s third country fabric provision 

immediately; (3) extend AGOA and consider a partnership structure to create a more favorable 

investment climate; (4) remove quotas on all U.S. imports of agricultural products from SubSaharan Africa (SSA) except sugar; (5) revise the rules of origin under AGOA for canned tuna; (6) 

consider a “Support Programme Imports (EIAO)” to encourage African countries benefiting 

from AGOA to further develop their exports and allow U.S. importers to increase the volume of 

items made by countries under AGOA to be at least equivalent to those entering the United 

Statesd from Bangladesh and Cambodia; and (7) provide a substantial grant by way of 

assistance and capacity building for eligible African countries. 

Embassy of the Republic of Mauritius697

In written submissions and in hearing testimony, Ambassador Somduth Soborun of the Republic 

of Mauritius said that his submission related to all four investigations. Ambassador Somduth 

stated that at the African Union Ministers of Trade meeting in Addis Ababa, Ethiopia, on 

695 Available online at http://edis.usitc.gov. 696 Andriantiana Ulrich, minister of foreign affairs, Embassy of the Republic of Madagascar, written submission to 

the USITC, January 14, 2014.

697 His Excellency, Somduth Soborun, ambassador of the Republic of Mauritius, USITC hearing transcript, 9–25, 

written submission, January 14, 2014, post-hearing submission to the USITC, January 16, 2014.

301
October 24, 2013, Ministers also adopted a unanimous AGOA declaration directing that the 

African Ambassador’s Working Group in Washington continue to actively engage the U.S. 

Administration and Congress on ways forward for a reauthorization of AGOA for a period of at 

least 15 years. The Ambassador said that this would ensure that trade with the United States 

takes place on a predictable, reliable, and legally secure basis in order to inspire investors’ 

confidence. 

Ambassador Soborun said that the AGOA rules of origin related to canned tuna should be 

revisited. He indicated that it is almost impossible for African canned tuna to meet the AGOA 

rules of origin, which is largely determined by the flag of the vessel that catches the fish rather 

than the nation where the fish is processed and canned. He noted that some SSA countries are 

exporting canned tuna to the EU, but exports to the U.S. are extremely low despite the fact that 

canned tuna is eligible for duty-free entry under AGOA. If the rule were relaxed, he said exports 

of canned tuna to the United States under AGOA would increase, thereby benefitting AGOAeligible countries. 

The Ambassador also recommended that the Third-Country Fabric Rule for apparel and textiles, 

which has been the subject of renewal every two or three years, should be made coterminous 

with the life of a reauthorized AGOA. He stated this provision has been solely responsible for 

AGOA’s success in the apparel industry and that 95 percent of the apparel and textile products 

produced under AGOA are dependent on the Third-Country Fabric rule. 

To conclude, Ambassador Soborun made the following recommendations: (1) reauthorize 

AGOA before October 2014 for at least 15 years to guarantee the predictability and certainty 

required for long-term investment and economic growth; (2) make the Third-Country Fabric 

rule coterminous with the life of AGOA; (3) relax stringent U.S. sanitary and phytosanitary (SPS) 

standards that prohibit small African agricultural exporters; (4) increase U.S.-provided capacity 

building and technical assistance; (5) promote U.S. investment in Africa; (6) renew AGOA in line 

with and supportive of President Obama’s Power Africa Initiative; and (7) have congressional 

delegations make periodic trips in the context of AGOA. 

Embassy of the Republic of Cabo Verde698

In a written submission, Dr. Jose Luis Rocha, Deputy Minister of Foreign Affairs, Republic of 

Cabo Verde, reported that his submission related to three of the Commission’s investigations, 

Nos. 332-542, AGOA: Trade and Investment Performance Overview; 332-544, AGOA: Economic 

Effects of Providing Duty-Free Treatment for Imports; and 332-545, Rules of Origin: Possible 

698 Dr. Jose Luis Rocha, deputy minister of foreign trade, Republic of Cabo Verde, written submission, January 21, 

2014.

302
Changes to Promote Regional Integration and Increase Exports to the United States. The Deputy 

Minister stated that Cabo Verde wants AGOA benefits to be extended in order to expand its 

trade and investment connections with the United States.

However, Dr. Rocha stated that there are a number of legal and regulatory issues that impede 

the ability of Cabo Verde to utilize the market access provided by AGOA. He suggested the 

following ways to improve the program: (1) liberalize and stabilize rules of origin; (2) provide 

duty-free, quota-free (DFQF) access for more products; (3) increase U.S. trade capacity building 

assistance (e.g., registration, quality inspection, and certification of products); (4) provide 

incentives for U.S. companies to invest in SSA; (5) cooperate better with regional trade 

organizations; and (6) support more maritime shipping lines between the United States and 

Cabo Verde. 

Dr. Rocha also listed the following supply side issues as posing challenges for Cabo Verde’s use 

of AGOA: (1) limited understanding of AGOA by Cabo-Verdean businesses and farmers; (2) the 

limited scale of Cabo-Verdean production; (3) institutional weaknesses in the area of export 

control; (4) transport challenges; and (5) the high cost of water and energy. He also indicated 

that the following U.S.-imposed hurdles increase the difficulty for Cabo Verde to export to the 

United States under AGOA: (1) restrictive SPS requirements, (2) non-tariff barriers such as 

excise taxes, and (3) complex and restrictive AGOA rules of origin.

Embassy of the Federal Democratic Republic 

of Ethiopia699

In a written submission and in hearing testimony, Ambassador Girma Birru of the Federal 

Democratic Republic of Ethiopia and the co-chair of the AGOA Ambassadors Working Group in 

Washington, DC. stated his submission related to all four investigations. Ambassador Birru said 

that AGOA remains the central pillar of U.S.-Africa trade and economic cooperation and 

contended that it should be reauthorized.

Ambassador Birru stated that AGOA has made a significant impact on exports from SSA 

countries and has helped to generate jobs in both Africa and the United States. The 

Ambassador noted that energy-related products continue to constitute the major share of 

AGOA exports to the United States, but products from the textile and apparel sector have also 

gained visibility and prominence in U.S-Africa trade and AGOA has offered meaningful 

opportunities for eligible African countries to transform their economies. However, the 

699 His Excellency, Girma Birru, ambassador of the Federal Democratic Republic of Ethiopia, USITC hearing 

transcript, 26–36, written submission, January 14, 2014.

303
Ambassador indicated that few AGOA countries have made use of the opportunity due to 

supply constraints, mostly related to the lack of infrastructure and institutional capabilities. 

Ambassador Birru noted that during the 2013 AGOA forum, African Ministers of Trade 

requested that the United States consider developing an AGOA compact with those countries 

that are taking steps to increase their AGOA exports to ensure that they receive the needed 

support to make the necessary policy and program changes to overcome supply side 

constraints. 

The Ambassador noted the importance of the role of AGOA in regional integration and the 

relevance of the economic partnership agreements (EPAs). He stated that Africa is the least 

integrated region in the world and intra-regional trade is also the lowest in the world. He 

contended that regional integration efforts are one way to improve intra-African trade ties and 

noted that AGOA calls for expanding U.S. assistance to SSA regional integration efforts. He 

stated that the reauthorization of AGOA will promote regional integration by ensuring that the 

program continues to play a constructive economic role in supporting regional integration. 

Finally, the Ambassador asserted that graduation would be punitive and may be 

counterproductive to economic growth and regional integration. 

Embassy of the Republic of Kenya700

In hearing testimony related to all four investigations, Ms. Jean Kamau, charge d’ affairs, 

Republic of Kenya, reported that AGOA remains an important pillar for Africa’s development 

and its contribution to the global economy. From Kenya’s position, according to Ms. Kamau, 

AGOA has had a profoundly beneficial effect on Africa and the United States. Ms. Kamau said 

that the recommendations contained in the AGOA declaration should be adopted and should 

form the basis of future legislation for the reauthorization of AGOA. Finally, she stated that 

AGOA should be extended for an additional 15 year period. 

Embassy of the Federal Republic of Nigeria701

In a written submission related to all four investigations, Professor Abe Adefuye, Ambassador 

and Head of Mission, Republic of Nigeria, reported that trade and investment with SSA under 

AGOA has been generally satisfactory. However, he said that Nigeria’s performance has been 

below expectations due to internal problems related to initial political instability, inadequate 

infrastructure, poor micro-economic management, and the inability to diversify Nigeria’s 

economy away from the capital intensive oil sector. 

700 Her Excellency, Jean Kamau, charge d’affairs of the Republic of Kenya, USITC hearing transcript, 61–63. 701 His Excellency, Abe Adefuye, ambassador and head of mission, Government of Nigeria, pre-hearing submission 

to the USITC, December 18, 2013.

304
Ambassador Adefuye stated that the United States is gradually diversifying its investments in 

Nigeria from oil and gas to other non-oil sectors such as power, energy, agriculture, hospitality, 

housing, and healthcare, among others. The Ambassador indicated that Nigeria can only 

increase its non-oil exports under AGOA through the following measures: (1) developing 

national- and state-level AGOA strategies that leverage Nigeria’s competitive and comparative 

advantages outside oil and gas; (2) cultivating more land to increase agri-business; (3) moving 

away from traditional exports of primary commodities and diversifying into value-added 

products; (4) improving Nigeria’s ranking in the Doing Business Index to increase the inflow of 

FDI; and (5) promoting good governance.

The Ambassador stated that it is imperative to re-assess apparel rules of origin under AGOA 

because they are not just constraints on sourcing, but they also force producers to use higher 

cost fabrics and materials. He suggested that the United States consider the concept of 

cumulation as a way of dealing with stringent textile rules of origin. He also suggested that the 

U.S. government relax the rules or origin on fish and fish products to allow effective market 

access. 

Embassy of the Republic of South Africa702

In a written submission and hearing testimony related to all four investigations, Ambassador 

Ebrahim Rasool, Republic of South Africa, recommended that AGOA be reauthorized for a 

period of 15 years and that the duration of the Third-Country Fabric Rule be made coterminous 

with AGOA. He said that AGOA should be transformed into a tool for economic integration with 

the United States rather than the one-way policy tool the United States originally envisioned, 

but he acknowledged that inadequate infrastructure, especially transport, energy, and water, 

continue to inhibit regional and international integration. 

However, the Ambassador reported that because of AGOA, South Africa has been able to invest 

in its own infrastructure, primarily through investments from the United States. He said that 

the stage is now set for the United States to export not only capital goods, but also household 

appliances and other white goods into South Africa. AGOA, according to the Ambassador, has 

made the United States South Africa’s second most important export partner as South Africa 

remains the largest market for U.S. goods on the African continent.

In its post-hearing submission, South Africa focused on the anti-dumping duties that it imposes 

on chicken cuts from the United States.703 The submission indicated that South Africa’s anti702 His Excellency, Ebrahim Rasool, ambassador of the Republic of South Africa, USTIC hearing transcript, 37–46, 

post-hearing submission, January 21, 2014. 703 Government of South Africa, post-hearing submission, January 21, 2014.

305
dumping measures against U.S. chicken exports were scheduled to expire in 2005, but were 

extended an additional 5 years following the filing of a petition by the South African poultry 

industry and a ruling by the South African International Trade Administration Commission 

(ITAC). The submission noted that the importer appealed the decision to the Supreme Court of 

Appeal (SAC) in 2007, that the SAC ruled in favor of the importer, and that the SAC then 

suspended the order to enable ITAC to carry out new “sunset review” investigations. The 

submission indicated that the ITAC imposed across-the-board punitive duties on poultry 

imports from the United States in February 2012, because U.S. chicken producers had failed to 

provide requested information during the original anti-dumping investigation conducted by 

ITAC’s predecessor, the Board on Tariff and Trade, as well as during subsequent sunset reviews 

undertaken by ITAC.

African Coalition for Trade (ACT)704

In a written submission and in hearing testimony related to all four investigations, Mr. Paul 

Ryberg, President, African Coalition for Trade (ACT), described ACT as a non-profit trade 

association of African private sector entities engaged in trade with the United States under 

AGOA. Mr. Ryberg stated that AGOA is recognized as the cornerstone of U.S. trade and 

economic policy concerning Africa and that AGOA should be renewed for at least 15 years to 

provide the stability required by investors. Mr. Ryberg noted U.S. imports from Africa have 

increased by 123 percent since 2000. He indicated that he would focus on the development of 

trade in non-extractive products as a barometer of what AGOA has achieved and reported that 

non-extractive imports under AGOA grew by 138 percent, particularly in agricultural products, 

motor vehicles, apparel, and footwear. Mr. Ryberg further explained that 36 of the 38 AGOA 

beneficiaries eligible for duty-free treatment in 2012 took advantage of the program and that 

AGOA created hundreds of thousands of direct jobs and millions of indirect jobs. 

Mr. Ryberg said that the third-country fabric rule is the most important AGOA rule of origin and 

that delays by Congress to renew this provision have already caused uncertainty and forced 

U.S. importers to shift orders out of Africa. He indicated that this rule accounts for more than 

90 percent of AGOA apparel trade and said that it is essential for AGOA’s apparel industry that 

this provision be extended. He expressed the view that without the third-country fabric rule, 

African apparel manufacturing would be decimated.

Mr. Ryberg offered several other recommendations: (1) that AGOA’s rule of origin for canned 

tuna be changed to allow for tuna caught by non-African fishing boats either by creating a 

704 Paul Ryberg, president, African Coalition for Trade, USITC hearing transcript 220–229, written submission to the 

USITC, December 14, 2014.

306
special rule of origin, such as a simple “tariff shift” standard, or by a special derogation allowing 

duty-free treatment for a limited volume of “non-originating” tuna; (2) that any proposal to 

“graduate” countries from AGOA should include rules of origin that provide that the remaining 

AGOA-eligible countries will continue to be able to “cumulate” with the graduated counties in 

satisfying AGOA rules of origin; and (3) that excluded agricultural products such as sugar, beef, 

and cotton should be added to AGOA-eligible products. 

African Cotton & Textile Industries Federation 

(ACTIF)705

In hearing testimony related to all four investigations, Mr. Jaswinder Bedi, Chairman, African 

Cotton & Textile Industries Federation (ACTIF), said that ACTIF is the only Pan-African 

organization that represents the full cotton textile and apparel value chain. Mr. Bedi stated 

ACTIF’s membership represents the entire cotton-textile-apparel value chain from across Africa, 

including cotton farmers, ginners, spinners, fabric manufacturers, and garment producers.

Mr. Bedi stated that it is undisputable that AGOA has been successful in spurring economic 

development and reducing poverty in Africa. He also stated that one of the challenges that has

prevented AGOA from accomplishing all that its creators hoped for is the fact that heretofore 

AGOA has been authorized for only a few years at a time. This series of short-term renewals, 

according to Mr. Bedi, has deterred investors by compounding the risks already inherent in 

investing in Africa. Mr. Bedi noted that most investors require at least a ten-year horizon to 

amortize a major investment. Mr. Bedi strongly recommends that Congress renew AGOA for a 

10–15 year period. He offered six suggestions as Congress looks to renew AGOA: (1) AGOA 

should be reauthorized for a sustained period because investors require stability and 

predictability; (2) the AGOA third-country fabric provision should be extended for the full term 

of AGOA’s renewal; (3) the same terms of access should apply to all AGOA-eligible countries; (4) 

Congress should reiterate AGOA’s policy of encouraging the administration to negotiate 

regional FTAs with the AGOA beneficiaries; (5) AGOA should create additional incentives for 

U.S. buyers to source apparel from Africa; and (6) Congress should renew AGOA well in advance 

of the September 30, 2015 expiration. 

705 Jaswinder Bedi, chairman, African Cotton & Textile Industries Federation, USTIC hearing transcript 229–237.

307
African Diplomatic Corps706

Ambassador Girma Birru, of Ethiopia, and Ambassador Somduth Soborun, of Mauritius, 

submitted a joint written submission on behalf of the African Diplomatic Corps relating to all 

four investigations. They stated that AGOA has come to be widely acknowledged as a very 

important milestone in the growing trade and investment relations between AGOA-eligible 

countries and the United States, but also stated that there are a number of systematic 

problems in some countries that have contributed to the underutilization of AGOA. They also 

included a list of the common constraints faced by AGOA-eligible countries.

Their submission listed possible modifications to the AGOA rules of origin for canned tuna, 

which they said is currently determined by the flag of the vessel that catches the fish rather 

than the nation where the fish is processed and canned. They also provided information on 

third-country fabric rules and regional integration. In addition, the submission noted that the 

negotiation of reciprocal free trade agreemetnts (FTAs) between the United States and African 

countries should remain one of AGOA’s objectives. In their view, the current process of AGOA 

reauthorization does not necessarily provide the basis for an appropriate framework to address 

concerns on EPAs or FTAs between the United States and African countries. They noted that 

among the AGOA beneficiary countries, South Africa is the only country to have an FTA with the 

EU and they said that the South Africa-EU FTA is a unique situation, that it should be viewed on 

its own merits, and that it should not be an excuse to propose fundamental changes and derail 

the process of reauthorizing AGOA.

American Apparel & Footwear Association 

(AAFA)707

In hearing testimony related to all four investigations, Stephen Lamar, Executive Vice President, 

American Apparel & Footwear Association (AAFA), said that AAFA is the public policy and 

political voice of the apparel and footwear industry. He indicated that AAFA’s members 

produce and sell clothing and shoes all around the world, including Africa. According to Mr. 

