GAO 

United States Government Accountability Office

Report to Congressional Committees

U.S.-AFRICA TRADE

Options for 

Congressional 

Consideration to 

Improve Textile and 

Apparel Sector 

Competitiveness 

under the African 

Growth and 

Opportunity Act 

August 2009 

GAO-09-916 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

August 2009

U.S.-AFRICA TRADE 

Options for Congressional Consideration to Improve 

Textile and Apparel Sector Competitiveness under 

Highlights of GAO-09-916, a report to the African Growth and Opportunity Act 

congressional committees 

According to U.S. government 

officials, sub-Saharan Africa’s 

(SSA) textile and apparel industry 

has not achieved the growth 

anticipated under the African 

Growth and Opportunity Act 

(AGOA). Despite the tariff 

reductions under AGOA, after an 

initial surge, U.S. imports of these 

products from beneficiary 

countries have declined in recent 

years (see figure). In view of this 

outcome, the 2008 Andean Trade 

Preference Extension legislation 

required GAO to prepare a report 

identifying changes to U.S. trade 

preference programs “to provide 

incentives to increase investment 

and other measures necessary to 

improve the competitiveness of 

[SSA] beneficiary countries in the 

production of yarns, fabric, and 

other textile and apparel inputs.” 

This report is intended to provide 

Congress a range of options put 

forward by experts for (1) possible 

changes to AGOA or other U.S. 

trade preference programs and (2) 

other measures the U.S. 

government could take to help 

increase investment in and improve 

competitiveness of SSA textile and 

apparel inputs production. 

To address these objectives, GAO 

considered the findings of a study 

prepared by the U.S. International 

Trade Commission that identified 

products that could be produced 

competitively in AGOA beneficiary 

countries. GAO also convened a 

panel of experts and key 

informants to discuss their views 

and prioritize the options that GAO 

identified. 

Many of the options discussed by the panel of experts GAO convened address 

the need to consider the trade-offs inherent in trade preference programs. 

Furthermore, experts emphasized that the link between trade policy and 

economic development complicates potential policy responses. While AGOA 

has generous benefits for textile and apparel, many SSA countries face 

infrastructure and development challenges that must be addressed before 

they can fully take advantage of these benefits. 

Recognizing this interplay, GAO’s panel of experts and key informants gave 

greatest priority to options they believed provide long-term investors with 

predictability of benefits and encourage regional commitments relative to 

other developing countries. Such options included: 

• Extending the duration of the third-country fabric provision for least 

developed AGOA countries beyond 2012, and 

• Extending the duration of overall AGOA benefits beyond 2015. 

The panel similarly gave greatest priority to the options for other development 

measures that focused on supporting investment through trade capacity 

building. Many experts considered trade capacity building to be a key 

component of improving the competitiveness of African textile and apparel 

inputs production, and in developing the physical and market infrastructure 

needed for a vibrant export sector. Such options included: 

• Funding regional trade hubs and focusing on market promotion and 

business linkages, and 

• Aligning U.S. trade capacity building and development assistance with 

AGOA objectives. 

U.S. Imports of Textile and Apparel from SSA, 1998 through 2009 

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Dollars in billions

Source: GAO analysis of official U.S. trade statistics.

Year

AGOA

implemented

View GAO-09-916 or key components.

For more information, contact Loren Yager at 

(202) 512-4347 or yagerl@gao.gov. 
Page i GAO-09-916 

Contents 

Letter 1

Background 3 

Expert Panel’s Options for Congressional Consideration of 

Possible Changes to AGOA or Other Trade Preference Programs 12 

Expert Panel’s Options for Congressional Consideration of U.S. 

Government Measures to Improve Competitiveness of the 

Textile and Apparel Inputs Sector in AGOA Beneficiary 

Countries 19 

Conclusion 29 

Agency Comments and Our Evaluation 30 

Appendix I Scope and Methodology 32 

Appendix II Panel’s Options for Possible Changes to AGOA or 

Other U.S. Trade Preference Programs 35 

Appendix III Panel’s Options for Other Possible Measures to 

Support SSA Textile and Apparel Sector 36 

Appendix IV Further Details about the Panel Ranking Exercises 39 

Appendix V GAO Contact and Staff Acknowledgments 42 

Tables 

Table 1: U.S. Textile and Apparel Imports by Type, 2008 10 

Table 2: Ranking Session for Possible Changes to AGOA 40 

Table 3: Ranking Session for Possible Other Changes 40 

Figures 

Figure 1: AGOA Beneficiary Countries, 2008 6 

 U.S.-Africa Trade 
Figure 2: U.S. Imports of Textiles and Apparel from SSA, 1998 

through 2009 8 

Figure 3: Trends in Market Shares of Selected Textile and Apparel 

Exporters to the United States, 1988 to April 2009 9 

Abbreviations 

AGOA African Growth and Opportunity Act 

Ex-Im Export-Import Bank 

ITC U.S. International Trade Commission 

LDC lesser-developed countries 

MCC Millennium Challenge Corporation 

MFA Multi-Fiber Arrangement 

OPIC Overseas Private Investment Corporation 

USAID U.S. Agency for International Development 

USTR Office of the U.S. Trade Representative 

SSA sub-Saharan Africa 

TCB trade capacity building 

TDA U.S. Trade and Development Agency 

WTO World Trade Organization 

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Page ii GAO-09-916 U.S.-Africa Trade
Page 1 GAO-09-916 

 

United States Government Accountability Office

Washington, DC 20548 

 

August 12, 2009 

The Honorable Max Baucus 

Chairman 

The Honorable Charles Grassley 

Ranking Member 

Committee on Finance 

United States Senate 

The Honorable Charles B. Rangel 

Chairman 

The Honorable Dave Camp 

Ranking Member 

Committee on Ways and Means 

House of Representatives 

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

is a U.S. trade preference program that is intended to stimulate economic 

growth and help integrate Africa into the global economy.1

 AGOA allows 

eligible2

 sub-Saharan African (SSA) countries to export qualifying goods to 

the United States without import duties. Benefiting from these duty-free 

provisions, U.S. textile and apparel imports from SSA countries are 

currently 52-percent higher than before AGOA implementation in 2000 and 

account for a significant proportion of non-oil imports from AGOA 

countries. However, despite the tariff advantage, AGOA textile and apparel 

imports still represent only 1.3 percent of total U.S. imports of these 

goods. Overall, the African textile and apparel industry has not achieved 

the growth in production or trade anticipated by U.S. supporters and 

AGOA beneficiaries. Production of AGOA textile inputs (such as yarn, 

fabric, zippers, and trim) was supposed to deepen the African industrial 

base and contribute to a more competitive African apparel industry. 