Lamar, the AAFA was among the earliest supporters of AGOA and AAFA’s members have used 

AGOA since its enactment. He stated that AGOA has had the most impact on AAFA’s apparel 

members but is now becoming increasingly important for its footwear members as well, 

particularly in Ethiopia. Mr. Lamar made four recommendations: (1) that AGOA be renewed as 

706 Ambassador Girma Birr of Ethiopia and Ambassador Somduth Soborun of Mauritius, joint written submission to 

the USITC, January 16, 2014.

707 Stephen Lamar, executive vice president, American Apparel & Footwear Association, USITC hearing transcript 

237–241.

308
soon as possible; (2) when AGOA is renewed, that it should be renewed on the longest possible 

basis and recommended a 15-year renewal because it creates the kind of certainty that can 

lead to long-term trade and investment decisions; (3) that the third-country fabric provision 

should be renewed for the entire length of the program; and (4) that the third-country fabric 

provision should be extended equally to all AGOA-eligible countries.

American Automotive Policy Council (AAPC)708

In a written submission, the American Automotive Policy Council (AAPC) focused its comments 

on two of the investigations, Nos. 332-542, AGOA: Trade and Investment Performance Overview

and 332-544, AGOA; Economic Effects of Providing Duty-Free Treatment for Imports. The 

Council said that it is an association representing the common policy interests of its member 

companies, including the Chrysler Group LLC (Chrysler), Ford Motor Company (Ford), and 

General Motors Company (GM). The Council said that it shares the goal of AGOA to assist the 

economies of SSA and to improve economic relations between the United States and the 

region. It said that its member companies have supported the success of AGOA since its launch 

in 2000 and two-way auto trade continues to grow steadily, and it said that it is crucial for the 

United States to extend this program beyond 2015.

AAPC noted that Ford is an active participant in South Africa’s automobile industry, and that 

Ford manufactures light commercial vehicles and diesel engines for local consumption and 

export. AAPC also noted that Ford maintains a parts distribution center and an on-site 

modification center, as well as a supplier incubation facility and training simulation facility. The 

Council said that GM produces vehicles and parts in South Africa and Kenya and is the largest 

motor vehicle manufacturer, assembler, and distributor in the East Africa region. The 

submission indicated that GM maintains numerous auto parts warehouses, a conversion and 

distribution center, and a sales and marketing center. The Council stated that Chrysler is the 

second largest importer of vehicles in South Africa where it distributes vehicles, parts, and 

accessories to its authorized franchised dealer network in South Africa, Botswana, and Namibia. 

The submission also noted that the Chrysler Group distributes vehicles, parts, and accessories 

through its general distributor network in Kenya, Tanzania, Mauritius, Mozambique, Uganda, 

Zambia, and Zimbabwe. AGOA, according to AAPC, is currently used by one of its members and 

allows Ford to import diesel engines it manufacturers in South Africa into the United States for 

assembly into the new North America Transit Van manufactured in Kansas City. AAPC also said 

that Chrysler took advantage of AGOA until 2010 to source component parts from South Africa 

for use in vehicles manufactured in the United States.

708 American Automotive Policy Council, written submission to the USITC.

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Business Leadership South Africa (BLSA)709

In a written submission to the Commission, Mr. Thero Setiloane, Chief Executive Officer, 

Business Leadership South Africa (BLSA), said that BLSA is an independent association whose 

members represent South Africa’s big business leadership and major multinational investors. 

Mr. Setiloane noted that his comments would focus on investigation No. 332-542, AGOA: Trade 

and Investment Performance Overview. BLSA, according to Mr. Setiloane, made three points in 

its submission: (1) BLSA supports an urgent, seamless 15-year extension of AGOA, (2) BLSA is 

not opposed to a negotiated, mutually beneficial free trade agreement between the United 

States and South Africa, and recommends a clause in a reauthorized AGOA to implement a 

framework for regional FTAs; and (3) BLSA proposes that a trade and investment facilitation 

component be included in AGOA legislation to institutionalize the benefits of the many U.S. 

programs that assist African trade facilitation.

CBI Sugar Group and the Mauritius Sugar 

Syndicate710

In a joint submission, the sugar industries of the CBI Sugar Group, the Philippines, the 

Dominican Republic, and Mauritius, focused their comments on two of the investigations, Nos.

332 542, AGOA: Trade and Investment Performance Overview and 332-544, AGOA: Economic 

Effects of Providing Duty-Free Treatment for Imports.

711 The submission recommended that 

sugar should continue to be excluded from AGOA. The submission said that recent experience 

with the reform of the EU sugar regime has proven that including sugar in duty-free initiatives 

actually does more harm than good to developing countries. The submission said that granting 

DFQF access to African sugar under AGOA risks destroying the U.S. Sugar Program, which is 

already vulnerable because of NAFTA. It also asserted that adding another major source of 

DFQF sugar to the U.S. market would risk further depression of the U.S. market price at a time 

when it is already at record low levels due to NAFTA.

709 Thero Setiloane, chief executive officer, Business Leadership South Africa, written submission to the USITC, 

January 21, 2014.

710 Paul Ryberg, CBI Sugar Group and Mauritius Sugar Syndicate, written submission, January 20, 2014. 711 Members of the CBI Sugar Group include the sugar industries of Barbados, Belize, the Dominican Republic, 

Guyana, Jamaica, Panama, and Trinidad & Tobago.

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Coalition of Services Industries (CSI)712

In written submissions to the Commission, Mr. Peter Allgeier, President of the Coalition of 

Service Industries (CSI), reported that CSI’s comments are related to one of the four 

investigations, No. 332-542, AGOA: Trade and Investment Performance Overview. He indicated 

that CSI is primarily a policy advocacy association that works on behalf of U.S.-based global 

services industries. Mr. Allgeier stated CSI supports the expansion of trade and investment 

between the United States and countries participating in AGOA and a renewal of AGOA.

Mr. Allegier said that, despite the continued dominance of U.S.-AGOA imports by petroleum 

products, Africa’s exports of non-oil products have more than tripled since AGOA’s inception. 

He also said that SSA has diversified its exports, especially in services, including business and 

information and communication technology services. Mr. Allgeier identified five key issues CSI 

would like raised at the AGOA forum in 2014: (1) increased interest in trade in services, 

especially economic infrastructure services; (2) digital trade in services; (3) investment 

protection; (4) trade facilitation; and (5) intellectual property protection. He cited a recent 

World Bank sponsored event entitled “Trade in Services Africa,” where services were identified 

as a key to growth and job creation in Africa.

Mr. Allgeier stated that as African countries become larger players in the global market, AGOA 

should include enhanced rules on trade facilitation. These enhanced rules, according to Mr. 

Allgeier, would be one of the most cost effective investments AGOA countries and international 

donors could make to improve economic competitiveness and support Africa’s participation in 

global supply chains. Mr. Allgeier explained that international trade in services is vital for 

expanding and diversifying the markets of AGOA participants and thereby creating new and 

better paying jobs. He contended that the renewal of AGOA creates the opportunity to 

implement policies and capacity building support to improve the services sectors of AGOA 

countries. 

The Common Market for Eastern and Southern 

Africa (COMESA)713

In a written submission and in hearing testimony related to all four investigations, Mr. Dennis 

Matanda stated that he was testifying on behalf of Mr. Sindiso Ngweya, Secretary General, The 

712 Peter Allgeier, president, Coalition of Services Industries, written submission, January 14, 2014, written 

submission, January 21, 2014. 713 The Common Market for Eastern and Southern Africa, USITC hearing transcript 76–88, written submission to 

the USITC, January 14, 2014.

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Common Market for Eastern and Southern Africa (COMESA). Mr. Matanda stated that COMESA 

is very supportive of AGOA and considers it vital to economic growth and poverty-reduction in 

Africa via regional integration. He also stated that AGOA has helped create many jobs and 

generated substantial investment in Africa, including in key economic sectors within COMESA. 

He included arguments presented by the DC Ambassadors’ Working Group and the African 

Union requesting a conterminous extension of AGOA and its third-country fabric provision.

Mr. Matanda noted that 14 COMESA members are also AGOA-eligible and nine qualify for 

textile and apparel benefits. Mr. Matanda indicated that although U.S. imports from COMESA 

consist mainly of oil, such imports also include woven and knit apparel, spices, tea and coffee, 

and textiles. Mr. Matanda asserted that Africa’s textile and apparel sector offers the best 

prospect for expanding production to the U.S. market. He listed a number of U.S. apparel 

companies active in the region including: Gap, Old Navy, Wal Mart, Vanity Fair, Target, and 

Calvin Klein. He noted that these companies are active in a number of AGOA beneficiaries, 

especially Kenya, Mauritius, and Madagascar before the latter lost its eligibility in 2009. He also 

said that delays to renew AGOA have led to serious dislocation in the industry as buyers have 

cancelled important Christmas orders over concerns that AGOA’s duty-free provisions will 

lapse. Further, Mr. Matanda also stated that if products subject to U.S. tariff rate quotas such 

as groundnuts, sweetened cocoa, leaf tobacco, cotton, and sugar were fully admissible into the 

United States under AGOA, trade in agricultural products would be significantly enhanced. Mr. 

Matanda urged the Commission to carefully study the manner in which tariff-rate quotas inhibit 

trade under AGOA. 

Mr. Matanda stated that U.S. imports from AGOA-eligible countries would increase if those 

countries developed agricultural processing capabilities, such as producing edible oils. He said 

that the most effective ways for Africa to be inserted into global supply chains and distribution 

networks is through modernization of the rules of origin. If these rules were changed, according 

to Mr. Matanda, producers and suppliers would be part of the global value chain based on tasks 

where Africa has a competitive advantage. He also noted that COMESA opposes South Africa’s 

graduation from AGOA despite South Africa’s considerable market access barriers to U.S. 

investment and exports. 

Esquel Mauritius Ltd (EML)714

In a written submission, Mr. John Cheh, Vice Chairman and Chief Executive Officer, Esquel 

Mauritius Ltd (EML), said that he will focus exclusively on three of the four investigations, Nos. 

332-542, AGOA: Trade and Investment Performance Overview; 332-544, AGOA: Economic 

714 John Cheh, vice chairman and CEO, Esquel Mauritius, written submission to the USITC, January 21, 2014.

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Effects of Providing Duty-Free Treatment for Imports; and 332-545, U.S. AGOA Rules of Origin: 

Possible Changes to Promote Regional Integration and Increase Exports to the United States. 

According to Mr. Cheh, EML is a wholly owned subsidiary of the Esquel Group, one of the 

world’s leading producers of premium cotton shirts for international brands such as Nike, Ralph 

Lauren, Tommy Hilfiger, J. Crew, Brooks Brothers, Hugo Boss, and Lacoste. He noted that EML 

has manufactured apparel products in Mauritius for more than 30 years and that EML originally 

invested in Mauritius in response to the quota system under the Multi-Fiber Agreement (MFA). 

Notwithstanding the end of the MFA, the Esquel Group remained in Mauritius because of 

quality workmanship and special AGOA duty-free privileges. Maintaining the Third Country 

Rules of Origin, according to Mr. Cheh, is essential for EML to maintain its manufacturing and 

export business in Mauritius. He stated that EML strongly supports extension of this provision 

until 2030.

Mr. Cheh stated that the present rules of origin allowing the use of third-country fabric provide 

African exporters and U.S. buyers with significant benefits and said that the most recent delay 

in the renewal of the third-country fabric provision in 2012 negatively impacted U.S. imports 

under AGOA. He noted that such imports only recovered starting in January 2013 following the 

renewal of the third-country provision in August of 2012 and have continued to improve 

through the first nine months of 2013. He also explained that if the third-country provision is 

not renewed or extended in 2015, it would drastically reduce Mauritius’ export competitiveness 

and result in serious consequences for its textile and apparel industry. 

Mr. Cheh cited other areas where AGOA can be improved, including: trade capacity building, 

education, and health and safety. He also commented that the United States could work with 

Mauritius to develop an “AGOA Regional Centre” for SSA with a wide mandate to focus on 

several objectives: (1) help improve AGOA countries’ understanding of the U.S. market and its 

supply chain; (2) lower administrative burdens to improve the clearance of goods and establish 

acceptance of electronic documents for entry; (3) assist the private sector in the development 

of the logistics industry in AGOA countries; (4) facilitate financial services to improve capital 

flow for infrastructure investments; (5) improve training for local labor and professionals; and 

(6) coordinate U.S. foreign aid projects.

Ms. Katrin Kuhlmann715

In a written submission and in hearing testimony related to all four investigations, Katrin 

Kuhlmann, president, New Markets Lab and Senior Advisor to the Corporate Council on Africa 

715 Katrin Kulhman, president, New Markets Lab, senior advisor, Corporate Council on Africa Trade Advisor, USITC 

hearing transcript, 89–99, written submission, January 14, 2014, post-hearing submission, January 21, 2014.

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(CCA), said that New Markets is a nonprofit membership based organization founded to build 

economic opportunity in developing markets through legal and regulatory reform and that CCA 

was founded to promote trade and investment between the United States and Africa. She 

stated that she focused her comments on trade and investment policy, legal and regulatory 

reforms, value chain development, and African regional integration.

Ms. Kuhlmann reported that value chains are becoming more complex, within and outside 

Africa, and production and processing involve an increasing number of actors, locations, and 

countries. Ms. Kuhlmann noted that access to essential services is becoming increasingly 

integral to well-functioning trade and value chains. She stated that both New Markets and CCA 

focus on increasing opportunities in services trade. She indicated one particular focus of New 

Markets Lab is work with the International Fund for Agricultural Development that looks at law 

and regulations from the perspective of scaling up interventions to develop agricultural value 

chains. 

Ms. Kuhlmann said that EPAs are problematic because the EU has shifted away from 

comprehensive preferences for many countries, yet maintains preferences for the poorest 

developing countries. This new policy, according to Ms. Kuhlmann, has met with heavy criticism 

and resistance by African policymakers. She stated that EPAs create benefits for European 

companies, but their ability to increase and diversify African trade is questionable. She stated 

that U.S. and European trade policies vis-à-vis SSA are unlikely to have much impact unless they 

complement African initiatives to build regional markets. 

Leading Women of Africa (LWA)716

In a written submission, Madelein Mkunu, CEO and President, Leading Women of Africa, said 

that LWA was founded as a Pan African forum to promote women’s economic empowerment in 

support of its 21st Century goals for sustainable development. She indicated that her 

submission would focus on investigation No. 332-542, AGOA: Trade and Investment 

Performance Overview. Mrs. Mkunu said that AGOA has assisted women in Africa by providing 

duty-free access to U.S. markets for product lines where women are employed or own small 

businesses. She urged that AGOA’s renewal be done with the appropriate modifications to 

accommodate 21st century trade between the United States and the participating African 

nations so that African countries can continue to open their economies and build free markets. 

She indicated that AGOA’s renewal is vital to generating: (1) tangible and profitable 

investments; (2) job creation and opportunity for under-educated youth and women; (3) skills 

transfer; (4) market access for women; and (5) economic growth. Ms. Mkunu expressed 

716 Madelein Mkunu, CEO and president, Leading Women of Africa, written submission, January 21, 2014.

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support for the renewal of AGOA for at least 15 years to ensure investor confidence for the 

trade and investment that has already benefited the women of SSA.

Manchester Trade717

In a written submission and in hearing testimony, Mr. Stephen Lande, President of Manchester 

Trade, indicated that he submitted Manchester Trade’s recently developed “Blueprint for 

AGOA” as a pre-hearing submission. Mr Lande noted that his comments would address three of 

the Commission’s investigations, Nos. 332-542 AGOA: Trade and Performance Overview; 332-

545, U.S. AGOA Rules of Origin: Possible Changes to Promote Regional Integration and Increase 

Exports to the United States; and 332-546, EU-South Africa FTA: Impact on U.S. Exports to South 

Africa. Mr. Lande, stated that actual trade between AGOA and the United States is much lower 

than anticipated and has failed to meet its potential except for machinery, motor vehicles, 

fruits and vegetables, and garments usually incorporating Chinese yarns and fabric. Mr. Lande 

stated these results are not surprising given the supply constraints, particularly inadequate 

infrastructure and manufacturing and processing capacity.

Mr. Lande expressed the view that removal of an AGOA beneficiary country should be used as a 

last resort and should only be taken if the following conditions are met: (1) the U.S. action does 

not have a negative effect on current U.S. investors or a dampening impact on future 

investments; (2) the U.S. action does not harm innocent parties such as small African apparel 

producers that rely on AGOA; and (3) the action is supported by African countries. 

With regard to investigation No. 332-544, Mr. Lande said that it is important that Congress and 

the Obama Administration consider including agricultural products currently excluded from 

AGOA, particularly TRQ products where South Africa has export potential (e.g., groundnuts, 

sugar, leaf tobacco). As for investigation No. 332-545, he said that current rules of origin do not 

assist in confronting the real challenges of AGOA since the development level of many 

beneficiaries does not allow them to add 35 percent value-added even when cumulated. He 

suggested that AGOA’s rules of origin be amended to provide duty-free entry for supply chain 

products with sufficient African content, even if the content is added before the final stage of 

production. Mr. Lande recommended that the United States consider designating willing 

economic communities for AGOA eligibility rather than individual countries. With regards to 

investigation no. 332-546, Mr. Lande said that the starting point for this investigation must be 

an analysis of the impact on trade. He also said that U.S. exports will experience a greater 

substantial negative impact if South Africa is graduated from AGOA. 

717 Stephen Lande, president, Manchester Trade, USITC hearing transcript 99–115 , written submission to the 

USITC, December 14, 2014.

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Manganese Metal Company (MMC)718

In a written submission, Buks Botes, Marketing Manager, Manganese Metal Company (MMC), 

said that his submission would focus on three of the investigations, Nos. 332-542, AGOA: Trade 

and Investment Performance Overview, 332-544, AGOA: Economic Effects of Providing DutyFree Treatment for Imports, and 332-546, EU-South Africa FTA: Impact on U.S. Exports to South 

Africa. Mr. Botes said that MMC is a producer of electrolytic manganese metal (EMM) and is 

located in the town of Nelspruit, in the Mpumalanga province of South Africa. Mr. Botes 

expressed support for the renewal of AGOA and he noted that there is no U.S. production of 

EMM, with China and South Africa being the world’s only major producers. According to Mr. 

Botes, EMM is used by U.S. industry as a key alloying element for the production of various 

grades of steel, stainless steel, foundry alloys, aluminum alloys, copper alloys, welding rods, and 

selected manganese-based chemicals. 

Mr. Botes stated that due to the duty-free benefits of AGOA, South African material can be 

competitively priced in a U.S. market dominated by Chinese-produced material. He stated that 

it is very important for U.S. EMM buyers to have a second source of supply in order to reduce 

country-risk and to increase competitiveness between suppliers. Mr. Botes stated that if the 

current AGOA program is not renewed beyond September 2015 or if South Africa is no longer a 

beneficiary country, it is highly likely that MMC will be driven out of the U.S. market and even 

cease production, negatively impacting U.S. business.

Mr. Botes explained that despite benefits of duty-free treatment provided by the EU South 

Africa FTA, the U.S. market is far more important to MMC. He reported that over the years, the 

share of MMC’s sales to the United States has increased due to the relative advantage that 

MMC enjoys in the U.S. market, where its Chinese competitors are subjected to a 14 percent 

import duty.

National Chicken Council (NCC), USA Poultry 

and Egg Export Council (USAPEEC)719

In a written submission and in hearing testimony, Mr. William Roenigk, Senior Consultant, 

National Chicken Council (NCC), said that his comments would address investigation No. 332-

542, AGOA: Trade and Investment Performance Overview. Mr. Roenigk said that NCC represents 

U.S. companies that produce and process over 95 percent of the chickens in the United States, 

718 Buks Botes, marketing manager, Manganese Metal Company, Ltd, written submission, January 21, 2014. 719 William Roenigk, senior consultant, National Chicken Council, USITC hearing transcript 241–250, written 

submission, December 17, 2013.

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and that the USA Poultry and Egg Export Council (USAPEEC) is a national trade association 

representing the interests of the U.S. poultry and egg export industry. Mr. Roenigk said that 

USAPPEEC members account for nearly 90 percent of total U.S. poultry and egg exports. He 

indicated that unless South Africa lifts anti-dumping duties on U.S. poultry, described below, 

and allows trade to resume fairly and without restraint, NCC and USAPEEC will strongly oppose 

any further extension of AGOA benefits to South Africa.

Mr. Roenigk noted that since 2000, South Africa has imposed antidumping duties on U.S. 

poultry. Prior to 2000, according to Mr. Roenigk, the U.S. industry enjoyed a South African 

export market of nearly 55,000 metric tons annually. He contends that South Africa initiated an 

antidumping case against U.S. poultry imports as a protectionist measure. He noted that South 

Africa is a net importer of poultry meat and the imposition of antidumping duties meant that 

South African domestic prices increased to four times the world price. Mr. Roenigk stated that 

since the imposition of antidumping duties, U.S. poultry has been totally shut out of the South 

African market. 

Mr. Roenigk said that domestic poultry producers assumed that the U.S. government would 

immediately mount a challenge at the World Trade Organization (WTO). He stated that, despite 

constant requests that the case be pursued at the WTO, no action was taken. Mr. Roenigk also 

stated that in 2007 South Africa’s imposition of antidumping duties on U.S. poultry was 

determined by the South African Supreme Court to be illegal under South African law. He noted 

that South African antidumping authorities simply declined to implement the Court’s ruling and 

continued to impose antidumping duties on U.S. products.

National Foreign Trade Council (NFTC)720

In a written submission and hearing testimony, Mr. Dan O’Flaherty, Vice President, National 

Foreign Trade Council (NFTC), said his comments would address investigation No. 332-542, 

AGOA: Trade and Investment Performance Overview. He said that the NFTC is an association of 

200 U.S.-based multinational corporations engaged in international trade and investment. Mr. 

O’Flaherty stated that AGOA preferences benefit both U.S. companies that source in Africa and 

African exporters. He stated that while reciprocity should remain the ultimate goal of AGOA, 

more adjustment time is required. The NFTC, according to Mr. O’Flaherty, supports renewal of 

AGOA, but is of the view that useful changes can be made to the statute. 

Mr. O’Flaherty stated that the NFTC supports reducing U.S. content requirements, including 

changing the rules of origin to qualify significant intermediate African value-added even when 

720 Dan O’Flaherty, president, National Foreign Trade Council, USITC hearing transcript 138–146, written 

submission to the USITC, January 14, 2014.

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the final product is exported from elsewhere. Additionally, he noted that NFTC supports 

allowing the designation of Africa’s regional economic commitments (RECs) as AGOA 

beneficiaries provided that the REC’s meet the eligibility requirements. Finally, Mr. Flaherty 

reported that a significant sector of the U.S. business community supports reciprocity for South 

Africa, as well as other countries in the region.

Mr. O’Flaherty identified three useful changes to AGOA: (1) designate REC’s as eligible for 

AGOA benefits if they accept U.S. conditions; (2) enhance capacity-building in eligible countries; 

and (3) modify current AGOA rules of origin which currently require 35 percent of a product be 

made in an AGOA-beneficiary country for eligibility. Mr. O’Flaherty asserted that AGOA should 

be renewed for a period of 2 years, during which the Executive Branch and Congress can review 

the advice of the Commission, GAO, and private sector organizations to develop a stronger 

AGOA. 

National Pork Producers Council (NPPC)721

In its written submission, the National Pork Producers Council (NPPC) said that it represents a 

federation of 43 state producer organizations and thus the domestic and global interests of 

67,000 U.S. pork operations. The NPPC focused its comments on investigation No. 332-542, 

AGOA: Trade and Investment Performance Overview. The NPPC asserted that extending AGOA 

for more than five years, or worse, making it permanent, would be a serious mistake. In its 

written submission, NPPC noted that non-reciprocal free trade programs can be useful short 

term tools to assist developing countries compete in foreign markets, but dependence on 

preference programs for long or indefinite periods is unwise.

The NPPC said that its concerns focus particularly on South Africa because it is a major recipient 

of U.S. foreign economic assistance and trade benefits under AGOA, while its pork market is 

closed to U.S. producers. South Africa, according to the NPPC, blocks U.S. pork exports based on 

unscientific and unjustifiable concerns about porcine reproductive and respiratory syndrome, 

trichinae, pseudorabies, and other issues. The Council asserted that South Africa is not meeting 

the AGOA Section 104 requirement that it establishes or makes substantial progress toward 

establishing “the elimination of barriers to U.S. trade and investment.” It also stated that AGOA 

is a one-way free trade agreement where the U.S. allows imports under AGOA to enter dutyfree, while U.S. exports typically face myriad non-tariff measures that limit or block U.S. 

exports. The NPPC stated that it does not oppose the renewal of GSP and does not oppose an 

extension of AGOA for a period of five years or less. The Council would prefer to resolve these 

trade barriers at a technical level. The Council noted that the extension of GSP or AGOA to 

721 National Pork Producers Council, written submission to the USITC, January 22, 2014.

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South Africa would remove any incentive for that country to move toward a reciprocal trade 

relationship with the United States. However, according to the NPPC, given the de facto ban on 

U.S. pork exports and the lack of progress in opening the market, U.S. pork producers may have 

no choice but to come out in opposition to AGOA.

Progressive Economy722

In a written submission and in hearing testimony, Edward Gresser, Director, Progressive 

Economy, said that Progressive Economy is a project of the Global Works Foundation and a 

non-partisan non-profit section 501(c)(3) organization. The Progressive Economy project is a 

research project meant to deepen understanding of U.S. trade policy and the global economy, 

with a special focus on supporting development and the reduction of poverty through trade. 

Mr. Gresser noted that his presentation would focus on investigation No. 332-542, AGOA: Trade 

and Investment Performance Overview. 

Mr. Gresser offered the following observations about AGOA: (1) AGOA is a central element of 

U.S.-Africa economic relations and should be renewed in a timely fashion, (2) AGOA’s market 

access provisions in clothing and manufacturing have yielded less benefits than commonly 

thought, whereas the enhanced dialogue, Trade Hubs, and other features meant to raise 

awareness of U.S. market opportunities and policy rules have probably done more, and (3) 

infrastructure and trade logistics are the greatest challenge to Africa’s ability to take advantage 

of global market opportunities.

Mr. Gesser asserted that Africa’s major successes in exporting to the United States have 

resulted mainly from the improved information on the U.S. market that African businesses, 

governments, and farm groups built up through AGOA’s Ministerial conferences, Trade Hubs, 

and other dialogues. He also said that the effects of additional market access appear to be 

concentrated in the automotive industry, while the clothing program viewed as the centerpiece 

of the program in 2000 has produced only modest results.

Rocky Mountain District Export Council 

(RMDEC)723

In a written submission to the Commission, Rocky Mountain District Export Council (RMDEC) 

said that its comments would focus on investigation No. 332-542, AGOA: Trade and Investment 

722 Edward Gresser, director, Progressive Economy, USITC hearing transcript, 115–125, written submission to the 

USTIC, January 14, 2014.

723 Rocky Mountain District Export Council, written submission to the USITC, January 20, 2014.

319
Performance Overview. RMDEC stated that it is a trade advisory group to the U.S. Department 

of Commerce’s International Trade Administration. The Council added that its mission is to 

educate and promote exports, exporting, and trade policy. RMDEC stated that its regional 

stakeholders for AGOA include multinational corporations, small and medium enterprises, and 

individual entrepreneurs, primarily in the agricultural and extractive industries. The Council said 

that the following factors impede trade, investment, and the economic climate in SSA: (1) lack 

of infrastructure; (2) a need for institutional capacity building; (3) a lack of policies, programs, 

and projects that advance corporate social responsibility; and (4) a lack of support for micro 

trade opportunities. 

To overcome these impediments, Rocky Mountain suggests: (1) more support for energy 

infrastructure development; (2) support for training in leadership, best business practices, and 

technical English, with a complement of U.S. loans or grants devoted to capacity building; (3) 

support for public health, schools, agriculture and animal husbandry to differentiate U.S. efforts 

from those of its competitors; (4) inclusions of micro-finance in the AGOA effort; and (5) pursuit 

of responsible trade, not exploitation. The Council concluded by asking that the U.S. 

government consider supporting AGOA’s ongoing trade shows being held across the United 

States to promote mutual trust. 

Dr. Witney Schneidman724

In a written submission and in hearing testimony, Dr. Witney Schneidman, Senior International 

Advisor for Africa, Covington & Burling LLP and Nonresident Senior Fellow, African Growth 

Initiative, Brookings, said that his comments relate to three of the Commission’s investigations, 

Nos. 332-542, AGOA: Trade and Investment Performance Overview; 332 545, Rules of Origin: 

Possible Changes to Promote Regional Integration and Increase Exports to the United States, 

and 332-546, EU-South Africa FTA: Impact on U.S. Exports to South Africa. 

As concerns investigation No. 332-542, Dr. Schneidman indicated that the overriding concern is 

how investments by the EU, China, Brazil, and India have overshadowed the presence of U.S. 

firms in Africa. He stated that as a non-reciprocal preference program, AGOA has done little to 

advance the interests of U.S. companies. Dr. Schneidman suggested a zero tax on repatriated 

income from investments in productive areas would encourage U.S. companies to become 

more active in Africa. 

724 Dr. Witney Schneidman, senior international advisor for Africa, Covington & Burling LLP and nonresident senior 

fellow, African Growth Initiative, Brookings, USITC hearing transcript, 212–220, and written submission, January 

14, 2014.

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Further, Dr. Schneidman indicated that the United States can offer more programs like those 

offered by the Millennium Challenge Corporation to strengthen regional integration and supply 

chains, which would increase exports to the United States. Dr. Schneidman also expressed the 

view that it would be a mistake to graduate South Africa from AGOA in 2015. He indicated that 

the Congressional Research Service reported that preferential imports from South Africa 

totaled $3.7 billion in 2012, accounting for roughly three-quarters of all U.S. imports from SSA 

under AGOA/GSP.

Dr. Schneidman stated it is important to note that the EU has adopted a trade policy toward 

Africa predicated on EPAs, which is negative for Africa, undermines regional integration, and 

discriminates against FDI and trade that does not originate in the EU. He recommended that 

USTR raise objections to the EPAs in the context of the Transatlantic Trade and Investment 

Partnership negotiations, but also in a formal discussion with the African Union. The African 

Union, according to Dr. Schneidman, should be encouraged to request the EU to postpose the 

deadline of October 1, 2014 when African nations are required to sign interim agreements.

U.S. Chamber of Commerce725

In a written submission and in hearing testimony, Mr. Scott Eisner, Vice President, African 

Affairs, U.S. Chamber of Commerce, said that the Chamber is the world’s largest business 

federation representing the interests of more than three million businesses, state and local 

chambers, and industry associations. Mr. Eisner stated that the Chamber’s comments address 

investigation No. 332-542, AGOA: Trade and Investment Performance Overview. Mr. Eisner 

stated that AGOA remains the cornerstone of U.S. trade and investment policy toward SSA. He 

remarked that AGOA’s expiration provides the opportunity to review its integral role within 

U.S.-African relations and to readjust the legislation to reflect Africa’s changing economic and 

political environment. 

Mr. Eisner said that new products should be included in AGOA, the Agreement should be 

extended for a longer period of time, and that AGOA’s third-party fabric provision should be 

changed. He also stated that some of the U.S. government’s aid to Africa should be directed to 

build Africa’s technical capacity under AGOA. Further, Mr. Eisner stated that AGOA’s pending 

expiration undermines business and investor certainty, which is already affecting business 

decisions and trade, and said that if AGOA were to expire, many of the significant gains made 

by African economies would be undermined. 

725 Scott Eisner, vice president, African Affairs, U.S. Chamber of Commerce, USITC hearing transcript, 125–138, 

written submission to the USIC, January 14, 2014.

321
Mr. Eisner stated AGOA eligibility requirements must include factors that foster greater twoway trade such as intellectual property protections, customs regimes, and regulatory and legal 

standards. He also said that each AGOA eligible country must begin to implement sound trade 

practices in order to enhance bilateral and multilateral trading relationships. Finally, Mr. Eisner 

proposed that AGOA benefits for eligible countries be extended beyond 2015 to provide 

greater predictability and stability to U.S.-Africa trade. 

United States Fashion Industry Association 

(USFIA)726

In a written submission, Julia Hughes, President, United States Fashion Industry Association 

(USFIA), said that USFIA represents textile and apparel brands, retailers, importers, and 

wholesalers based in the United States. She indicated that she would concentrate on two of the 

investigations, Nos. 332-542, AGOA: Trade and Investment Performance Review, and 332-545, 

U.S. AGOA Rules of Origin: Possible Changes to Promote Regional Integration and Promote 

Exports to the United States. USFIA member companies, according to Ms. Hughes, continue to 

source from textile and apparel producers in SSA. Ms. Hughes noted that these companies want 

to maintain partnerships on the African continent and she made the following 

recommendations: (1) AGOA should be renewed on a seamless basis as soon as possible and no 

later than 2014; (2) AGOA should be reauthorized for a 15-year period; (3) the third-country 

fabric provision should be renewed for the full duration of the AGOA renewal; (4) all AGOA 

beneficiary countries should benefit from AGOA’s third-country fabric provision; and (5) trade 

capacity building programs should be expanded. 

Universal Leaf Tobacco Company, Inc. 

(Universal)727

In a written submission, Mr. H. Michael Ligon, Vice President, Universal Leaf Tobacco Company 

(Universal), said that his company’s business is based on its core function as a reliable, serviceoriented international link between leaf tobacco growers and product manufacturers. He stated 

that Universal conducts business through its affiliates in Malawi, Mozambique, South Africa, 

Tanzania, Zambia, and Zimbabwe. Mr. Ligon indicated that his submission would focus on 

investigation Nos. 332-542, AGOA: Trade and Investment Performance Overview, and 332-544, 

AGOA: Economic Effects of Providing Duty-Free Treatment for Imports. 

726 Julia Hughes, president, United States Fashion Industry Association, written submission, January 21, 2014. 727 H. Michael Ligon, vice president, Universal Leaf Tobacco Co., written submission to the USITC, January 21, 2014.