1

Trade preference programs offer unilateral tariff reductions to eligible developing 

countries for the import of specified products into the United States. 

2

AGOA authorizes the President to designate countries as eligible to receive AGOA 

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

progress toward establishing, the following: market-based economies; the rule of law and 

political pluralism; elimination of barriers to U.S. trade and investment; protection of 

intellectual property; efforts to combat corruption; policies to reduce poverty and 

increase availability of health care and educational opportunities; protection of human 

rights and worker rights; and elimination of certain child labor practices. 

 U.S.-Africa Trade 
 

However, U.S. apparel imports from AGOA countries have declined since 

2005. In addition, U.S. yarn and fabric imports from SSA have declined 

from about $24.2 million in 1998 to $15.6 million in 2008. Over the past few 

years, Congress has sought ways to enhance AGOA benefits to improve 

the competitiveness of SSA textile and apparel inputs production. 

This report responds to a mandate in the 2008 Andean Trade Preference 

Extension legislation requiring us to submit a report with 

recommendations for changes to U.S. trade preference programs “to 

provide incentives to increase investment and other measures necessary 

to improve the competitiveness of beneficiary sub-Saharan African 

countries in the production of yarns, fabrics, and other textile and apparel 

inputs....”3

 We were required to base the report, in part, on the findings of 

a study prepared by the U.S. International Trade Commission (ITC), under 

the same mandate, to “identify yarns, fabrics, and other textile and apparel 

inputs that through new or increased investment or other measures can be 

produced competitively in beneficiary sub-Saharan African countries.” At 

the request of staff from the House Committee on Ways and Means, we 

expanded our study objectives to include a review of measures that are 

beyond the scope of traditional U.S. trade preference legislation, such as 

incentives for investment and trade capacity building. The mandate also 

required us to prepare a report 90 days after the ITC study was issued. 

Thus, in this report, we provide information on options experts have put 

forward that Congress may wish to consider for (1) possible changes to 

AGOA or other U.S. trade preference programs and (2) other measures the 

U.S. government could take to help increase investment in and improve 

competitiveness of textile and apparel inputs production in SSA. Some of 

the options presented would require legislative action while others could 

be implemented administratively. 

To prepare this report, we reviewed ITC reports on SSA, including hearing 

materials and the ITC study4

 conducted under the same mandate as our 

review, and reviewed literature on issues related to the textile and apparel 

industry and investment in SSA countries. We also interviewed 

 

3

Pub.L. 110-436, sec. 3(c)(2). 

4

ITC, Sub-Saharan African Textile and Apparel Inputs: Potential for Competitive 

Production, ITC Pub. 4078 (May 2009). See also, ITC, Sub-Saharan Africa: Effects of 

Infrastructure Conditions on Export Competitiveness, Third Annual Report, Pub. 4071 

(April 2009); and ITC, Sub-Saharan Africa: Factors Affecting Trade Patterns of Selected 

Industries, Second Annual Report, Pub. 3989 (April 2008). 

Page 2 GAO-09-916 U.S.-Africa Trade
 

knowledgeable U.S. agency officials, researchers, and consultants involved 

in work related to U.S.-Africa trade, private-sector representatives of the 

U.S. and African textile industries and the U.S. retail and apparel import 

industries, and officials from 12 African embassies in Washington, D.C. 

Through these sources, we identified numerous suggestions for how the 

U.S. government could support competitiveness in the African textile and 

apparel industry. On June 2, 2009, we convened a panel of experts and key 

informants that considered the industry challenges and potentially 

competitive products described in the ITC report. We asked the panel to 

consider ways to improve the competitiveness of the African textile and 

apparel inputs industry and to rank these options as higher or lower 

priorities for Congress to consider. As discussed with congressional staff, 

to meet the 90-day deadline provided by the mandate, the options 

presented in this report are based on the opinions of experts and key 

informants and should not be interpreted as GAO recommendations. GAO 

did not evaluate the potential impacts or the economic costs and benefits 

of the options discussed. We conducted our work from January through 

July 2009 in accordance with all sections of GAO’s Quality Assurance 

Framework that are relevant to our objectives. The framework requires 

that we plan and perform the engagement to obtain sufficient and 

appropriate evidence to meet our stated objectives and to discuss any 

limitations in our work. We believe that the information and data obtained, 

and the analysis conducted, provide a reasonable basis for any findings 

and conclusions in this product. (See app. I for a complete description of 

our scope and methodology.) 

AGOA, signed into law on May 18, 2000, was designed to promote free 

markets, stimulate economic growth in SSA, and facilitate SSA’s 

integration into the global economy. According to the Office of the U.S. 

Trade Representative (USTR), AGOA provides duty-free access to U.S. 

markets for more than 6,000 dutiable items in the U.S. import tariff 

schedules.5

 All 48 countries in SSA are potentially eligible for AGOA, but 

Background 

 

5

In prior reports on U.S. trade preference programs, see GAO, International Trade: U.S. 

Trade Preference Programs Provide Important Benefits, but a More Integrated Approach 

Would Better Ensure Programs Meet Shared Goals, GAO-08-443 (Washington, D.C.: Mar. 7, 

2008); and International Trade: An Overview of Use of U.S. Trade Preference Programs 

by Beneficiaries and U.S. Administrative Reviews, GAO-07-1209 (Washington, D.C.: Sept. 

27, 2007), we stated that AGOA provided benefits on about 5,200 dutiable products. The 

discrepancy with the figure cited by USTR may be due to differences in the methodology 

used to determine dutiable items provided duty-free access. GAO’s calculations are based 

on a methodology described in GAO-08-443, appendix II. There have also been some 

changes in the number of dutiable lines since those reports were released. 

Page 3 GAO-09-916 U.S.-Africa Trade
 

some have not met the eligibility criteria, and the program currently has 

only 40 beneficiaries. See figure 1. Most U.S. imports of textiles and 

apparel from SSA countries come from no more than 10 countries 

(Ethiopia, Kenya, Lesotho, Madagascar, Mauritius, Nigeria, South Africa, 

Swaziland, Tanzania, and Zambia). Together, these countries account for 

97 percent of U.S. textile and apparel imports from SSA. 