322
Mr. Ligon stated that although AGOA is an extremely important trade preference program that 

has helped improve the economic and diplomatic relationships between the United States and 

the countries of SSA, it is undermined by, inter alia, tariff-rate quotas (TRQs) applied to many 

agricultural products. According to Mr. Ligon, only a small amount of leaf tobacco imports into 

the United States from Africa enters under AGOA. He noted that this is because the U.S. TRQ on 

leaf tobacco provides only a small duty free quota to imports from Malawi and other SSA 

exporters. Likewise, he noted that other SSA exporters are excluded from the U.S. market by 

high tariffs and limited volumes. 

Further, Mr. Ligon said that AGOA should be renewed in an expeditious manner because it 

would be imprudent to wait until September 2015 as it would cause uncertainty. He also 

recommended that AGOA be improved by expanding access for products subject to TRQs. He 

stated that the AGOA legislation does not provide for TRQs on agricultural products, but rather 

they exist separately. Mr. Ligon asserted that leaf tobacco should be exempt from the overquota tariff. 

World Cocoa Foundation (WCF)728

In a written submission to the Commission, Mr. William Guyton, Vice President, World Cocoa 

Foundation (WCF) said that his submission concerns two of the investigations, Nos. 332-542, 

AGOA: Trade and Investment Performance Overview and 332-544, AGOA; Economic Effects of 

Providing Duty-Free Treatment for Imports. Mr. Guyton noted WCF’s support for AGOA’s 

renewal and expansion. Mr. Guyton contended that AGOA reached its objectives of expanding 

U.S. trade and investment with SSA, stimulating regional economic growth and economic 

integration, and facilitating SSA’s integration into the global economy and has emerged as a 

critical element of U.S. policy in the region. 

Mr. Guyton stated that the World Cocoa Foundation welcomed the increase in U.S.-SSA trade 

and indicated that more than $1 billion in cocoa beans and products are imported from SSA 

into the United States annually. He also noted that the United States continues to import more 

cocoa beans and products from SSA than any other agricultural product. Mr. Guyton urged the 

Commission to document AGOA’s vital role in expanding and diversifying exports from AGOA 

beneficiary countries to the United States and to explain the economic benefits of expanded 

trade with SSA for U.S. and African producers, workers, farmers, and consumers to USTR, 

Congress, and the American people. 

728 William Guyton, president, World Cocoa Foundation, written submission to the USITC, January 8, 2014.

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Appendix E

U.S. Imports under AGOA 

325

327

Table E.1 U.S. imports for consumption under AGOA (excluding crude petroleum), by beneficiary country, 2001, 2005, and 2008–13

Country 2001 2005 2008 2009 2010 2011 2012 2013

Thousand $

Angola a 99,583.4 96,057.7 38,055.9 0.0 0.0 216,742.1 96,386.9

Benin 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Botswana 0.0 30,043.7 15,803.0 12,361.7 11,558.5 15,478.5 10,426.7 5,856.1

Burkina Faso a 0.0 0.0 0.0 1.7 1.7 5.0 186.24 

Burundi a a 0.0 0.0 0.0 0.0 0.0 0.0

Cameroon 15,259.2 69,153.1 72,737.8 45,099.6 69,409.4 137,372.0 65,148.1 36,426.7

Cabo Verde 0.0 2,115.4 0.0 0.0 145.6 154.0 116.9 146.4

Central African Republic 0.0 a a a a a a a

Chad 0.0 108,103.5 0.0 0.0 0.0 17,529.9 0.0 0.0

Comoros a a 0.0 0.0 0.0 0.0 0.0 0.0

Côte d`Ivoire a a a a a 0.0 29,901.5 229.3

Congo, Dem. Rep. a 0.0 0.0 0.0 0.0 a a a

Djibouti 0.0 0.0 0.0 16.8 0.0 0.0 0.0 0.0

Eritrea 0.0 a a a a a a a

Ethiopia 215.3 3,646.4 9,391.5 6,723.4 6,875.1 10,886.5 18,294.1 31,711.3

Gabon 0.0 0.0 19,202.8 15,857.0 0.0 0.0 0.0 17,339.8

Gambia a 0.0 0.0 0.0 5.3 1.4 0.0 0.0

Ghana 33,092.4 49,926.9 31,493.6 2,303.3 2,052.8 72,731.1 16,988.1 2,811.0

Guinea 0.0 0.0 0.7 1.1 a 0.0 2.5 5.6

Guinea-Bissau 0.0 0.0 0.0 0.0 0.0 0.0 0.0 a

Kenya 55,090.2 272,131.1 252,243.0 204,981.6 220,636.1 288,273.4 287,737.5 336,534.8

Lesotho 129,522.8 388,344.3 338,796.8 277,046.4 280,341.6 314,311.2 300,609.0 320,806.9

Liberia a a 0.0 0.0 0.0 0.0 0.0 0.0

Madagascar 92,145.3 273,193.1 277,050.7 210,003.9 a a a a

Malawi 12,057.3 32,375.2 26,680.4 39,734.3 47,190.6 56,145.6 46,307.1 47,084.2 

Mali 0.0 0.0 3.9 61.6 3.6 1.6 20.6 a

Mauritania 0.0 0.0 0.0 a 0.0 0.0 0.0 0.0

Mauritius 38,899.5 146,807.5 97,291.5 98,747.2 117,910.9 155,982.1 160,030.0 187,894.6

Mozambique 0.0 2,827.7 129.1 0.0 183.6 688.6 29.5 1,361.8

Namibia 0.0 53,058.4 6.2 0.0 5.3 12.8 215.6 0.0

Niger 0.0 24.3 0.7 2.8 a 0.0 1.2 0.3

Nigeria 191,368.7 1,194,923.9 1,294,141.2 394,603.6 551,064.9 828,360.0 934,024.2 942,087.2

Congo, Rep. 37,112.7 109,513.7 27,473.5 19,081.2 0.0 9,843.2 40,267.4 144,815.1

Rwanda 265.2 0.5 5.3 62.9 10.5 17.3 7.9 9.4

São Tomé and Principe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Senegal 0.0 9.2 10,228.9 1,585.1 6.7 2.7 5,634.0 11.0

Seychelles 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
328

Country 2001 2005 2008 2009 2010 2011 2012 2013

Sierra Leone 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

South Africa 417,256.3 455,315.6 2,427,689.9 1,642,892.5 1,902,140.4 2,458,159.6 2,384,108.7 2,578,238.1

South Sudan a a a a a a a 0.0

Swaziland 8,314.0 160,462.3 125,386.6 94,718.2 92,798.4 77,121.1 62,373.3 53,940.0

Tanzania 15.7 2,811.7 1,527.3 1,006.2 1,850.1 5,130.9 10,445.8 10,359.7

Togo a a 0.0 0.0 0.0 0.0 44,448.4 0.0

Uganda 0.0 4,854.3 472.6 221.9 344.8 786.9 64.5 55.9

Zambia 9.8 0.0 4.8 6.7 0.4 10.3 6.8 8.3

Total U.S. imports under AGOA excluding 

crude petroleum

1,030,624.5 3,459,225.1 5,123,819.3 3,105,174.9 3,304,536.0 4,449,002.3 4,633,956.3 4,814,126.9

Source: USITC DataWeb/USDOC (accessed February 18, 2014).

Notes: The data in this table are based on the list of AGOA eligible countries, which varies by year. For a complete list of AGOA eligible countries by year, see table 

1.1. Data on U.S. imports for consumption under AGOA reported in this table exclude imports under HTS 2709 (crude petroleum) and rate provision code 11 

(imports into U.S. Virgin Islands). a = Country was not AGOA eligible in this year.
Appendix F 

Product Space Methodology and Data 

329

Summary of Product Space and 

Complexity Analysis 

Background

This appendix provides additional information on the product space and complexity analysis, 

which has become an increasingly applied approach to identify potentially competitive 

products. Work begun by Ricardo Hausmann and César Hidalgo has expanded the analysis of 

countries’ export capabilities while illuminating the evolution of countries’ productive 

structures and the implications of those structures for economic development.729 Their work, 

here referred to as “product space and complexity analysis,” draws on network science to 

determine how close products are to each other in terms of the production capabilities 

required to produce them, as well as how complex or sophisticated they are from the same 

point of view. The analysis covers all goods trade data, including manufactured goods, 

agricultural goods, and natural resources.730 This analysis also shows the effect on countries’ 

economic development of expanding the range and sophistication of products.

One insight from product space and complexity analysis is that it is important to calculate how 

close products are to each other—that is, how many capabilities are shared in the production of 

any two products.731 This is determined by measuring “proximity”—the minimum probability 

that a country exports product 1 given that it exports product 2, or vice versa—which 

formalizes the intuitive idea that the ability of a country to produce one product depends on its 

ability to produce other products. Proximity and other related indicators provide insights into 

the possible ease with which a country producing product 1 will be able to move into producing 

product 2. The product space is the network connecting products based on their proximity, or 

how close they are to each other, and, therefore, the potential of exporting closely related 

products. 

729 For detailed technical explanations of the analytical approach encompassing product space analysis and 

economic complexity, see Hidalgo and Hausmann, “The Building Blocks of Economic Complexity,” June 30, 2009, 

10570–75; Hidalgo et al., “The Product Space Conditions the Development of Nations,” 2007; and Hausmann et al., 

The Atlas of Economic Complexity, 2011. Hausmann is a professor of economic development at Harvard Kennedy 

School’s Center for International Development, and Hidalgo is an assistant professor at the Media Lab of the 

Massachusetts Institute of Technology (MIT).

730 See below for additional information on standard data use and coverage, as well as the specific goods trade 

data sectors used for the information in this appendix.

731 Hausmann and Hidalgo theorize that these results are explained by what they call productive knowledge or 

capabilities—the infrastructure, institutions, societal experience with similar production, and workers skilled in 

related types of production that are required to produce and then export new products. This productive 

knowledge goes beyond the traditional factors used by economists to explain production; i.e., capital and labor. 

Hausmann and Hidalgo theorize that a nation’s base of productive knowledge must be expanded for the nation to 

move into production and export of new products.

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In examining what products countries export over time, research shows that countries tend to 

diversify by developing products that are close in the product space to those they already 

export.732 The researchers show empirically that countries move from products that they 

already create to others that are “nearby”733 in terms of the productive knowledge and 

capabilities that the products require. Their work has also shown that countries that develop 

successfully do so by exporting a diverse range of products, while countries that have lagged in 

development usually export a limited range of products. They theorize that producing a diverse 

range of products helps grow a nation’s productive capabilities and the knowledge needed to 

produce new products.734

Economic complexity analysis examines which countries export a product, and then examines 

which other products are also exported by the countries that export the original product. The 

results determine a product-specific level of complexity or sophistication (i.e., more complex 

products are exported by only a few countries, which also export other complex products as 

well as a wide range of products; and less complex products are exported by many countries 

who also predominantly export a relatively limited range of products).735 For example, 

complexity analysis has shown that not only do few countries export x-ray machines, but those 

countries also export a diverse range of other products, including other products that few 

countries export. On the other hand, it has also shown that many of the world’s leastdeveloped countries export only products (such as raw materials and agricultural products) that 

other countries with similarly limited export profiles also export.736

Product space and complexity analysis allows researchers to see relationships in the product 

export patterns that are not necessarily immediately obvious using other traditional methods of 

analysis (e.g., factor accumulation, technology differences, or supply chain).737 One of their 

insights is that “input-output relationships do not explain proximity—i.e., products do not tend 

to be strongly connected to other varieties up or down the value chain.” For example, one 

might think that exporting apparel is related to exporting textiles because those products are 

linked in a supply chain, but countries that are large apparel exporters may not actually also be 

large textile exporters. However, countries that are large apparel exporters may also be large 

732 Bustos et al., “The Dynamics of Nestedness,”April 2012. 733 “Nearby” is a qualitative term to describe when two or more products require similar know-how to 

manufacture. If the unique productive knowledge (or capabilities) needed to make a specific good do not already 

exist in a country, it will prove highly difficult for the country to manufacture it. Instead, countries adapt existing 

capabilities to produce goods that require similar capabilities to ones already manufactured; these products are 

said to be nearby or in the adjacent possible. When a country has an abundance of nearby products, it has an 

easier path to capability acquisition, product diversification, and development. “Density,” one of the metrics 

reflecting this concept, is defined below.

734 Hidalgo and Hausmann, “The Building Blocks of Economic Complexity,” June 30, 2009, 10570–75. 735 “Product Complexity Index,” one of the metrics reflecting this concept, is defined below. 736 Hausmann et al., The Atlas of Economic Complexity, 2011. 737 Hidalgo, Discovering Southern and East Africa’s Industrial Opportunities, 2011, 3.

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wiring harness exporters, as the productive knowledge needed to produce apparel is more 

similar to the productive knowledge needed to produce wiring harnesses than it is to the 

productive knowledge needed to produce textiles.738 Consequently, developing countries with 

the productive knowledge to produce apparel might be well advised to move into producing 

wiring harnesses before moving into producing textiles.739

Analysis of the product space and of a country’s current export profile provides insight into 

potential avenues for development strategies. This analytical approach and these metrics can 

be used as an initial step or component, along with other analytical approaches, in a countryand product-focused process of identifying potentially competitive products and policies to 

advance economic development. Various entities assessing potential export products and 

opportunities for economic development are starting to turn to product space and economic 

complexity analyses.740

For example, the Government of Malawi’s Ministry of Industry and Trade, in its National Export 

Strategy 2013–2018, began its nine-step assessment with a trade and market analysis that 

applies product space to Malawi exports. The goal was to provide a “road map for developing 

Malawi’s productive base to allow for both export competitiveness and economic 

empowerment.”741 After identifying potentially competitive products, the document assessed 

the economic environment, supportive institutions, and competencies, skills, and knowledge 

needed in order to develop an overall production development strategy to address appropriate 

constraints or build capabilities. Similarly, in a study for the German Marshall Fund, César 

Hidalgo applied these analytical approaches to identify new industrial export and production 

opportunities for Southern and Eastern African countries, both individually and as a regional 

grouping.742 Hidalgo noted in this study that the alternative approach provided by the product 

space analysis “allows us to make predictions about the products that a country can make in 

the future, since the ability of a country to produce a product in the future depends, through 

the local presence of capabilities, on the products that it is currently making.”743

738 Hausmann and Klinger, “Policies for Achieving Structural Transformation,” 2009, 9. 739 Ibid. 740 In response to Commissioner Aranoff’s question regarding expansion versus diversification and potentially 

competitive exports, Katrin Kuhlmann referred to this novel analytical approach, noting that “There’s a model that 

a colleague of mine developed at MIT called the Observatory of Economic Complexity that looks at what countries 

are trading....” USITC, hearing transcript, January 14, 2014, 171 (testimony of Katrin Kuhlmann, president and 

founder, senior advisor, Corporate Council on Africa). For additional explanation of the use of product space 

analysis for export competitiveness assessment, see Reis and Farole, Trade Competitiveness Diagnostic Toolkit, 

2012, 50–53. 741 Government of Malawi, National Export Strategy 2013–2018, 2013, vol. 1, 7. 742 Hidalgo, “Discovering Southern and East Africa’s Industrial Opportunities,” 2011. 743 Ibid., 2–3.

333
The African Development Bank also used product space analysis as an initial step in its 

Comparative Study on Export Policies in Egypt, Morocco, Tunisia, and South Korea.

744 In this 

study, Hausmann and Bustos used product space and complexity analyses to understand the 

structural transformation of Egypt, Morocco, and Tunisia, and then to compare them to China, 

the Republic of Korea, and Thailand. The report aimed to provide “policy recommendations on 

how these countries could improve their exports in the strategic industries.”745 Yet another 

example is a study by the Millennium Challenge Corporation and the Government of Liberia. In 

helping Liberia and its development partners to identify the constraints on growth in Liberia, as 

well as the most binding constraints on diversity and investment, the researchers used product 

space analysis to “examine whether a lack of information on profitable opportunities constrains 

diversity and investment in Liberia.”746

Selected Product Space and Complexity Data 

and Variables747

The product space and complexity analysis methodology produces several metrics that can help 

researchers identify potentially competitive products for export and economic development. 

The terms describing these metrics allow researchers to classify products by their relatedness, 

complexity, and potential for future growth. The metrics density and product complexity are 

two measures that could point to areas for further research into potentially competitive 

products for AGOA-eligible countries because they can be used to predict extensive margin 

growth (e.g., diversification or expansion into new products) as a result of expanding or 

acquiring additional capabilities based on a country’s current capabilities. The ability to expand 

capabilities, however, is affected by a variety of policies or market factors (e.g., domestic or 

international policies, domestic or international regulations, infrastructure constraints), and 

detailed product-specific analysis of relevant policies and market factors would be required to

determine the viability of expanding into these product areas.

Density

Density measures how “close” a product is to a country’s current productive capabilities. That 

is, products with a high density for a particular country are very close (i.e., their production 

744 African Development Bank, “Comparative Study on Export Policies,” 2012. 745 Ibid., 6. 746 MCC and Government of Liberia, “Liberia Constraints Analysis,” September 2013, 114. Similar use was made of 

product space in a Tunisia study supported by the African Development Bank, the government of Tunisia, and the 

U.S. government (Toward a New Economic Model for Tunisia, 2013). 747 Product space and complexity data (i.e., product density and product complexity metrics, as well as associated 

HTS 4-digit product labels) were sourced from the Observatory at Harvard Kennedy School Center for International 

Development (CID), based on analytical approaches initially developed by Hausmann and Hidalgo.