A key feature of AGOA is its provisions for duty-free preferences for 

specific textile and apparel goods subject to rules of origin limitations.6

Eligibility for textiles and apparel benefits is based on conditions more 

selective than the general AGOA conditions and is only available to select 

AGOA countries.7

 AGOA provides duty-free and quota-free treatment for 

eligible apparel articles made in qualifying SSA countries through 2015. 

Qualifying articles include: 

• Apparel made of U.S. yarns and fabrics; 

• Apparel made of SSA (regional) yarns and fabrics until 2015, subject to a 

cap; 

• Apparel made in designated SSA lesser-developed countries (LDC)8 of 

third-country yarns and fabrics originating anywhere in the world, until 

2012, subject to a cap—commonly referred to as the “third-country fabric 

provision;”9

• Apparel made of yarns and fabrics not produced in commercial quantities 

in the United States; and 

 

6

Rules of origin are used to determine the country of origin of a product for purposes of 

international trade. Rules of origin provide the basis for Customs officials to make 

determinations about which goods are entitled to preferential tariff treatment under a trade 

preference program such as AGOA. 

7

Countries must first establish effective visa systems to prevent illegal transshipment and 

use of counterfeit documentation, and implement required enforcement and verification 

procedures. 

8

Under AGOA, LDCs are defined as SSA countries with a per capita gross national product 

under $1,500 in 1998. South Africa and Seychelles are not classified as LDCs and thus are 

not eligible for the third-country fabric provision. 

9

For a detailed description of the third-country fabric provision and an evaluation of trade 

preference programs in general, see GAO-08-443. 

Page 4 GAO-09-916 U.S.-Africa Trade
 

• Textile or textile articles originating entirely in one or more lesserdeveloped beneficiary SSA countries; certain cashmere and merino wool 

sweaters; and eligible hand-loomed, handmade, or folklore articles, and 

ethnic printed fabrics. 

Page 5 GAO-09-916 U.S.-Africa Trade
 

Figure 1: AGOA Beneficiary Countries, 2008 

AGOA-eligible

AGOA-eligible and eligible for AGOA apparel benefits

Body of water

Countries not classified as LDCs

Source: GAO analysis of U.S. Department of Commerce, International Trade Administration data; map (clipart). 

Niger

Chad

Nigeria

Cameroon

San Tome and Principe

Mali

Mauritania

Burkina Faso

Liberia

Sierra Leone Ghana

Guinea Guinea-Bissau

C Sengal ape Verde

Gambia

Benin Togo

DRC Congo

Gabon

Angola

Namibia

Botswana

South

Africa

Lesotho

Swaziland

Madagascar

Mozambique

Zambia

Tanzania

Malawi

Comoros

Burundi

Rwanda

Mauritius

Ug

Kenya anda

Seychelles

Ethiopia

Djibouti

Page 6 GAO-09-916 U.S.-Africa Trade
 

Notes: Mauritania was declared AGOA-eligible on June 28, 2007, but has lost its eligibility effective 

January 1, 2009. 

South Africa and Seychelles are not classified as LDCs and thus are not eligible for the “third-country 

fabric” provision. 

Industrialization in many developed countries was initiated in the textiles 

and apparel sectors, and some developing countries have relied on these 

sectors to significantly increase and diversify exports, with positive effects 

on incomes, employment, and poverty levels. Proponents of AGOA 

anticipated that by providing generous preferences for imports of textiles 

and apparel from AGOA-eligible countries, AGOA beneficiaries would be 

able to leverage these advantages to replicate this industrialization 

process. After AGOA was implemented, there was an initial surge of U.S. 

textile and apparel imports from beneficiary countries. U.S. imports of 

SSA products from SSA increased from $776 million in 2000 to about $1.8 

billion in 2004. However, after 2004, when quotas under the Multi-Fiber 

Arrangement (MFA)10 were removed, U.S. imports of these products from 

SSA declined by about one-third, to $1.2 billion in 2008. See figure 2. 

 

10The MFA, in place since 1974, provided a framework under which developed countries 

including the United States, the European Union, and Canada imposed quotas on imports 

of yarn, textiles, and apparel from developing countries. On January 1, 2005, restrictions on 

the fourth and final set of textile and clothing products regulated by the Agreement on 

Textiles and Clothing, which succeeded the MFA, were removed. Thereafter, a significant 

portion of the textile and apparel trade shifted from preferential sources (such as AGOA 

countries) toward suppliers that had previously been constrained by the MFA, notably 

China. 

Page 7 GAO-09-916 U.S.-Africa Trade
 

Figure 2: U.S. Imports of Textiles and Apparel from SSA, 1998 through 2009 

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Dollars in billions

Source: GAO analysis of official U.S. trade statistics.

Year

Total

Apparel

AGOA

implemented

MFA

quotas

removed

Note: 2009 values shown are year to date, April 2009, with data projected to the end of the year. 

Although AGOA provides some of the most generous preferences under 

any U.S. trade program, as figure 3 shows, in 2008, SSA countries 

accounted for 1.3 percent of total U.S. textile and apparel imports. In 

contrast, China accounted for 35 percent of U.S. imports of textiles and 

apparel, while Bangladesh and Cambodia accounted for 3.8 and 2.6 

percent, respectively. In 2008, U.S. textile and apparel imports from China 

were 28 times the value of those from SSA countries. In that same year, 

U.S. textile and apparel imports from Bangladesh were 3 times those from 

all SSA countries combined. 

Page 8 GAO-09-916 U.S.-Africa Trade
 

Figure 3: Trends in Market Shares of Selected Textile and Apparel Exporters to the United States, 1988 to April 2009 

Source: GAO analysis of official U.S. trade statistics.

0

5

10

15

20

25

30

35

40

Cambodia

China

Bangladesh

SSA

2009

(April)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

0

1

2

3

4

5

6

Cambodia

Bangladesh

SSA

2009

(April)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Percentage

Percentage

AGOA

implemented

MFA

removed quotas

AGOA

implemented

MFA

removed quotas

Year

Note: 2009 values shown are year to date, April 2009, with data projected to the end of the year. 

Moreover, U.S. imports of textile and apparel products from SSA are 

predominantly apparel. As illustrated in table 1, apparel constitutes 98 

percent of this type of U.S. import from AGOA beneficiaries, while yarn, 

fabrics, and made-ups11 represent less than 2 percent of all U.S. textile and 

 

11“Made-ups” consist of finished textile products such as pillow cases, sheets, bedspreads 

and quilts, blankets, towels, floor coverings, etc. 

Page 9 GAO-09-916 U.S.-Africa Trade
 

apparel imports from SSA. By contrast, U.S. imports of these products 

from all countries make up a larger part—23 percent—of textile and 

apparel trade. The modest share of U.S. imports of textile and apparel 

inputs, including yarn and fabrics, from SSA countries reflects not only 

limited production of these inputs in the region, but also the fact that an 

integrated apparel and textile sector with potential to serve as an engine of 

economic development is not available. 

Table1: U.S. Textile and Apparel Imports by Type, 2008 

Dollars in millions 

 U.S. imports from SSA, 2008 Total U.S. imports, 2008 

Value Percent of total Value Percent of total

Apparel $1,151 98 $71,568 77

Fabrics 13 1 5,120 5

Yarn 2 0 1,322 1

Made-ups 10 1 15,177 16

Total $1,177 100 $93,187 100

Source: GAO analysis of official U.S. trade statistics. 

Several studies and experts have pointed out that current trends in U.S. 

textile and apparel markets are less conducive to African sourcing 

because low-cost Asian producers (China, India, and Bangladesh) with 

relatively modern production facilities have developed a competitive 

advantage, challenging SSA textile and apparel in the United States and 

elsewhere. Also, the U.S. market has experienced significant consolidation 

in the retail sector resulting in lean retailing methods—the combination of 

low inventories and frequent restocking. Lean retailing12 requires retailers 

to closely track their sales using electronic data to facilitate fast 

communication with suppliers. From the standpoint of suppliers, the 

method demands great flexibility, as they must be able to adjust output, 

and ship and deliver products quickly. Less flexible suppliers that can only 

compete on selling cost and not on timeliness are at a disadvantage. As a 

result, aspects of the lean retailing method do not favor African suppliers 

 

12Consumer tastes for apparel and textiles are volatile, and retailers face the prospect of 

having to liquidate vast inventories of unpopular clothing at the end of a selling season or 

the prospect of running short of suddenly popular styles. “Lean retailing” offers a partial 

solution to these concerns because with low inventories, stores will not be stuck with large 

amounts of unsold goods if demand collapses, and with frequent restocking, stores will not 

run short of popular items. 

Page 10 GAO-09-916 U.S.-Africa Trade
 

that have less advanced production technology that limits their flexibility 

to meet changing demands. 

Duty-free access for textile and apparel imports from SSA countries under 

AGOA reduces the competitive edge of low-cost Asian producers. 

However, duty-free access alone may not overcome the advantages Asian 

producers enjoy due to long-standing, established trade channels. Africa’s 

lack of resources to significantly improve its trade infrastructure—power, 

water, production facilities, etc.—adds to the disadvantages of sourcing 

from SSA countries. Furthermore, underdeveloped production facilities, 

including aged existing plants and equipment, increase the cost of 

production while reducing quality and variety. SSA’s challenging business 

climate, primary corruption and political instability, adds to the difficulty 

of attracting new and increased investment. Uncertainty about AGOA’s 

duration and preference erosion (a weakening in the effectiveness of 

preferences due to falling prices in the world market caused by general 

trade liberalization) also limit the attractiveness of beneficiary countries 

for foreign and domestic investors. 

The ITC study on the competitiveness of apparel and textile inputs 

identified products that have the potential to be produced competitively in 

SSA countries, such as cotton yarn, cotton knit fabric, cotton denim fabric, 

and woven cotton shirting. Cotton is widely cultivated in the region, and is 

the primary fiber currently used in the production of yarn and fabric in 

SSA countries. These products can either be directly exported or used in 

downstream production of apparel for export. Other items cited for 

potential competitive production in the region were niche products that 

supply narrow markets such as organic cotton products, woven wool 

fabric, high-tech and industrial fabrics and local print fabrics. As the global 

demand for organic and environmentally friendly goods increases, organic 

cotton products, for example, might be competitive in the global 

marketplace. Woven wool fabrics and high-tech and industrial fabrics, 

which South Africa currently supplies to the United States and Europe, 

also have the potential to be more competitive in these markets. Africa has 

a long tradition in mostly hand-loomed local print fabrics. Although these 

fabrics are mainly produced for local markets, they may have potential 

export markets as home furnishings. Another promising dimension is 

production for Africa’s own local and regional markets. Many African 

countries produce fabrics that reportedly are not of sufficient quality for 

U.S. and European markets. However, local and regional marketing of 

such items may be profitable and may encourage backward and forward 

supply chain linkages in the long run. As a whole, the competitive 

production of textile and apparel inputs in SSA countries varies, as each 

Page 11 GAO-09-916 U.S.-Africa Trade
 

beneficiary has its own factors that contribute to or inhibit production. 

The ITC report notes that one of the biggest challenges affecting 

production of textile and apparel inputs in SSA countries is the lack of 

regional demand for these products. 

Based on our review of the ITC study and other related research, and in 

consultation with trade and industry experts, we identified four issue 

areas where possible changes to AGOA or other U.S. trade preference 

programs could be made to improve the competitiveness of the textile and 

apparel inputs sector in SSA beneficiary countries. The four issue areas 

include (1) extending the duration of AGOA provisions and making AGOA 

permanent, (2) expanding AGOA LDC benefits to all beneficiaries and 

duty-free eligibility for other textile products, (3) creating non-punitive 

and voluntary incentives, and (4) preserving existing benefits under AGOA 

and modifying other preference programs and trade agreements. The 

panel of experts GAO convened discussed and ranked nine specific 

options for congressional consideration in each area. Panelists ranked 

each option on a 7-point priority scale that ran from “extremely low 

priority” to “extremely high priority.” Among the specific options, the 

panel ranked extending the duration of the third-country fabric provision 

for LDCs beyond 2012 and extending the duration of AGOA beyond 2015 

as being an extremely high and very high priority, respectively, for 

congressional consideration. Experts explained that these steps are 

essential to attract investment in the textile and apparel inputs sector 

because companies need to have certainty that AGOA benefits will persist, 

as investments in the industry are usually long term. A more detailed 

discussion of the issue areas and accompanying options follows. 

Expert Panel’s 

Options for 

Congressional 

Consideration of 

Possible Changes to 

AGOA or Other Trade 

Preference Programs 

Issues Related to 

Extending the Duration of 

AGOA Provisions and 

Making AGOA Permanent 

The options considered under this issue area were to: 

• Extend the duration of the third-country fabric provision for LDCs beyond 

2012 to provide potential investors with greater long-term certainty about 

the program’s benefits. 