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involves many similar shared capabilities) to the products that the country already exports (e.g., 

men’s shirts and women’s shirts).

Product Complexity 

The Product Complexity Index (PCI) measures how complex a product is by seeing how many 

countries export the product, and whether the product is also exported by countries that 

export other complex products. For example, the few countries that export x-ray machines also 

tend to export other complex machinery (that are exported by relatively few countries) as well 

as a diverse range of products. Thus, x-ray machines have a relatively high PCI. On the other 

hand, many countries export light manufacturing products, but they tend to have a much more 

limited range of exports (that are exported by many countries, including those that export x-ray 

machines). Thus, footwear has a relatively low PCI.

Selected SSA Country Data and Results

To identify shared production capabilities among products, it is optimal to use internationally 

comparable production data. Since internationally comparable and sufficiently detailed 

production data are not available, export data, which reflect production capabilities and for 

which there are internationally comparable data, are used as a proxy for production. Product 

space analysis, complexity analysis, and associated metrics for this appendix were constructed 

using international trade data at the HTS (Harmonized Tariff Schedule) 4-digit level of 

aggregation. Services trade data are not included because of the lack of sufficiently detailed and 

internationally comparable services trade data by industry. Natural resource products also were 

excluded in compiling the list of closest products based on density, as these products rely on 

geographic natural endowments that are not easily acquired by countries. The HTS 4-digit 

categories are identified with accessible labels748 for ease of interpretation and reading. In 

some instances, the label appears distant from a country’s production capabilities. These 

categories, nevertheless, may include a wide variety of products that are exported or capable of 

being exported by SSA countries when examined at a more disaggregated level, or may reflect 

data anomalies (e.g., reexports or exports of products destined for refurbishing or repair). 

Potentially competitive products include both products a country does not export as well as 

those the country may export in some quantity, but not enough749 to be considered globally 

748 Product labels have been developed by Growth Lab at the Harvard Center for International Development (The 

Observatory). 

749 For example, an uncompetitive product would be defined as having a revealed comparative advantage (RCA) 

measure of less than 5 percent. In particular, the RCA index measures a good’s share in a country’s total exports 

relative to that good’s share in world trade. For a more detailed description of RCA, see USITC, Export 

Opportunities and Barriers, 2005, D-4.

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competitive. While this analytical approach provides, among other things, insight into 

potentially competitive products, it does not in and of itself identify the specific missing 

capabilities, policy constraints, or policy or economic environment changes that would be 

necessary to expand into these potentially competitive products. Also, although the identified 

products are specific to a particular export country, they are not specific to a destination or 

market; i.e., these are potentially competitive products for global export, and not specifically to 

the U.S. market or specifically under the AGOA program.

For this analysis, the product space and complexity analysis data are presented for 21 

countries: Angola, Cameroon, Chad, Côte d’Ivoire, the Republic of the Congo, Ethiopia, Gabon, 

Ghana, Kenya, Liberia, Mali, Mauritania, Mauritius, Mozambique, Nigeria, Senegal, South Africa, 

Tanzania, Togo, Uganda, and Zambia (tables F.1 through F.21 and figures F.1 through F.21).750

These data are intended to illustrate the initial output using product space and complexity 

analysis—products that would warrant additional analysis to determine opportunities, 

constraints, and overall viability for production and exports. They are not meant to be 

interpreted as specific products that should be exported by AGOA-eligible countries; the 

products identified have not undergone additional analysis or vetting for country-specific 

production and export viability. This analytical approach and these metrics are most effective 

when supplemented by other analytical approaches, in a country- and product-focused process 

of identifying potentially competitive products.751

For each of the 21 SSA countries, there is a table and a figure providing product space and 

economic complexity metrics and export data. The first, second, and third columns of each 

table provide the rank, name, and HTS 4-digit code of the 15 most potentially competitive 

products based on the density metric defined above. These 15 products represent the 15 

products closest to the country’s current export profile or basket that are not currently 

competitively exported, as described above. The fourth and fifth columns list exports for the 

country and for all AGOA-eligible countries for 2012; these data provide context as to whether 

the country is exporting the product (though not globally competitively) or not, and whether 

other AGOA countries are exporting the same or similar products. Each corresponding figure 

750 Most of the metrics are calculated using only countries that have reliable export data, exports of more than 

$1 billion, and population above 1.2 million. 751 See discussion above on examples of the integrated use of product space and complexity analysis with other 

analytical tools by the African Development Bank, the MCC and the government of Liberia, and the government of 

Malawi to identify potentially competitive products.

336
plots the actual values for density and complexity (both defined above) for these 15 

products.752

The density value is a country- and product-specific metric. That is, the density value for a given 

product—say, non-fileted frozen fish—is different for different countries; for example, it is 

different for Angola than for Mozambique. This difference is because the density value is 

relative to each country’s current specific export products and related capabilities. The 

complexity value, on the other hand, is a product-specific metric. The level of product 

complexity for a specific product—say, copper wire—does not differ for different countries. 

Products that appear near the lower right-hand quadrant represent products that are both 

closer to the country’s current production capabilities and relatively less complex; products in 

the upper left-hand quadrant represent products that are not as close to the country’s current 

production capabilities and are also relatively more complex.753 Decisions on which products 

would ultimately be more useful for production, export, and economic development would 

require researchers to identify the related constraints to production and export for each 

country, as well as the overall strategic value of these products in supporting economic 

development and increased income.

Summary of Identified Products 

Despite the wide variety of the products identified as potentially competitive for the AGOAeligible countries below, several sectors are prominent on the list. Sectors that emerge often 

across countries are agricultural and animal products, textile inputs and other textile products, 

apparel, footwear, accessories, processed wood products, processed metal products, low-tech 

manufactured products, construction products, and chemicals. Specific products in each of 

these sectors are listed below. As noted above, these are areas of potential competitiveness for 

these countries, for which additional detailed analysis would provide better insight into 

feasibility and product-specific issues. 

• A large number of identified products are in the agricultural and animal products

sector. These included unprocessed fruits, vegetables, or plants (such as cassava,

tropical fruits, pepper, grapes, ginger, dried legumes, honey, bananas, cut flowers,

and raw tobacco); processed fruits, vegetables, and nuts (such as cocoa paste and

powder, dried, preserved, or frozen fruit and vegetables, sugar, fruit juice, and

752 Whereas higher complexity values are associated with more complexity for a specific product, larger density 

values are associated with closer proximity (nearer) to a country’s current export profile. The actual values have 

not been provided on the axes as the specific numbers are not intuitive, and the relative distance from current 

production capabilities and relative complexity is most useful for insight and potential policy analysis.

753 Higher complexity values are associated with more complexity for a specific product. Larger density values are 

associated with closer proximity (nearer) to a country’s current export profile.

337
wine); processed animal products (such as hides and fur skins, and prepared animal 

hair), and fish products (such as processed fish and non-fileted frozen fish).

• Textile inputs were also identified, including wool and heavy pute woven cotton.

Other textile products include carpets, blankets, and conveyor belt textiles. Apparel

items include shirts, socks/hosiery, coats, and undergarments. Footwear parts were

identified as a potentially competitive product in the footwear sector. Various

accessories that could be potentially competitive include hat shapes (or forms) and

neckties.

• Processed wood products that could be competitively produced include plywood,

plaiting products, wood carpentry, shaped wood, and other wood articles. Similarly,

processed metal products include copper wire, aluminum wire and bars, and metal

clad products.

• Several low-tech manufactured products that were listed include plastic pipes,

twine and rope, netting, jewelry, metal-clad watches, and watch cases and parts.

• A variety of chemicals are identified as potentially competitive products for a

number of countries, although South Africa accounts for a large number of these

products.

• Some construction-related products also emerge for several countries, including

building stone, curbstones, and rock wool.

Comparison with Review of Literature in Chapters 

3 and 4

At an aggregate level, several of the sectors and products identified by the product space and 

complexity analysis shown above are broadly similar to those mentioned in this report as 

having export potential and targeted for further development. For example, several of the 

product groups listed in the literature as having potential for integration into regional or global 

supply chains (presented in chapter 3 of this report) overlap with the product space analysis 

presented here. These include agricultural products and foodstuffs, as well as textile and 

apparel products. Additionally, several sectors identified and targeted by country governments 

and stakeholders across SSA for further development as part of broader economic development 

strategies754 (presented in chapter 4 of this report) overlap with the product space analysis 

here. These include agricultural (particularly horticultural) products, and handcraft and 

woodcraft products (e.g., basketry, mats, and home furnishings).

754 These broad economic development strategies include regional integration, export diversification to 

complement traditional export sectors, and production value addition (i.e., moving up the value chain).

338
Table F.1 Angola: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Angola exports, 

2012b

All AGOA country 

exports, 2012b

Actual $

1 Raw Tobacco 2401 0 1,507,457,515

2 Non-fillet Frozen Fish 0303 45 850,988,814

3 Antiknock 3811 145,741 7,284,069

4 Yachts 8903 41,775 69,626,380

5 Butter 0405 0 8,508,921

6 Ginger 0910 0 53,875,138

7 Dried Legumes 0713 0 361,812,983

8 Building Stone 6802 282,733 24,243,031

9 Acyclic Alcohols 2905 0 241,922,048

10 Saturated Acyclic Monocarboxylic Acids 2915 98,298 45,736,167

11 Netting 5608 10,741 5,004,878

12 Safety Glass 7007 99,421 42,635,101

13 Metal-Clad Products 7114 0 1,082,545

14 Further Prepared Bovine & Equine Hides 4107 0 20,328,594

15 Aluminum Wire 7605 0 2,913,145

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4-digit codes. b Includes inter-African trade.

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels).

Figure F.1 Angola: Product space and complexity metrics related to potentially competitive products

339
Table F.2 Cameroon: Potentially competitive products based on product space metric

Density

rankinga Product HTS-4 code

Cameroon exports, 

2012b 

All AGOA country 

exports, 2012b

Actual $

1 Cocoa Paste 1803 57,201,397 1,226,596,440

2 Cassava 0714 414,124 36,217,158

3 Cocoa Powder 1805 220,694 299,751,380

4 Plywood 4412 6,174,598 85,299,294

5 Shaped Wood 4409 5,997,401 32,624,726

6 Wood Carpentry 4418 846,605 48,970,037

7 Tropical Fruits 0804 9,791,460 317,693,149

8 Cut Flowers 0603 996,416 927,202,015

9 Other Wood Articles 4421 662,696 17,096,947

10 Prepared Wool or Animal Hair 5105 0 62,665,732

11 Other Nuts 0802 48,982 232,901,371

12 Other Animals 0106 86,079 67,675,222

13 Pepper 0904 29,215 18,343,395

14 Raw Sugar 1701 8 1,140,039,544

15 Flavored Water 2202 412,670 70,372,513

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4-digit codes. b Includes inter-African trade.

Figure F.2 Cameroon: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels).

340
Table F.3 Chad: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Chad exports, 2012b

All AGOA country 

exports, 2012b

Actual $

1 Halides 2812 0 5,064,697

2 Epoxides 2910 0 36,270

3 Precious Metal Compounds 2843 0 243,466,922

4 Nitrile Compounds 2926 0 1,385,915

5 Curbstones 6801 0 70,904

6 Plastic Pipes 3917 176,358 81,160,528

7 Rock Wool 6806 0 7,763,980

8 Glaziers Putty 3214 0 14,582,733

9 Building Stone 6802 0 24,243,031

10 Ethylene Polymers 3901 0 68,586,603

11 Blankets 6301 387 12,184,217

12 Chocolate 1806 7,295 102,897,241

13 Other Articles of Twine & Rope 5609 0 994,513

14 Twine & Rope 5607 4,681 15,047,940

15 Aluminum Bars 7604 1,219 11,114,964

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4-digit codes. b Includes inter-African trade.

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels).

Figure F.3 Chad: Product space and complexity metrics related to potentially competitive 

products

341
Table F.4 Côte d’Ivoire: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Côte d’Ivoire exports, 

2012b

All AGOA country 

exports, 2012b

Actual $

1 Cocoa Butter 1804 250,203,279 442,378,826

2 Cocoa Beans 1801 2,720,889,629 6,294,341,705

3 Coconuts, Brazil Nuts & Cashews 0801 299,003,367 998,190,085

4 Rubber 4001 878,792,146 1,720,703,475

5 Bananas 0803 185,353,736 449,191,485

6 Cocoa Shells 1802 798,694 6,086,381

7 Cocoa Paste 1803 806,421,237 1,226,596,440

8 Cocoa Powder 1805 170,698,375 299,751,380

9 Manganese Ore 2602 23,427,345 2,304,760,898

10 Cassava 0714 1,453,699 36,217,158

11 Coconut Oil 1513 30,562,645 41,557,306

12 Palm Oil 1511 192,997,684 288,068,583

13 Accordions 9204 0 10,356

14 Copra 1203 0 26,308

15 Cloves 0907 0 82,534,204

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.4 Côte d’Ivoire: Product space and complexity metrics related to potentially competitive 

products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

342
Table F.5 Republic of the Congo: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Rep. of Congo exports, 

2012b

All AGOA country exports, 

2012b

Actual $

1 Cobalt Oxides & Hydroxides 2822 347,583 7,122,951

2 Plywood 4412 1,996,679 85,299,294

3 Wood Carpentry 4418 47,988 48,970,037

4 Shaped Wood 4409 1,162,801 32,624,726

5 Buckwheat 1008 0 6,751,317

6 Copper Wire 7408 0 110,750,764

7 Ground Nuts 1202 0 72,215,152

8 Honey 0409 0 7,707,846

9 Metal-Clad Watches 9101 1,201,584 8,931,567

10 Wool 5101 0 294,565,292

11 Other Wood Articles 4421 5,731 17,096,947

12 Dried Vegetables 0712 0 4,801,356

13 Cassava 0714 968 36,217,158

14 Dried Legumes 0713 0 361,812,983

15 Conveyor Belt Textiles 5910 0 1,395,513

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.5 Republic of the Congo: Product space and complexity metrics related to potentially 

competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels).

343
Table F.6 Ethiopia: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Ethiopia exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Dried Legumes 0713 125,741,514 361,812,983

2 Tropical Fruits 0804 2,959 317,693,149

3 Cassava 0714 6,033 36,217,158

4 Grapes 0806 0 747,028,881

5 Cut Flowers 0603 198,260,573 927,202,015

6 Ground Nuts 1202 145,190 72,215,152

7 Dried Vegetables 0712 90,708 4,801,356

8 Other Nuts 0802 39,296 232,901,371

9 Preserved Vegetables 0711 0 1,825,460

10 Raw Tobacco 2401 0 1,507,457,515

11 Frozen Vegetables 0710 2,034 28,798,196

12 Tanned Sheep Hides 4105 20,911,119 123,099,238

13 Building Stone 6802 4,635 24,243,031

14 Knotted Carpets 5701 7,312 2,172,639

15 Other Vegetables 0709 358,631 97,607,531

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.6 Ethiopia: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels); USITC Dataweb/Customs (export data). 