• Extend the duration of AGOA beyond 2015 to provide potential investors 

with greater long-term certainty about the program’s benefits. 

• Make AGOA benefits permanent to provide potential investors with 

greater long-term certainty about the program’s benefits. 

Page 12 GAO-09-916 U.S.-Africa Trade
 

The options to extend the duration of AGOA and its third-country fabric 

provision for LDCs stem primarily from the desire to enhance 

predictability for investors, who are risk-averse and reluctant to make 

long-term commitments in SSA with AGOA and its third-country provision 

set to expire in 2015 and 2012, respectively. According to the ITC report, 

textile and apparel firms in SSA have difficulty securing much-needed 

capital to cover operating expenses and finance costly infrastructure 

improvements. Without adequate investment, SSA countries are unable to 

capitalize on AGOA benefits. Exacerbating the situation, much foreign 

direct investment fled SSA after the 2004 removal of global textile and 

apparel import quotas. 

Panelists expressed the opinion that extending AGOA would encourage 

investment in Africa. According to previous GAO analysis, a surge in trade 

is typical upon implementation and renewal of trade preference programs. 

One panelist highlighted the idea that extending AGOA would enhance 

predictability for investment in the “missing middle” of the supply chain, 

enabling raw materials produced in Africa, such as cotton, to be used in 

local fabric and other inputs production. However, some panelists noted 

that there are currently other trade policy measures being developed with 

non-SSA regions and countries that compete with SSA. They argued that 

priority must be given to extending AGOA relative to other trade programs 

because of SSA’s competitive disadvantage and to prevent preference 

erosion. The options to extend AGOA and its special provisions thus 

garnered considerable support from the panel of experts and emerged as 

very high and extremely high priorities, respectively. 

The option to make AGOA permanent arose in response to concern from 

investors and trade experts that a limited extension is inadequate to 

ensure long-term sustainability. Although this option would make AGOA 

program benefits permanent, each country would have to maintain its 

eligibility. There are currently many free trade agreements that offer dutyfree benefits on a continuing basis,13 a significant change from when 

AGOA was first implemented. As a result, one panelist emphasized that 

AGOA needs more predictability for beneficiaries to compete with 

countries and regions with which the United States has free trade 

agreements. However, other expert testimony and previous GAO analysis 

 

13For example, under the Dominican Republic-Central America-United States Free Trade 

Agreement signed in August of 2004, the United States extended permanent duty free 

access to six countries in the Western Hemisphere, which, as a group, are responsible for 

significant textile and apparel production. 

Page 13 GAO-09-916 U.S.-Africa Trade
 

raised concerns about the trade-off between investment predictability and 

the ability to leverage trade liberalization in developing countries, a 

cornerstone of broader global trade policy. One panelist observed t

permanence could potentially provide a disincentive to implementing 

other internal changes in countries’ economies that might allow 

become more competitive. Furthermore, AGOA permanence would not be

sufficient to overcome the fact that the overall structure of the global

textile and apparel trade has shifted, consolidating benefits enjoyed by 

Southeast Asian producers. As a result of these critiques, the option to 

make AGOA permanent received slightly less support than the options 

extending its duration and was assigned a generally high priority 

hat 

them to 

by 

panelists. 

The options considered under this issue area were to: 

th Africa to improve regional 

tegration in the textile and apparel sector. 

eficiaries to improve regional 

tegration in the textile and apparel sector. 

 gain 

ale 

an 

port, 

n 

w 

A LD

Improving Use of AGOA 

• Expand third-country fabric provision to Sou

in

C 

• Expand AGOA LDC benefits to all AGOA ben

in

Options to expand the scope of AGOA benefits to other SSA countries, 

especially to South Africa, are intended to encourage regional integration

by fostering trade between African countries, and to broaden the use of

AGOA. One African country official noted that the regional benefits of 

AGOA cannot be measured solely by U.S. import numbers. Countries

many benefits through increased regional sourcing and integration. 

Despite the fact that the textile sector is one of the most regionally 

integrated, South Africa is not included in the rules of origin provision that 

allows use of third-country fabric in qualifying duty-free exports. Industry 

sources identified in the ITC report suggest that broadening third-country

fabric benefits to South Africa would “lead to greater economies of sc

and expansion in the apparel industry” by supporting backward and 

forward integration and development in the textile sector. A South Afric

embassy representative called for such an extension by explaining that 

despite South Africa’s non-LDC classification, some economic sectors are 

characterized by low levels of development. According to the ITC re

“industry sources stress that duty-free eligibility in the U.S. and EU 

markets for South African textiles could make a substantial contributio

to the industry’s competitiveness and that the downward trend in the

industry might be reversed if rules of origin were amended to allo

greater access to third-country fabrics for South African apparel

Issues Related to 

Expanding AGO

Benefits to All 

Beneficiaries and to 

Page 14 GAO-09-916 U.S.-Africa Trade
 

exporters.” As another example of an attempt to boost industry 

competitiveness, the ITC report cites South Africa’s creation of “indust

clusters consisting of firms from the textile, clothing, retail, and other 

sectors that work cooperatively” to offer world class manufacturing. ITC 

officials, however, stated that this approach would be difficult to pu

elsewhere in SSA due to inadequate infrastructure. Some panelists 

recommended modifying this option to simply extend AGOA LDC benefits 

to all SSA countries, but the primary focus remained on South Africa. Bot

the option to expand third-country fabric provisions to South Africa and 

the one to expand LDC benefits to all AGOA be

ry 

rsue 

h 

neficiaries received similar 

support, emerging as generally high priorities. 

 the 

ot 

-

 of the 

ch a 

rics is unrealistic given the realities of the SSA 

textile and apparel sector. 

The option considered under this issue area was to: 

l 

OA beneficiaries that is manufactured using fabric from the 

reating 

Voluntary Incentives 

During the discussion on ways to expand benefits, a panelist raised

concern that AGOA is being underutilized, in part because certain 

specialized products containing synthetic fabrics, such as luggage, are n

offered duty-free eligibility. A panelist with extensive knowledge of the

textile and apparel trade noted that synthetics, some of which are not 

currently covered under AGOA, offer greater savings on duties, but they 

also have higher costs of production. Synthetics, as a subset of manmade

fiber products, face higher U.S. import tariffs than cotton products. For 

instance, the normal duty for a cotton t-shirt is 16.5 percent of the value, 

whereas the normal duty for a manmade fiber t-shirt is 32 percent

value. Thus, increased production of synthetic fabric could offer 

significantly larger duty savings for AGOA beneficiaries and could provide 

for greater utilization of benefits. However, another panelist pointed out

that, while benefits could be expanded to other textile products, su

policy would not produce significant gains in trade or production 

competitiveness. Production of synthetic fibers is capital intensive, 

requires extensive infrastructure capabilities, and relies heavily on 

petrochemicals. SSA countries generally lack such capacity and, as a 

result, synthetics represent a small portion of the region’s overall textile 

exports. The discussion concluded with the view that pursuing increased 

production of synthetic fab

• Create a voluntary “duty credit” program for U.S. importers of appare

from AG

region. 