344
Table F.7 Gabon: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Gabon exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Plywood 4412 35,977,547 85,299,294

2 Shaped Wood 4409 532,915 32,624,726

3 Wood Carpentry 4418 668,760 48,970,037

4 Other Frozen Vegetables 2004 0 10,525,489

5 Other Wood Articles 4421 2,615 17,096,947

6 Metal-Clad Watches 9101 0 8,931,567

7 Ferroalloys 7202 0 4,150,403,383

8 Cassava 0714 0 36,217,158

9 Other Hides & Skins 4103 0 20,922,750

10 Antiknock 3811 2,921 7,284,069

11 Pearl Products 7116 0 72,996,623

12 Ketones & Quinones 2914 0 239,095,066

13 Precious Stones 7103 129 297,839,866

14 Neck Ties 6215 0 734,630

15 Essential Oils 3301 0 29,423,873

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.7 Gabon: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

345
Table F.8 Ghana: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Ghana exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Cassava 0714 24,687,005 36,217,158

2 Cocoa Paste 1803 319,872,408 1,226,596,440

3 Cocoa Powder 1805 126,703,237 299,751,380

4 Pepper 0904 120,448 18,343,395

5 Tropical Fruits 0804 58,733,996 317,693,149

6 Plywood 4412 12,204,665 85,299,294

7 Shaped Wood 4409 6,681,355 32,624,726

8 Wood Carpentry 4418 1,541,785 48,970,037

9 Cut Flowers 0603 1,435,854 927,202,015

10 Dried Legumes 0713 5,096,020 361,812,983

11 Detonating Fuses 3603 500,116 58,282,464

12 Grapes 0806 11,644 747,028,881

13 Raw Sugar 1701 153,832 1,140,039,544

14 Prepared Wool or Animal Hair 5105 0 62,665,732

15 Precious Stones 7103 0 297,839,866

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.8 Ghana: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

346
Table F.9 Kenya: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Kenya exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Cut Flowers 0603 613,213,959 927,202,015

2 Other Vegetables 0709 36,288,515 97,607,531

3 Cassava 0714 53,042 36,217,158

4 Tropical Fruits 0804 35,650,871 317,693,149

5 Dried Vegetables 0712 14,597 4,801,356

6 Raw Tobacco 2401 22,565,300 1,507,457,515

7 Fruit Juice 2009 14,694,494 259,667,402

8 Processed Fish 1604 34,097,469 1,076,310,494

9 Honey 0409 190,670 7,707,846

10 Non-Knit Active Wear 6211 5,977,599 18,812,010

11 Non-Knit Women's Suits 6204 75,296,357 205,008,852

12 Pepper 0904 512,361 18,343,395

13 Grapes 0806 55 747,028,881

14 Knit Men's Undergarments 6107 5,277 7,990,110

15 Non-Knit Men's Undergarments 6207 58,541 4,654,330

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.9 Kenya: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

347
Table F.10 Liberia: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Liberia exports, 2012b

All AGOA country exports,

2012b

Actual $

1 Cassava 0714 410 36,217,158

2 Non-fillet Frozen Fish 0303 307,635 850,988,814

3 Dried Legumes 0713 10,908 361,812,983

4 Tanned Fur Skins 4302 0 3,507,316

5 Cocoa Paste 1803 0 1,226,596,440

6 Metal-Clad Products 7114 0 1,082,545

7 Tanned Sheep Hides 4105 0 123,099,238

8 Plywood 4412 0 85,299,294

9 Metal-Clad Watches 9101 149,798 8,931,567

10 Shaped Wood 4409 534,148 32,624,726

11 Wood Carpentry 4418 0 48,970,037

12 Honey 0409 0 7,707,846

13 Wool 5101 0 294,565,292

14 Precious Stones 7103 3,882 297,839,866

15 Water 2201 0 6,721,012

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 9, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.10 Liberia: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

348
Table F.11 Mali: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Mali exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Raw Tobacco 2401 0 1,507,457,515

2 Dried Legumes 0713 76,362 361,812,983

3 Precious Stones 7103 1,535,015 297,839,866

4 Prepared Wool or Animal Hair 5105 0 62,665,732

5 Honey 0409 179 7,707,846

6 Buckwheat 1008 17,391 6,751,317

7 Cut Flowers 0603 24,434 927,202,015

8 Artificial Vegetation 6702 0 1,676,953

9 Tanned Sheep Hides 4105 13,340,805 123,099,238

10 Cassava 0714 174,667 36,217,158

11 String Instruments 9202 0 294,547

12 Jewelry 7113 2,724 207,169,552

13 Ginger 0910 124,134 53,875,138

14 Hat Shapes 6502 0 46,252

15 Footwear Parts 6406 0 8,654,746

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.11 Mali: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

349
Table F.12 Mauritania: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Mauritania exports, 

2012b

All AGOA country exports, 

2012b

Actual $

1 Non-fillet Frozen Fish 0303 156,969,391 850,988,814

2 Processed Fish 1604 1,286,272 1,076,310,494

3 Other Hides & Skins 4103 36,184 20,922,750

4 Dried Legumes 0713 72,026 361,812,983

5 Prepared Wool or Animal Hair 5105 0 62,665,732

6 Wool 5101 0 294,565,292

7 Tropical Fruits 0804 6,527 317,693,149

8 Cassava 0714 2,148 36,217,158

9 Raw Sugar 1701 184,911 1,140,039,544

10 Precious Stones 7103 77,935 297,839,866

11 Tanned Sheep Hides 4105 1,636,209 123,099,238

12 Grapes 0806 0 747,028,881

13 Non-Retail Animal Hair Yarn 5108 0 5,754,306

14 Butter 0405 0 8,508,921

15 Other Carpets 5705 24,824 6,685,212

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.12 Mauritania: Product space and complexity metrics related to potentially competitive 

products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

350
Table F.13 Mauritius: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Mauritius exports, 

2012b 

All AGOA country exports, 

2012b

Actual $

1 Non-Retail Animal Hair Yarn 5108 446 5,754,306

2 Watch Straps 9113 13,098,943 13,541,069

3 Metal-Clad Products 7114 47,869 1,082,545

4 Precious Stones 7103 2,666,162 297,839,866

5 Knit Women's Suits 6104 48,702,266 180,975,812

6 Jewelry 7113 58,076,793 207,169,552

7 Tulles & Net Fabric 5804 2,914 821,143

8 Non-Knit Women's Shirts 6206 6,826,343 33,805,292

9 Watch Cases & Parts 9111 6,926 98,209

10 Imitation Jewelry 7117 7,989,671 23,145,112

11 Other Knit Garments 6114 3,717,778 18,259,233

12 Knit Sweaters 6110 80,355,711 198,046,240

13 Pearl Products 7116 9,771,069 72,996,623

14 Knit Babies' Garments 6111 3,821,235 21,608,987

15 Knit Men's Suits 6103 3,484,597 50,931,676

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.13 Mauritius: Product space and complexity metrics related to potentially competitive 

products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels).

351
Table F.14 Mozambique: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Mozambique 

exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Dried Legumes 0713 45,586,981 361,812,983

2 Ferroalloys 7202 0 4,150,403,383

3 Acyclic Alcohols 2905 717 241,922,048

4 Aluminum Wire 7605 0 2,913,145

5 Cassava 0714 57 36,217,158

6 Grapes 0806 0 747,028,881

7 Lead Oxides 2824 0 8,310,304

8 Other Nuts 0802 429,241 232,901,371

9 Hat Shapes 6502 0 46,252

10 Raw Tobacco 2401 234,793,750 1,507,457,515

11 Raw Sugar 1701 141,367,138 1,140,039,544

12 Heavy Pute Woven Cotton 5209 0 14,208,427

13 Ground Nuts 1202 8,224,943 72,215,152

14 Knotted Carpets 5701 15 2,172,639

15 Non-fillet Frozen Fish 0303 2,426,360 850,988,814

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.14 Mozambique: Product space and complexity metrics related to potentially competitive 

products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

352
Table F.15 Nigeria: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Nigeria exports, 

2012b

All AGOA country exports, 

2012b

Actual $

1 Tanned Sheep Hides 4105 51,349,094 123,099,238

2 Cocoa Paste 1803 42,776,169 1,226,596,440

3 Knit Socks & Hosiery 6115 3,642 16,927,855

4 Wood Carpentry 4418 2,403 48,970,037

5 Shaped Wood 4409 236,961 32,624,726

6 Cassava 0714 1,053,930 36,217,158

7 Building Stone 6802 402 24,243,031

8 Cocoa Powder 1805 674,136 299,751,380

9 Packing Bags 6305 98,105 42,515,998

10 Dried Legumes 0713 3,023,053 361,812,983

11 Ground Nuts 1202 278,908 72,215,152

12 Knotted Carpets 5701 6,460 2,172,639

13 Grapes 0806 18,314 747,028,881

14 Raw Tobacco 2401 3,899 1,507,457,515

15 Non-Knit Women's Coats 6202 7,535 2,916,749

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.15 Nigeria: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

353
Table F.16 Senegal: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Senegal exports, 

2012b

All AGOA country exports, 

2012b

Actual $

1 Ground Nuts 1202 8,730,365 72,215,152

2 Plaiting Products 4601 208,391 4,671,440

3 Dried Legumes 0713 425,386 361,812,983

4 Other Hides & Skins 4103 561,377 20,922,750

5 Other Vegetables 0709 13,515,709 97,607,531

6 Honey 0409 246 7,707,846

7 Raw Sugar 1701 565,642 1,140,039,544

8 Tropical Fruits 0804 12,844,497 317,693,149

9 Non-fillet Frozen Fish 0303 136,666,925 850,988,814

10 Cassava 0714 204,916 36,217,158

11 Grapes 0806 20,968 747,028,881

12 Sauces & Seasonings 2103 963,413 102,426,791

13 Malt Extract 1901 3,490,334 33,244,518

14 Frozen Vegetables 0710 1,013,635 28,798,196

15 Detonating Fuses 3603 217,089 58,282,464

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade. 

Figure F.16 Senegal: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

354
Table F.17 South Africa: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

South Africa 

exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Ferroalloys 7202 4,138,960,941 4,150,403,383

2 Manganese Oxides 2820 56,860,875 57,030,413

3 Other Nuts 0802 161,355,572 232,901,371

4 Chromium Oxides & Hydroxides 2819 24,475,104 24,478,452

5 Grapes 0806 698,313,934 747,028,881

6 Dried Legumes 0713 11,760,133 361,812,983

7 Prepared Wool or Animal Hair 5105 62,486,134 62,665,732

8 Manganese 8111 108,248,661 108,412,787

9 Raw Tobacco 2401 67,902,440 1,507,457,515

10 Detonating Fuses 3603 53,450,238 58,282,464

11 Lead Oxides 2824 7,848,816 8,310,304

12 Ground Nuts 1202 26,407,629 72,215,152

13 Wool 5101 286,967,296 294,565,292

14 Apples 0808 442,183,432 443,088,991

15 Hat Shapes 6502 39,648 46,252

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.17 South Africa: Product space and complexity metrics related to potentially competitive 

products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

355
Table F.18 Tanzania: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Tanzania exports, 

2012b

All AGOA country exports, 

2012b

Actual $

1 Cassava 0714 666,981 36,217,158

2 Pepper 0904 354,737 18,343,395

3 Raw Tobacco 2401 300,728,210 1,507,457,515

4 Dried Legumes 0713 104,275,707 361,812,983

5 Cut Flowers 0603 16,848,813 927,202,015

6 Knit Women's Shirts 6106 120,965 45,265,561

7 Prepared Wool or Animal Hair 5105 68 62,665,732

8 Other Vegetables 0709 155,658 97,607,531

9 Tropical Fruits 0804 793,654 317,693,149

10 Grapes 0806 147,117,026 747,028,881

11 Dried Vegetables 0712 5,378 4,801,356

12 Building Stone 6802 81,134 24,243,031

13 Curbstones 6801 0 70,904

14 Heavy Pute Woven Cotton 5209 225,189 14,208,427

15 Ground Nuts 1202 5,320 72,215,152

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.18 Tanzania: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels).

356
Table F.19 Togo: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code Togo exports, 2012b

All AGOA country exports, 

2012b

Actual $

1 Cassava 0714 128,767 36,217,158

2 Cocoa Paste 1803 0 1,226,596,440

3 Basketwork 4602 135,271 6,767,428

4 Artificial Vegetation 6702 0 1,676,953

5 Plaiting Products 4601 1,110,997 4,671,440

6 Ground Nuts 1202 1,299,788 72,215,152

7 Processed Fish 1604 24,679 1,076,310,494

8 Flavored Water 2202 1,841,242 70,372,513

9 Other Vegetables 0709 2,176,866 97,607,531

10 Fruit Juice 2009 134,533 259,667,402

11 Malt Extract 1901 798,474 33,244,518

12 Knit Women's Shirts 6106 8,991 45,265,561

13 Water 2201 3,000 6,721,012

14 Dried Legumes 0713 49,081 361,812,983

15 Sowing Seeds 1209 2,646 73,796,219

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade.

Figure F.19 Togo: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

357
Table F.20 Uganda: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Uganda exports, 

2012b

All AGOA country exports, 

2012b

Actual $

1 Processed Fish 1604 124 1,076,310,494

2 Cassava 0714 954,748 36,217,158

3 Raw Tobacco 2401 74,670,052 1,507,457,515

4 Cut Flowers 0603 33,766,285 927,202,015

5 Tropical Fruits 0804 1,432,041 317,693,149

6 Non-fillet Frozen Fish 0303 9,494,239 850,988,814

7 Other Processed Fruits & Nuts 2008 81,880 271,350,925

8 Raw Sugar 1701 9,281,308 1,140,039,544

9 Tanned Equine & Bovine Hides 4104 20,224,076 170,141,982

10 Dried Legumes 0713 801,693 361,812,983

11 Honey 0409 14,990 7,707,846

12 Wine 2204 53,026 798,295,017

13 Wool 5101 0 294,565,292

14 Other Women's Undergarments 6212 1,074 15,657,510

15 Other Live Plants 0602 28,448,508 140,992,827

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014. 

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes.

b Includes inter-African trade.

Figure F.20 Uganda: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels). 

358
Table F.21 Zambia: Potentially competitive products based on product space metric

Density 

rankinga Product HTS-4 code

Zambia exports, 

2012b

All AGOA country exports, 

2012b

Actual $

1 Cobalt Oxides & Hydroxides 2822 197 7,122,951

2 Copper Wire 7408 102,171,896 110,750,764

3 Acyclic Alcohols 2905 0 241,922,048

4 Dried Legumes 0713 522,446 361,812,983

5 Detonating Fuses 3603 2,554,868 58,282,464

6 Raw Sugar 1701 90,117,062 1,140,039,544

7 Ferroalloys 7202 7,297,579 4,150,403,383

8 Other Processed Fruits & Nuts 2008 6,134 271,350,925

9 Other Vegetables 0709 2,746,208 97,607,531

10 Cassava 0714 111,417 36,217,158

11 Honey 0409 1,671,836 7,707,846

12 Tropical Fruits 0804 15,937 317,693,149

13 Wine 2204 15 798,295,017

14 Sowing Seeds 1209 184,197 73,796,219

15 Lead Oxides 2824 0 8,310,304

Source: Growth Lab, Harvard CID, and The Observatory (product space/density data, including HTS labels), accessed 

December 19, 2013; GTIS (export data), accessed January 15, 2014.

Notes: Does not include Natural Resources sector, as defined by Growth Lab. a Ranked from closest to farthest products 

among the closest 15 products (i.e., 15 products nearest to the country’s current capabilities) for all HTS 4 digit codes. 

b Includes inter-African trade. 

Figure F.21 Zambia: Product space and complexity metrics related to potentially competitive products

Source: Growth Lab at the Harvard Center for International Development and The Observatory, http://atlas.cid.harvard.edu/

(product space and complexity data, including HTS labels).

359

Appendix G

Business and Investment Data 

361

363 

Table G.1 How SSA countries improved in governance in 2000–2012

Country 

Voice and 

accountability

Political stability 

and absence of 

violence/terrorism

Government 

effectiveness

Regulatory 

quality Rule of law

Control of 

corruption

Number of 

areas of 

improvement

Angola √ √ √ √ √ √ 6

Congo, Dem. Rep. √ √ √ √ √ √ 6

Liberia √ √ √ √ √ √ 6

Rwanda √ √ √ √ √ √ 6

Burundi √ √ √ √ √ 6

Djibouti √ √ √ √ √ 5

Sierra Leone √ √ √ √ √ 5

Zambia √ √ √ √ √ 5

Botswana √ √ √ √ 4

Congo, Rep. √ √ √ √ 4

Niger √ √ √ √ 4

Burkina Faso √ √ √ 3

Cameroon √ √ √ 3

Cabo Verde √ √ √ 3

Comoros √ √ √ 3

Côte d'Ivoire √ √ √ 3

Equatorial Guinea √ √ √ 3

Ethiopia √ √ √ 3

Ghana √ √ √ 3

Lesotho √ √ √ 3

Mauritius √ √ √ 3

Mozambique √ √ √ 3

Namibia √ √ √ 3

Somalia √ √ √ 3

South Sudan √ √ √ 3

Swaziland √ √ √ 2

Tanzania √ √ √ 2

Uganda √ √ √ 2

Central African Republic √ √ 2

Guinea √ √ 2

Kenya √ √ 2

Malawi √ √ 2

Senegal √ √ 2

Seychelles √ √ 2

Sudan √ √ 2

Chad √ 2

Eritrea √ 2
364 

Country 

Voice and 

accountability

Political stability 

and absence of 

violence/terrorism

Government 

effectiveness

Regulatory 

quality Rule of law

Control of 

corruption

Number of 

areas of 

improvement

Gambia, The √ 1

Guinea-Bissau √ 1

Nigeria √ 1

South Africa √ 1

Togo √ 1

Zimbabwe √ 0

Benin 0

Gabon 0

Madagascar 0

Mali 0

Mauritania 0

São Tomé and Principe 0

Total 22 29 17 22 25 14 129

Source: The World Bank World Governance Indicators (accessed March 4, 2014).

Note: √ = made improvement; South Sudan: only 2011 and 2012 data.
365 

Table G.2 Rankings of SSA countries in ease of doing business and the numbers of areas of improvement in 2006–13

Country

Ranking 

in ease 

of doing 

business

Starting 

business

Dealing with 

construction 

permits

Getting 

electricity

Registering 

property

Getting 

credit

Protecting 

investors

Paying 

taxes

Trading 

across 

borders

Enforcing 

contracts

Resolving 

insolvency

Number of 

areas of 

improvement

Angola 178 √ √ √ √ √ √ no 

practice

6

Benin 175 √ √ √ √ √ √ √ √ 8

Botswana 65 √ √ √ √ √ √ √ 7

Burkina Faso 154 √ √ √ √ √ √ √ √ √ 9

Burundi 157 √ √ √ √ √ √ √ √ 8

Cameroon 162 √ √ √ √ √ √ √ √ 8

Cabo Verde 128 √ √ √ √ √ √ √ √ no 

practice

8

Central African 

Republic

187 √ √ √ √ √ √ 6

Chad 189 √ √ √ √ √ √ 6

Comoros 160 √ √ √ √ no 

practice

4

Congo, Dem. 