Issues Related to C

Non-punitive and 

Page 15 GAO-09-916 U.S.-Africa Trade
 

The option to create non-punitive incentives to encourage use of regional 

inputs offers a way to stimulate voluntary regional investment. Th

punitive focus is a direct response to the negative results of the previously 

implemented “abundant supply” provision,

e non-

 U.S. 

which is not entirely relevant to 

AGOA. The earned import program was thus rejected in favor of the 

mpetitive 

in 

ch to 

g African textiles that would be ineffective. Ultimately, the duty 

credit program received extensive support, emerging as a very high 

riority. 

 

14 which penalized the 

insufficient use of domestic fabric by disallowing duty-free eligibility. The 

ITC report cited one industry source as suggesting an “earned import 

allowance program,” similar to those in place for Haiti and the Dominican 

Republic, as a possible approach to creating non-punitive incentives to 

encourage use of regional inputs. Such an incentive program would allow

apparel producers to earn the right to use third-country fabric, provided 

they use specified volumes of regional fabric. Some panelists, however, 

pointed out that this program is intended to facilitate the exchange of

content in a specific bilateral relationship, 

option of a simple “duty credit” approach. 

A simplified duty credit program would create a non-punitive incentive for 

use of African regional fabric. For example, a U.S. firm that imports jeans 

made with African origin denim would earn the right to import jeans from

Bangladesh, duty free. A ratio could then be set to account for co

differences, such as a specified square meter equivalent of African orig

jeans earning a credit for a specified square meter equivalent of 

Bangladeshi origin jeans. Panelists that supported this option focused 

especially on its voluntary and non-punitive nature. However, one panelist 

expressed concern that the duty credit program is an indirect approa

stimulatin

p

14The abundant supply provision, enacted in a 2006 AGOA amendment and repealed in 

2008, stipulated elaborate conditions for when third-country fabric could or could not be 

used. (For a detailed explanation of the abundant supply provision, see ITC, Commercial 

Availability of Fabric and Yarns in AGOA Countries: Certain Denim, Pub. 3950, 

September 2007.) 

Page 16 GAO-09-916 U.S.-Africa Trade
 

The options considered under this issue area were to e options considered under this issue area were to: 

LDCs 

ficiary countries. 

•

•

side 

er 

ce 

ed, 

ed by 

me 

 currently under consideration at the World Trade 

Organization (WTO) Doha Round negotiations to provide “duty-free, 

al 

O 

oha 

 

: 

LDCs 

ficiary countries. 

•

•

side 

er 

ce 

ed, 

ed by 

me 

 currently under consideration at the World Trade 

Organization (WTO) Doha Round negotiations to provide “duty-free, 

al 

O 

oha 

 

• Refrain from extending trade preferences provided under AGOA to 

outside SSA to preserve benefits for textile and apparel production in 

AGOA bene

• Refrain from extending trade preferences provided under AGOA to 

outside SSA to preserve benefits for textile and apparel production in 

AGOA bene

Modify rules of origin provisions under other U.S. trade preference 

programs or free trade agreements to provide duty-free access for 

products that use AGOA textile and apparel inputs. 

Simplify AGOA rules of origin to allow duty-free access for certain 

partially assembled apparel products with components originating out

the region. 

The option to refrain from extending AGOA-type preferences to oth

LDCs aims to preserve advantages that allow the textile and apparel 

industry in SSA to compete in the global market. The issue of preferen

erosion was raised by experts we consulted and in literature we review

as well as in the ITC report. In particular, there is some controversy 

regarding whether LDCs in Asia that are not included in U.S. regional 

preference programs should be entitled to the same benefits enjoy

SSA LDCs that are AGOA beneficiaries. As we previously reported,15 two

of these countries—Bangladesh and Cambodia—have become major 

producers and exporters of apparel to the United States and have sought

duty-free access to U.S. markets. In comments filed with USTR, so

African beneficiary countries, as well as certain U.S. industries, have 

opposed the proposals

Modify rules of origin provisions under other U.S. trade preference 

programs or free trade agreements to provide duty-free access for 

products that use AGOA textile and apparel inputs. 

Simplify AGOA rules of origin to allow duty-free access for certain 

partially assembled apparel products with components originating out

the region. 

The option to refrain from extending AGOA-type preferences to oth

LDCs aims to preserve advantages that allow the textile and apparel 

industry in SSA to compete in the global market. The issue of preferen

erosion was raised by experts we consulted and in literature we review

as well as in the ITC report. In particular, there is some controversy 

regarding whether LDCs in Asia that are not included in U.S. regional 

preference programs should be entitled to the same benefits enjoy

SSA LDCs that are AGOA beneficiaries. As we previously reported,

quota-free” access for all LDCs. African trade experts and African 

government representatives reiterated concerns that giving preferenti

access to Bangladesh and Cambodia for apparel might endanger continued

development of the African apparel export industry that has grown up 

under AGOA. The ITC study also cited sources cautioning against 

extending duty-free treatment to highly competitive textile and apparel 

producing countries. 

Trade preference erosion received considerable attention from the GA

expert panel. One panelist noted that the proposal to grant duty-free, 

quota-free access to LDCs has been provisionally accepted by WTO D

quota-free” access for all LDCs. African trade experts and African 

government representatives reiterated concerns that giving preferenti

access to Bangladesh and Cambodia for apparel might endanger continued

development of the African apparel export industry that has grown up 

under AGOA. The ITC study also cited sources cautioning against 

extending duty-free treatment to highly competitive textile and apparel 

producing countries. 

Trade preference erosion received considerable attention from the GA

expert panel. One panelist noted that the proposal to grant duty-free, 

quota-free access to LDCs has been provisionally accepted by WTO D

15 two

of these countries—Bangladesh and Cambodia—have become major 

producers and exporters of apparel to the United States and have sought

duty-free access to U.S. markets. In comments filed with USTR, so

African beneficiary countries, as well as certain U.S. industries, have 

opposed the proposals

Issues Related to 

preserving Existing 

Benefits under AGOA 

and Modifying Other 

Preference Programs and 

Trade Agreements 

15GAO-08-443. 

Page 17 GAO-09-916 U.S.-Africa Trade
 

Round negotiators. In effect, this provision would undercut the exclusive 

benefits currently enjoyed by AGOA beneficiaries. A private-sector 

representative on the panel said many companies believe that duty-fr

quota-free access will go into effect if the Doha Round is successful

concluded, and the belief is already affecting their decisions on where to

invest. On the other hand, other experts on the panel pointed out that 

duty-free, quota-free access, as currently under consideration in Doha 

Round negotiations, would cover only 97 percent of tariff lines. The 

provision to exclude 3 percent of tariff lines could be used to protect trade 

preferences for countries that are less competitive in key sectors, s

ee, 

ly 

uch as 

textile and apparel production. A panelist representing international 

ey 

untries are 

-SSA 

ther 

n 

d in a 

e 

s 

panelist 

Morocco Free Trade Agreement could theoretically be modified to provide 

textile and apparel producers in Africa said that some of the major 

manufacturers doing business in AGOA countries have stated that th

would move production to Bangladesh or Cambodia if these co

granted duty-free access for textile and apparel. Given the potentially 

critical impact of extending AGOA benefits to LDCs outside Africa, 

panelists gave the option to refrain from extending preferences to non

LDCs a very high level of priority for congressional consideration. 

Options to modify rules of origin provisions under AGOA and other U.S. 

trade preference programs or free trade agreements are intended to 

benefit SSA textile and apparel input production by providing 

opportunities to combine production with U.S. trade partners in o

regions. Panelists suggested an option for simplifying rules of origi

provisions in AGOA to grant duty-free access for partially assembled 

garments that are jointly produced in other countries that are U.S. free

trade partners or benefit from U.S. trade preferences. For example, a 

consultant doing business with companies producing in AGOA countries 

explained that one of his clients had expressed interest in assembling highvalue shirts in one AGOA beneficiary with collars and cuffs produce

non-AGOA country, but was unable to because of rules of origin 

restrictions. According to ITC officials and the Harmonized Tariff 

Schedule, such partial assembly of garments is currently allowed under 

AGOA, but confusion persists among SSA manufacturers and outsid

experts. Furthermore, one expert expressed concern that placing an 

increased emphasis on partially assembled garments might relegate SSA 

manufacturers to lower value-added production. The ITC study also refers 

to African government and industry sources’ recommendations for

changing the rules of origin under non-AGOA trade preference program

and free trade agreements to allow apparel made with SSA fabric to 

qualify for duty-free treatment in the United States. Similarly, one 

representing companies that produce in Africa noted that the U.S.-

Page 18 GAO-09-916 U.S.-Africa Trade
 

duty-free benefits for textile and apparel items produced with inputs

AGOA countries. However, other panelists indicated such changes to m

 from 

ost 

existing free trade agreements would have minimal impact on the 

ompetitiveness of AGOA producers. They noted that, due to the small 

ion. 

he 

d 

we 

n 

n 

hese issue 

CB to 

igning TCB and development assistance with AGOA as 

extremely high priorities for Congress to consider. Many of the experts we 

onsulted consider TCB a key component of improving the 

try in the region. 

Furthermore, they consider it necessary to address problems that affect 

ore 

ealign U.S. trade policy and programs to support infrastructure and 

e 

c

scale of textile and apparel production in the region and the distance 

between AGOA beneficiaries and countries that have a free trade 

agreement with the United States, such arrangements would probably not 

be viable. Panelists assigned these options to modify rules of origin 

provisions as generally high priorities for congressional considerat

As part of our review, we consulted with experts on measures the U.S. 

government could take to help increase investment in and improve t

competitiveness of textile and apparel inputs production in SSA, beyond

changes to AGOA. Based on our review of the ITC study and other relate

research, and in consultation with trade and industry experts, 

identified five issue areas in which the U.S. government could take actio

to improve the competitiveness of the textile and apparel inputs sector i

AGOA beneficiary countries. These issue areas include (1) infrastructure 

development, (2) trade capacity building (TCB) assistance, (3) U.S. 

government international finance entities, (4) SSA regional integration, 

and (5) unfair trade practices of AGOA competitors. Under t

areas, the panel discussed and ranked 25 specific options for 

congressional consideration. Panelists ranked each option on a 7-point 

priority scale that ran from “extremely low priority” to “extremely high 

priority.” The panel ranked funding regional trade hubs to provide T

the industry and al

Expert Panel’s 

Options for 

Congressional 

Consideration of U.S. 

Government 

Measures t

c

competitiveness of the textile and apparel inputs indus

competitiveness of the industry to maximize the benefits of AGOA. A m

detailed description of the issue area and accompanying options is 

presented below. 

The options considered under this issue area were to: 

• R

energy development in Africa to ensure trade preferences and assistance 

result in projects that will improve competitiveness of industries in th

region. 

o Improve 

Competitiveness of 

the Textile and 

Apparel Inputs Sector 

in AGOA Beneficiary 

Countries 

Issues Related to 

Infrastructure 

Development 

Page 19 GAO-09-916 U.S.-Africa Trade
 

• Increase collaboration with African governments and international donors

to improve infrastructure and energy. 

• Reauthorize the Millennium Challenge Corporation (MCC) and adjust the 

• reate incentives for private-sector investment and provision of services 

ortunities. 

re and energy projects that reduce the cost of doing business. 

• r 

• ht 

eral 

e main 

 by 

able 

n 

l 

ary to meet environmental compliance standards required in the 

international market. The ITC study and other reports indicate that poor 

transportation infrastructure is a major constraint to trade in SSA 

legislation to allow more private-sector involvement, create regional 

compacts, and extend the duration of compacts. 

C

in infrastructure and energy by leveraging resources in a manner that 

creates better business opp

• Encourage programmatic coordination among U.S. government entities 

involved in development assistance and trade programs to develop 

infrastructu

Incorporate metrics to measure reduction in the cost of doing business fo

infrastructure investment. 

Support renewable energy technology transfer to SSA countries that mig

have a natural disposition for such production to address energy supply 

shortages. 