Rep.

183 √ √ √ √ √ √ 6

Congo, Rep. 186 √ √ √ √ √ 5

Côte d'Ivoire 173 √ √ √ √ √ √ √ 7

Equatorial 

Guinea

164 √ √ √ √ √ no 

practice

5

Eritrea 185 √ √ √ √ no 

practice

4

Ethiopia 124 √ √ √ √ √ √ √ √ 8

Gabon 169 √ √ √ √ √ √ 6

Gambia, The 148 √ √ √ √ √ √ 6

Ghana 62 √ √ √ √ √ √ √ √ 8

Guinea 179 √ √ √ √ √ √ 6

Guinea-Bissau 181 √ √ √ √ √ √ √ √ no 

practice

8

Kenya 122 √ √ √ √ √ √ √ √ 8

Lesotho 139 √ √ √ √ √ √ √ √ 8
366 

Country

Ranking 

in ease 

of doing 

business

Starting 

business

Dealing with 

construction 

permits

Getting 

electricity

Registering 

property

Getting 

credit

Protecting 

investors

Paying 

taxes

Trading 

across 

borders

Enforcing 

contracts

Resolving 

insolvency

Number of 

areas of 

improvement

Liberia 149 n.a. n.a. √ n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1

Madagascar 144 √ √ √ √ √ √ 6

Malawi 161 √ √ √ √ √ √ √ 7

Mali 153 √ √ √ √ √ √ √ √ √ 9

Mauritania 171 √ √ √ √ √ √ √ √ no 

practice

8

Mauritius 20 √ √ √ √ √ √ √ 7

Mozambique 142 √ √ √ √ √ √ √ √ 8

Namibia 94 √ √ √ √ √ 5

Niger 174 √ √ √ √ √ √ 6

Nigeria 138 √ √ √ √ √ √ √ √ 8

Rwanda 54 √ √ √ √ √ √ √ √ √ 9

São Tomé and 

Príncipe

166 √ √ √ √ √ √ √ 7

Senegal 176 √ √ √ √ √ √ √ √ 8

Seychelles 77 √ √ √ √ √ √ √ 7

Sierra Leone 137 √ √ √ √ √ √ √ √ √ 9

South Africa 41 √ √ √ √ √ √ √ √ 8

South Sudan 184 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. no 

practice

0

Sudan 143 √ √ √ √ √ √ √ 7

Swaziland 120 √ √ √ √ √ √ √ √ 8

Tanzania 136 √ √ √ √ √ √ √ 7

Togo 159 √ √ √ √ √ √ √ 7

Uganda 126 √ √ √ √ √ √ √ √ √ 9

Zambia 90 √ √ √ √ √ √ √ 7

Zimbabwe 168 √ √ √ √ √ √ √ 7

# of countries 

improved

44 43 44 41 35 9 29 40 25 10 320

Source: The World Bank World Governance Indicators.

Note: √ = made improvement and n.a. = not available.
Table G.3 The improvement in openness of trade and investment policy regime in SSA countries over 

2000–2013

Country Trade freedom Investment freedom

Number of areas of 

improvement

Angola √ √ 2

Benin √ √ 2

Botswana √ √ 2

Burkina Faso √ 1

Burundi √ √ 2

Cabo Verde √ 1

Cameroon √ 1

Central African Republic √ √ 2

Chad √ 1

Comoros √ √ 2

Congo, Dem. Rep. √ √ 2

Congo, Rep. √ 1

Côte d'Ivoire √ 1

Djibouti √ √ 2

Equatorial Guinea 0

Eritrea √ 1

Ethiopia √ 1

Gabon √ √ 2

Gambia, The √ √ 2

Ghana √ √ 2

Guinea 0

Guinea-Bissau √ √ 2

Kenya √ 1

Lesotho √ 1

Liberia √ √ 2

Madagascar √ √ 2

Malawi √ 1

Mali √ 1

Mauritania √ 1

Mauritius √ √ 2

Mozambique √ 1

Namibia √ 1

Niger √ √ 2

Nigeria √ 1

Rwanda √ √ 2

São Tomé and Príncipe √ √ 2

Senegal √ √ 2

Seychelles √ √ 2

Sierra Leone √ √ 2

Somalia 0

367
Country Trade freedom Investment freedom

Number of areas of 

improvement

South Africa √ 1

Sudan 0

Swaziland √ 1

Tanzania √ √ 2

Togo √ 1

Uganda √ √ 2

Zambia √ 1

Zimbabwe √ 1

# of countries improved 42 25

Source: The Heritage Foundation Index of Economic Freedom.

368
369 

Table G.4 The global ranking of SSA countries in Global Competitiveness Index and each pillar, 2012–13

Country GCI Institutions Infrastructure

Macroeconomy

Health 

and 

primary 

education

Higher 

education 

and 

training

Goods 

market 

efficiency

Labor 

market 

efficiency

Financial 

market 

development

Technological 

readiness

Market 

size

Business 

sophistication Innovation

South Africa 52 43 63 69 132 84 32 113 3 62 25 38 42

Mauritius 54 39 54 87 54 65 27 70 35 63 109 41 98

Rwanda 63 20 96 78 100 117 39 11 49 113 128 70 51

Seychelles 76 47 42 79 47 31 70 48 94 66 142 87 93

Botswana 79 33 87 81 114 95 78 60 53 106 97 95 73

Namibia 92 52 59 84 120 119 87 74 47 104 120 102 101

Gambia, The 98 35 82 129 126 94 94 31 69 109 141 59 52

Gabon 99 67 117 9 128 122 126 63 106 86 110 141 136

Zambia 102 56 111 67 129 121 42 111 50 115 111 75 61

Ghana 103 75 110 108 112 107 76 97 59 108 70 101 95

Kenya 106 106 103 133 115 100 93 39 24 101 75 67 50

Liberia 111 45 115 82 130 114 40 61 74 132 144 62 54

Cameroon 112 107 125 59 118 115 89 58 105 126 87 104 79

Nigeria 115 117 130 39 142 113 88 55 68 112 33 66 78

Senegal 117 90 124 92 125 116 77 80 84 95 105 72 62

Benin 119 99 122 76 111 120 132 67 112 124 122 125 84

Tanzania 120 86 132 107 113 132 110 47 85 122 77 106 75

Ethiopia 121 74 119 114 116 134 120 87 129 140 66 129 114

Cabo Verde 122 57 114 121 71 99 105 126 121 90 143 118 120

Uganda 123 102 133 119 123 127 103 23 62 117 85 105 82

Mali 128 120 107 74 141 130 111 118 113 119 118 126 88

Malawi 129 76 135 136 124 129 112 43 75 134 123 115 99

Madagascar 130 136 137 95 110 133 115 54 138 135 113 122 106

Côte d’Ivoire 131 129 102 130 140 123 122 71 103 99 94 123 115

Zimbabwe 132 101 128 122 119 118 133 139 109 120 135 128 127

Burkina Faso 133 83 136 85 139 137 118 64 117 137 114 140 107

Mauritania 134 122 113 89 133 142 135 131 136 123 131 117 121

Swaziland 135 88 99 128 135 125 107 119 89 128 133 124 137

Lesotho 137 121 126 113 136 135 102 116 122 136 136 135 138

Mozambique 138 112 129 125 137 138 124 128 134 121 101 131 122

Chad 139 140 140 45 144 140 141 95 137 143 112 138 113

Guinea 141 128 142 142 138 136 127 56 135 142 129 139 125

Sierra Leone 143 95 138 143 143 141 116 114 125 141 138 136 139

Burundi 144 142 141 137 127 143 139 112 144 144 140 143 140

Average 114 87 112 97 120 118 98 79 91 115 109 105 96

Source: The World Economic Forum, Global Competitiveness Index.
370 

Table G.5 Number of new greenfield FDI projects by source country and year, 2003–13

Source country 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

United States 35 20 49 43 37 61 42 49 96 78 61 571

United Kingdom 37 15 28 35 22 64 70 59 80 82 76 568

South Africa 14 10 11 19 6 32 23 34 61 75 57 342

India 8 16 8 25 11 32 25 46 59 37 42 309

Germany 6 11 8 8 7 15 21 17 24 24 21 162

Portugal 4 7 4 10 18 36 26 21 24 4 5 159

Canada 22 11 31 11 5 21 12 10 15 11 8 157

France 5 8 11 11 8 21 26 12 17 16 17 152

Kenya 1 1 4 4 2 25 26 19 20 21 22 145

China 8 4 10 5 14 20 14 12 19 31 7 144

United Arab Emirates 3 2 6 11 12 16 7 5 14 25 19 120

Japan 4 7 12 4 5 5 13 9 22 13 21 115

Australia 9 5 17 10 6 15 13 9 12 7 10 113

Nigeria 2 3 7 2 21 19 13 18 5 21 111

Switzerland 4 4 3 8 4 8 15 19 8 11 12 96

Netherlands 5 2 4 3 3 8 6 8 11 9 10 69

South Korea 1 2 3 1 1 1 4 3 20 15 11 62

Spain 1 2 3 2 2 6 13 9 7 12 57

Sweden 3 4 2 4 2 9 5 6 4 7 4 50

Togo 1 6 10 10 3 12 2 4 48

Ireland 1 2 1 3 1 1 14 3 4 5 9 44

Russia 3 3 2 7 3 4 5 4 4 3 3 41

Italy 2 2 4 3 1 7 3 1 5 8 3 39

Luxembourg 3 2 5 4 6 9 5 3 37

Finland 4 2 3 2 3 3 18 1 36

Mauritius 1 2 1 6 9 11 3 2 35

Belgium 1 4 4 7 5 5 2 1 3 32

Brazil 1 2 1 2 3 5 6 2 6 3 1 32

Singapore 1 2 3 1 1 5 2 6 5 26

Malaysia 4 3 1 2 6 4 1 1 3 25

Egypt 1 1 2 1 5 7 1 3 4 25

Botswana 4 2 1 12 5 1 25

Israel 3 1 1 3 4 4 3 4 23

Norway 3 3 2 1 1 4 1 2 3 2 22

Hong Kong 2 2 2 1 1 5 2 5 20

Saudi Arabia 2 3 1 2 2 3 4 2 1 20

Zimbabwe 6 1 7 3 2 1 20

Tanzania 1 1 2 3 3 3 5 18

Qatar 1 4 5 1 1 2 3 17

Denmark 1 3 3 3 2 3 2 17

Kuwait 2 1 4 3 2 2 1 15

Côte d’Ivoire 1 3 1 1 2 1 1 2 12

Turkey 1 1 1 2 1 1 3 1 11

Ghana 1 1 5 2 2 11

Angola 1 2 3 1 4 11
371 

Source country 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

Austria 1 2 1 1 1 4 10

Uganda 1 1 3 3 1 1 10

Taiwan 2 1 3 1 1 2 10

All other 5 23 21 18 13 27 24 173

Total 211 169 255 279 213 524 485 458 647 592 534 4,367

Source: Financial Times, FDI Markets database.
Table G.6 Numbers of greenfield FDI projects and investing companies in SSA, by source country, 2003–

13

Source country Number of projects Number of companies

United States 571 365

United Kingdom 568 336

South Africa 342 169

India 309 160

Germany 162 104

Portugal 159 37

Canada 157 97

France 152 101

Kenya 145 54

China 144 88

UAE 120 80

Japan 115 65

Australia 113 74

Nigeria 111 38

Switzerland 96 43

Netherlands 69 54

Republic of Korea 62 23

Spain 57 38

Sweden 50 25

Togo 48 9

Ireland 44 24

Russia 41 29

Italy 39 25

Luxembourg 37 14

Finland 36 10

Mauritius 35 18

Belgium 32 19

Brazil 32 13

Singapore 26 14

Malaysia 25 17

Egypt 25 14

Botswana 25 9

Israel 23 17

Norway 22 20

Hong Kong 20 16

Saudi Arabia 20 15

Zimbabwe 20 11

Tanzania 18 12

Qatar 17 10

Denmark 17 14

Kuwait 15 10

Côte d’Ivoire 12 2

Turkey 11 10

Ghana 11 8

Angola 11 5

Austria 10 9

Uganda 10 8

Taiwan 10 8

Lebanon 8 5

Bermuda 8 7

Ethiopia 8 4

Mali 8 2

Pakistan 7 7

Tunisia 6 5

372
Source country Number of projects Number of companies

Bahrain 6 6

Cyprus 6 5

Vietnam 6 5

Indonesia 5 5

Namibia 5 3

Iran 5 4

Greece 5 5

Czech Republic 4 2

Romania 4 3

Zambia 4 2

Senegal 4 2

Thailand 4 4

Philippines 4 4

Algeria 3 2

Yemen 3 2

Cameroon 3 2

Congo, Dem. Rep. 3 3

Rwanda 3 2

Malawi 3 2

Libya 3 2

Morocco 3 1

Serbia 3 3

Jordan 3 3

Slovakia 2 2

Venezuela 2 1

Iceland 2 2

Lithuania 2 2

Cayman Islands 2 2

Sudan 2 1

Burundi 2 2

Mozambique 1 1

Moldova 1 1

Haiti 1 1

Eritrea 1 1

Bahamas 1 1

New Zealand 1 1

Hungary 1 1

Sri Lanka 1 1

Mexico 1 1

Gabon 1 1

Mongolia 1 1

Cuba 1 1

Poland 1 1

Malta 1 1

Estonia 1 1

Ukraine 1 1

Bulgaria 1 1

Argentina 1 1

Slovenia 1 1

Latvia 1 1

Chile 1 1

Total 4,367 2,467

Source: Financial Times, FDI Markets database.

373
Table G.7 Number of greenfield FDI projects and investing companies in SSA, by destination country, 

2001–13

Destination country Number of projects Number of companies

South Africa 1,107 867

Nigeria 405 317

Kenya 319 263

Angola 308 150

Ghana 268 215

Tanzania 180 142

Uganda 169 123

Zambia 156 115

Mozambique 147 121

Botswana 96 76

Namibia 94 82

Rwanda 87 67

Ethiopia 85 77

Congo, Dem. Rep. 84 66

Zimbabwe 70 57

Mauritius 69 65

Senegal 63 57

South Sudan 60 42

Sudan 59 46

Côte d’Ivoire 57 50

Cameroon 43 34

Gabon 35 30

Sierra Leone 32 28

Madagascar 30 29

Mauritania 24 21

Guinea 23 22

Liberia 22 20

Burundi 21 18

Congo, Rep. 21 19

Burkina Faso 20 18

Malawi 20 20

Mali 18 15

Swaziland 18 17

Equatorial Guinea 17 14

Djibouti 17 17

Gambia 16 12

Seychelles 16 16

Somalia 14 13

Togo 11 10

Chad 10 9

Lesotho 10 9

Niger 8 7

Cape Verde 8 5

Eritrea 7 4

Benin 7 7

Guinea-Bissau 5 4

Comoros 5 5

Central African Republic 3 3

São Tomé and Príncipe 3 3

Total 4,367 2,467

Source: Financial Times, FDI Markets database.

374
375

Table G.8 Number of greenfield FDI projects in SSA, by industry, 2003–13

Sector/industry 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

Financial Services 26 20 22 48 45 116 106 92 124 98 82 779

Communications 6 7 17 34 15 30 35 42 66 82 67 401

Metals 38 22 52 33 24 54 31 30 42 28 13 367

Business Services 6 8 13 17 14 23 29 37 42 73 70 332

Coal, Oil and Natural Gas 32 23 27 23 10 52 26 25 37 17 18 290

Food & Tobacco 12 8 13 12 9 19 33 29 45 38 39 257

Software & IT services 16 7 8 16 15 27 25 26 42 37 28 247

Transportation 4 5 11 8 4 10 30 15 22 26 23 158

Automotive OEM 6 6 14 15 4 15 15 16 28 16 11 146

Industrial Machinery, Equipment 

& Tools

1 1 4 3 5 12 21 17 18 31 10 123

Hotels & Tourism 6 7 2 9 14 25 10 10 4 8 6 101

Chemicals 9 8 2 7 3 8 9 12 14 19 7 98

Minerals 8 9 15 4 9 15 10 8 12 5 1 96

Beverages 9 5 2 4 18 12 11 18 8 6 93

Building & Construction 

Materials

1 5 2 4 15 14 10 12 6 21 90

Textiles 7 7 2 2 2 6 5 12 15 7 20 85

Consumer Products 3 3 4 4 1 2 7 4 18 12 22 80

Alternative/Renewable energy 0 2 2 3 6 9 11 6 16 13 10 78

Real Estate 3 4 3 4 4 17 4 5 5 7 7 63

Consumer Electronics 2 5 4 3 3 2 3 10 8 14 54

Electronic Components 2 5 2 2 8 3 8 9 11 50

Pharmaceuticals 1 3 1 5 5 4 4 8 13 4 48

Automotive Components 1 3 4 4 1 4 7 5 4 3 2 38

Business Machines & Equipment 1 5 4 4 4 4 4 6 3 35

Healthcare 1 3 2 13 7 5 1 32

Warehousing & Storage 4 4 2 2 5 1 3 9 30

Paper, Printing & Packaging 6 1 1 4 1 2 3 2 1 5 26

Non-Automotive Transport OEM 2 1 1 2 2 3 2 5 4 2 2 26

Rubber 1 1 4 1 2 2 4 1 2 4 22

Plastics 1 1 1 1 1 5 3 4 2 19

Aerospace 1 3 2 4 1 1 1 2 3 18

Medical Devices 1 1 2 2 1 6 13

Leisure & Entertainment 1 2 2 3 4 12

Ceramics & Glass 1 1 4 1 1 8

Engines & Turbines 1 1 1 2 1 1 7

Wood Products 2 1 1 1 5
376

Sector/industry 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

Biotechnology 1 1 1 1 1 5

Space & Defense 1 1 2 4

Semiconductors 1 1

Total 211 169 255 275 212 515 479 456 642 591 532 4,337

Source: Financial Times, FDI Markets database.
377

Table G.9 Number of M&A deals, by announced date and industry, 2000–13

Industry 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

Communications, business, and computer 

services

13 8 5 18 24 43 42 34 40 26 31 38 32 41 395

Metals, mining, and agriculture 4 6 14 43 33 37 45 34 36 27 24 30 19 13 365

Financial services 2 1 3 7 9 10 14 16 24 6 8 13 9 16 138

Wholesale, retail, distribution 2 3 4 6 5 12 10 10 16 5 10 12 11 14 120

Food, beverages, tobacco 4 4 1 8 9 3 7 5 9 2 5 4 7 8 76

Chemicals, rubber, plastics, nonmetallic 

manufacturing

1 2 3 9 7 6 10 5 14 5 4 3 1 2 72

Machinery, equipment, furniture, recycling 1 3 7 5 3 10 12 9 1 5 3 2 8 69

Transport 1 1 1 5 2 5 11 6 4 2 3 7 4 2 54

Tourism 0 0 1 2 3 3 1 2 5 2 2 2 0 4 27

Construction 0 0 0 1 1 3 1 3 2 0 5 3 0 1 20

Publishing, printing 0 0 0 6 3 1 1 2 3 0 0 1 0 1 18

Gas, water, electricity 0 0 1 0 2 2 0 2 1 1 2 1 0 5 17

Textiles, wearing apparel, leather 1 0 0 1 2 0 2 0 1 3 0 0 0 0 10

All other 1 0 0 1 1 5 2 0 1 3 6 5 10 9 44

Grand total 30 28 33 114 106 133 156 131 165 83 105 122 95 124 1,427

Source: Bureau van Dijk, Zephyr M&A database.
Table G.10 Number of M&A deals in SSA, by EU member acquirer and sector of target, 2000–2013

Industry

United 

Kingdom Netherlands France Germany Luxembourg Other Total

Nonfinancial services 93 16 13 4 9 25 160

Metals & metal products 46 9 1 1 2 2 61

Primary sector (agriculture, mining, etc.) 33 5 6 1 4 6 55

Wholesale & retail trade 22 7 9 3 2 5 48

Food, beverages, tobacco 17 7 7 3 1 9 44

Banks 18 3 4 4 1 1 31

Machinery, equipment, furniture, recycling 8 2 2 7 9 28

Chemicals, rubber, plastics, non-metallic products 5 2 4 4 1 8 24

Transport 13 1 1 1 3 19

All other 33 6 6 3 5 9 62

Total 288 58 53 31 25 77 532

Source: Zephyr M&A database.

Table G.11 FDI inflows to South Africa, by source country, 2004–11 (million$)

2004 2005 2006 2007 2008 2009 2010 2011 Total

Net foreign direct investment 

inflows

798 6,647 –527 5,695 9,006 5,365 1,228 5,807 34,019

Main origin of FDI inflows

United Kingdom 7,036 7,940 2,698 2,211 2,412 1,550 4,002.2 8,756.4 36,606

Switzerland –58 879 344 815 3450 –226 121.6 235.8 5,561

United States 480 82 159 1,000 306 410 779 722 3,938

Germany 578 476 666 782 –34 331 1,074.2 1,037.6 4,911

France 48 155 262 197 338 376 353.6 447.1 2,177

Source: African Development Bank.

378
379

Table G.12 China, number of greenfield FDI projects in SSA, by industry, 2003–12

Industry

South 

Africa Zambia Ethiopia Angola Kenya Nigeria Zimbabwe Ghana Sudan

Congo 

(DRC) Other Total

Communications 5 2 3 6 3 2 5 1 1 1 5 34

Metals 8 11 1 1 2 4 27

Automotive OEM 7 2 4 2 1 3 19

Coal, oil and natural gas 1 1 1 2 4 9

Building and construction materials 1 2 5 8

Financial services 2 1 1 1 1 1 0 7

Chemicals 2 1 1 2 6

Industrial machinery, equipment and 

tools

3 1 1 0 5

Transportation 1 1 1 1 4

Consumer electronics 2 1 0 3

All other 5 1 3 2 1 4 1 0 0 1 4 22

Total 36 18 11 10 9 9 7 6 5 5 28 144

Source: Financial Times, FDI Markets database.
380

Table G.13 India, selected M&A transactions in SSA

Acquirer name Target name

Target 

country

Deal value 

(million $)

Announced 

date

Completed 

date Target industry 

ONGC Videsh Ltd Talisman Energy's Sudan Assets Sudan 758 10/30/2002 3/12/2003 Oil and gas services

Bharti Airtel Celtel Zambia Ltd Zambia 499 5/20/2010 7/22/2010 Telecommunicatio

ns

Videsh Sanchar Nigam Sepco South Africa 200 8/16/2005 8/16/2005 Telecommunicatio

ns

Essar Group Warid Congo Congo 150 11/15/2009 11/16/2009 Telecommunicatio

ns

Gremach Infrastructure Equipments 

and Projects

Osho Mozambique Coal Mining Mozambiqu

e

100 9/26/2007 9/26/2007 Coal mining

Sesa Goa Western Cluster Liberia 90 8/6/2011 8/24/2011 Iron mining

Intelenet Global Services Unnamed Mauritian company that owns Upstream 

and Travelport

Mauritius 75 12/3/2007 12/3/2007 Business services

Ranbaxy Laboratories Be-Tabs Pharmaceuticals South Africa 70 12/1/2006 12/1/2006 Pharmaceuticals

Sesa Goa Western Cluster Liberia 34 12/20/2012 12/20/2012 Iron mining

Godrej Consumer Products Kinky Group South Africa 33 4/1/2008 4/1/2008 Consumer 

products

Zee Entertainment Enterprises Taj TV Mauritius Mauritius 31 4/21/2010 4/21/2010 Television 

broadcasting

Global Steel Holdings Ltd Delta Steel Nigeria 30 2/24/2005 2/24/2005 Steel

Source: Zephyr M&A database.

Note: Under the first Sesa Goa-Western Cluster deal, Sesa Goa acquired a 51 percent stake in the company. Under the second deal, Sesa Goa acquired the remaining 

equity.
381

Table G.14 India, number of greenfield FDI projects in SSA, by industry, 2003–13

Industry

South 

Africa Nigeria Kenya Tanzania Mauritius Ethiopia Zambia Ghana Uganda Other Total

Financial services 13 2 3 13 2 2 1 3 7 46

Communications 2 4 7 1 1 1 1 3 18 38

Software and IT services 13 2 3 1 1 2 1 6 29

Automotive OEM 6 3 4 1 3 4 3 24

Coal, oil and natural gas 5 4 1 3 1 8 22

Healthcare 4 1 2 2 1 1 2 2 3 18

Business services 2 3 3 1 3 1 1 3 17

Metals 2 3 1 1 1 1 5 14

Industrial machinery, equipment, and tools 4 1 1 1 2 9

Pharmaceuticals 4 1 1 1 1 1 9

All other 21 6 8 6 4 11 6 2 3 16 83

Total 68 35 32 26 17 16 15 15 13 72 309

Source: Financial Times, FDI Markets database.

Appendix H

EU-South Africa FTA Tariff 

Commitments

383

Table H.1 EU-South Africa tariff commitments: Industrial goods

European Community South Africa

Immediate elimination of duties on imports of all industrial products other than those listed. 

Annex II, list 1

Reductions to 75% of the basic duty on entry into force; to 

50% after year 1; to 25% after 2 years; complete elimination 

after year 3.

Annex III, list 1

Reductions to 75% of the basic duty on entry into force; to 

50% after year 1; to 25% after year 2; complete elimination 

after year 3.

Goods include, but are not limited to:

• Chemical products

• Textiles

• Wood

• Finished electronics

• Motor vehicles

Goods include, but are not limited to:

• Chemical products

• Textiles

• Glass products

• Consumer goods

Annex II, list 2

Reductions to 86% of the basic duty on entry into force; 

annual reductions thereafter to 72%, 57%, 43%, 28%, 14% in 

years 2–6; complete elimination after year 6.

Annex III, list 2

Reductions to 67% of the basic duty 3 years after entry into 

force; to 33% 4 years after; complete elimination after year 

5.

Goods include, but are not limited to:

• Chemical products

• Textiles

• Motor vehicles

Goods include, but are not limited to:

• Chemical products

• Rubbers and plastics

• Woods

• Metals

• Consumer goods

• Heavy machinery and electrical equipment

Annex II, list 3

Reductions to 75% of the basic duty 3 years after entry into 

force; to 50% after 4 years; to 25% after 5 years; complete 

elimination after year 6; 

-orReductions to 67% of the basic duty 4 years after entry into 

force; to 33% 5 years after entry into force; complete 

elimination after year 6.

Annex III, list 3

Reductions to 90% of the basic duty 3 years after entry into 

force; annual reductions thereafter to 80%, 70%, 60%, 50%, 

40%, 30%, 20%, 10% in years 5–12; complete elimination 

after year 12.

Goods include, but are not limited to:

• Chemical products

• Various metals (Reductions of duties on some steel

products is carried out on an MFN basis, to arrive at

zero duty in 2004)

Goods include, but are not limited to:

• Electronic goods used in appliances

• Paper products

• Toiletries and cosmetics

• Some finished furniture

Annex II, list 4

Complete elimination after a maximum of 10 years

Annex III, list 4

Reductions to 88% of the basic duty 5 years after entry into 

force; annual reductions thereafter to 75%, 63%, 50%, 38%, 

25%, and 13% in years 7–12; complete elimination after year 

12.

Goods include, but are not limited to:

• Motor vehicles and parts –– reductions beginning

with 50 percent immediate reductions for specific

products; with specific schedule for

others (determined at later dates)

Goods include, but are not limited to:

• Chemical products

• Paper products

• Rubbers and plastics

• Woods

• Metals

• Toiletries and cosmetics

• Some finished furniture

Annex II, list 5

Review in year 5 for possible elimination.

Annex III, list 5

Progressive reductions according to specific schedule for 

goods. Parts of this list would also be considered for 

proposals for additional liberalization at a later date.

385
European Community South Africa

Goods include, but are not limited to:

• Aluminum

Goods include, but are not limited to:

• Vehicle parts

• Tires

• Textiles

• Motors

Annex III, list 6

Periodic review for additional liberalization.

Goods include, but are not limited to:

• Chemical products

• Large components for vehicle manufacturing

Source: Compiled by USITC based on the original EU-South Africa Trade Development and Cooperation Agreement signed on 

October 11, 1999. The agreement was applied provisionally January 1, 2000; entered into force May 1, 2004.

Note: Certain tariffs or quotas applied to goods originating in the European Community as mentioned in these lists are subject 

to derogations of South African basic duties. These products are mentioned in the First Annex in the agreement.

386
Table H.2 EU-South Africa tariff commitments: Agricultural goods

European Community South Africa

Immediate elimination of duties on imports of all agricultural products other than those listed. 

Annex IV, list 1

Reductions to 75% of the basic duty on entry into force; to 

50% after 1 year; to 25% after 2 years; complete elimination 

after year 3.

Annex VI, list 1

Reductions to 75% of the basic duty on entry into force; to 

50% after 1 year; to 25% after 2 years; complete 

elimination after year 3.

Goods include, but are not limited to:

• Live animals

• Meats

• Vegetables

• Tobacco products

Goods include, but are not limited to:

• Meats

• Vegetables

• Processed food products (e.g., soups, pastas)

Annex IV, list 2

Reductions to 91% of the basic duty on entry into force; 

annual reductions to 82%, 73%, 64%, 55%, 45%, 36%, 27%, 

18%, 9% in years 2–10; complete elimination after year 10.

Annex VI, list 2

Reductions to 67% of the basic duty 3 years after entry 

into force; to 33% after 4 years; complete elimination 

after year 5.

Goods include, but are not limited to:

• Various kinds of milk, yogurt, and cheeses

• Various fruit and vegetable products

Goods include, but are not limited to:

• Meats

• Vegetables

• Processed products

Annex IV, list 3

Reductions to 87% of the basic duty 3 years after entry into 

force; annual reductions thereafter to 75%, 62%, 50%, 37%, 

25%, 12% in years 5–10; complete elimination after year 10. 

A duty-free quota also applies to some articles in this list.

Annex VI, list 3

Reductions to 88% of the basic duty 5 years after entry 

into force; annual reductions thereafter to 75%, 63%, 

50%, 38%, 25%, 13% in years 7–12; complete elimination 

after year 12. A duty-free quota also applies to some 

articles in this list.

Goods include, but are not limited to:

• Flowers

• Vegetable and fruit products

Goods include, but are not limited to:

• Wheat products

• Processed products (oils) 

• Fibrous goods

• Tobacco products

Annex IV, list 4

Reductions to 83% of the basic duty 5 years after entry into 

force; annual reductions thereafter to 67%, 50%, 33%, 17% 

in years 7–10 ; complete elimination after year 10. A dutyfree quota also applies to some articles in this list. 

Annex VI, list 4

Periodic review.

Goods include, but are not limited to:

• Meats and animal byproducts

• Live animals

• Cheeses

• Fruits and vegetables

Goods include, but are not limited to:

• Meat of bovine animals, swine, sheep, or goats,

fresh, frozen, or preserved

• Edible offal

• Dairy products

• Sugar and confectionery

• Flax

• Hemp

Annex IV, list 5

Change in duty or quota schedules, but no elimination. 

Reductions of duties in certain processed goods could be in 

tandem with reductions in their basic products or by 

mutual concessions.

Goods include, but are not limited to:

• Processed dairy and confectionery products

• Some processed agricultural products, food

preparations

387
European Community South Africa

Annex IV, list 6

Reduced duties as listed therein.

Goods include, but are not limited to:

• Cut flowers and flower buds

• Fruits and nuts

• Wine

Annex IV, list 7

Periodic review. 

Goods include, but are not limited to:

• Live animals

• Meat and dairy products

• Fruit and fruit juices

• Wine

• Grains

Annex IV, list 8

No concessions, as the products are protected by EU 

denominations.

Goods include, but are not limited to:

• Cheeses, wine, and alcohol products

Source: Compiled by USITC based on the original EU-South Africa Trade Development and Cooperation Agreement signed on 

October 11, 1999. The agreement was applied provisionally January 1, 2000; entered into force May 1, 2004.

Note: Certain tariffs or quotas applied to goods originating in the European Community as mentioned in these lists are subject 

to derogations of South African basic duties. These products are mentioned in the First Annex in the agreement.

388
Table H.3 EU-South Africa tariff commitments: Fisheries products

European Community South Africa

Concessions apply after Fisheries Agreement to enter into force. All concessions to be fully implemented within 10 years from

entry into force of the FTA.

Annex V, list 1

Immediate elimination.

Annex VII, list 1

Duties on fisheries products to be eliminated in parallel 

with elimination of duties on corresponding products by 

the European Community.

Goods include, but are not limited to:

• Live fish

• Fresh or frozen fish, excluding filets

• Fish filets

Goods include, but are not limited to:

• Fresh, frozen, or preserved fish, crustaceans,

mollusks; caviar and caviar substitutes

Annex V, list 2

Tariffs eliminated in three equal annual stages beginning 3 

years after entry into force of the Fisheries Agreement. 

Goods include, but are not limited to:

• Live fish

• Fresh or frozen fish, excluding filets

• Fish filets and other fish meat

• Live crustaceans, mollusks

• Prepared or preserved fish, crustaceans, mollusks

Annex V, list 3

Tariffs eliminated in equal annual stages starting at the 

beginning of the 4th year of the Fisheries Agreement.

Goods include:

• One type of live fish

• One type of frozen fish

• Fish filets and other fish meat

• One type of prepared fish

Annex V, list 4

Tariffs eliminated in equal annual stages starting at the 

beginning of the 6th year of the Fisheries Agreement. 

Goods include, but are not limited to:

• One type of live fish

• Fresh, frozen, or preserved fish, fish filets,

crustaceans; caviar or caviar substitutes

Annex V, list 5

Concessions to be reviewed. 

Goods include, but are not limited to:

• Fresh or frozen fish

• One type of fish filet

• Prepared fish products

Source: Compiled by USITC staff based on the original EU-South Africa Trade Development and Cooperation Agreement signed 

on October 11, 1999.The agreement was provisionally applied January 1, 2000; fully entered into force May 1, 2004; 

liberalization schedules were completed by 2012.

Note: The Fisheries Agreement has not yet taken effect.- 

389