Options to support infrastructure development are intended to lead to a 

reduction in the cost of doing business in SSA countries. There is gen

agreement among experts we consulted, the ITC study, and other 

literature we reviewed that inadequate infrastructure is one of th

obstacles to doing business in Africa and one of the factors that most 

affects the competitiveness of production of textile and apparel inputs in 

SSA. Production of textile and apparel inputs is particularly affected

the lack of reliable power supplies, lack of abundant clean water, and poor 

transportation infrastructure. The ITC study reports that many SSA 

countries have among the highest cost rates and the most unreli

supply of electrical power in the world. According to the study, 

disruptions in electricity supply reduce productivity and add to cost. For

example, a disruption in power supplies can ruin an entire production run 

in yarn and fabric mills, and increase cost do to the use of back-up 

generators. ITC also reported that the lack of an abundant supply of clea

water in many SSA countries affects the production of textile and appare

inputs. Dyeing fabrics requires the use of clean water, which is 

contaminated in the process. Wastewater treatment capabilities are thus 

necess

Page 20 GAO-09-916 U.S.-Africa Trade
 

countries. Textile and apparel production is particularly affected in the 

region because poor transportation infrastructure inhibits the ability of 

producers to meet tight delivery schedules demanded by retailers. Delay

in regional and international trade are caused by poor roads, railways, and 

ports. 

Recognizing the challenges that poor infrastructure places on trade and 

the textile and apparel sector in SSA countries, the panel discussed h

U.S. assistance for infrastructure is supplied to the region and provided 

options that could improve its implementation. A panelist said that th

limited coordination among MCC,

s 

ow 

ere is 

licy. 

t be 

 to 

f 

they 

ty 

tric 

tric 

eed 

re 

tunity. Another panelist explained that there is private 

sector interest in developing energy facilities in Ethiopia; however, there is 

 lack of a transmission and distribution system, which discourages 

investment. Based on this discussion, panelists ranked the option on 

 

16 which provides a significant level of 

assistance for infrastructure, other U.S. assistance, and U.S. trade po

Several panelists agreed that infrastructure development in Africa mus

strategically planned to benefit exports and regional industries, and 

coordination between U.S. trade and development agencies is necessary

achieve that goal. For example, one panelist said that it is not only a 

matter of building a port, but making sure that the port functions well and

is positioned to serve key industries. In the same context, a panelist 

representing textile and apparel producers in Africa indicated that for 

infrastructure development to have an impact in making the textile,

apparel, and other industries more competitive, infrastructure projects 

must result in a reduction in the cost of doing business in SSA. Several 

panelists mentioned the need to establish metrics to measure benefits o

U.S.-sponsored infrastructure projects. Panelists also discussed the need 

to take a regional approach for infrastructure development in Africa; 

indicated that the bilateral approach that MCC takes in developing 

compacts limits the impact infrastructure projects can have. For example, 

one panelist said that the best way Kenya can reduce the cost of electrici

is to invest in Ethiopia because Ethiopia has the greatest hydroelec

power potential in East Africa. Thus, Kenyan investment in a hydroelec

project in neighboring Ethiopia would benefit Kenyan consumers of 

electricity down the line because they would have greater access to 

cheaper electricity. A panelist from the private sector said that there n

to be incentives created for the private sector to invest in infrastructu

and that companies must see infrastructure projects in Africa as a 

business oppor

a

16Currently, 10 SSA countries have compacts with MCC. 

Page 21 GAO-09-916 U.S.-Africa Trade
 

reauthorizing MCC and encouraging programmatic coordination for 

infrastructure development as extremely high priorities for congressional 

he options considered under this issue area were to: 

ubs to provide TCB assistance to SSA. 

ce to 

rel inputs 

ector faces by implementing business solutions and increased marketing. 

 it 

 disadvantages of exports 

dustries, such as the textile and apparel inputs industry. 

o improve SSA countries’ potential to attract international 

etailers that emphasize these practices. 

• uction 

n 

e consulted to be a key component of improving the 

competitiveness of the textile and apparel inputs industry in SSA. 

However, there is a lack of funding directed at the textile and apparel 

input industry. While AGOA authorizing legislation refers to TCB, as we 

 

consideration. 

T

• Reauthorize the Africa Global Competitiveness Initiative to provide 

funding for U.S. Agency for International Development (USAID) trade 

h

• Provide resources to USAID trade hubs designated for TCB assistan

address the competitive disadvantages the textile and appa

s

• Align U.S. TCB and development assistance with AGOA to ensure that

addresses the competitive challenges and

in

• Increase and promote organic production and fair labor and trade 

practices t

r

Intensify U.S. assistance to the SSA cotton industry to improve prod

and further integrate cotton production with the textile and apparel 

industry. 

Options on TCB17 emphasize the need to have a stronger connectio

between trade preferences and development assistance to address 

competitive disadvantages in the textile and apparel inputs industry and 

improve business opportunities in SSA countries. TCB is considered by

many experts w

 e 

dards, physical and economic infrastructure, environmental sector 

trade and standards, financial sector development, competition policy, and foreign 

ntives. 

Issues Related to TCB 

Assistance 

17USAID has defined TCB in part to include activities meant to help countries build th

physical, human, and institutional capacity to benefit more broadly from a rules-based 

trading system. TCB is provided in several areas, including trade facilitation, human

resources and labor stan

investment ince

Page 22 GAO-09-916 U.S.-Africa Trade
 

previously reported, funding for this type of assistance is not provided 

under the act.18

USAID delivers TCB assistance in Africa through four regional trade hubs, 

which are funded by the Africa Global Competitiveness Initiative, 

scheduled to expire in 2010. While several panelists expressed support fo

reauthorizing this initiative to provide funding for the regional trade hubs, 

one government official noted that congressional reauthorization doe

mean that funding will be provided. Funding would need to be prov

separately through the appropriations process. A contractor who manag

the West and Southern African trade hubs explained that there is no 

funding earmarked for assistance to the textile and apparel inputs 

industry, which makes it very difficult to implement targeted technical 

assistance projects. Rather, TCB assistance for the textile and apparel 

inputs sector comes out of limited discretionary assistance funding. Th

contractor estimated that less than $1 million was spent by the two trade 

hubs on providing assistance to the textile and apparel industry in 2008. 

Nevertheless, according to the ITC study, textile and apparel industry 

representatives said that TCB provided by USAID trade hubs has advance

regional and international market opportunities. TCB assistance provided

to the textile and apparel industry includes projects such as business-to

business events to foster trade linkages between the textile and appar

producers throughout Africa and a cross-section of the apparel industry 

doing business in the region. Acc

r 

s not 

ided 

es 

e 

d 

-

el 

ording to a USAID fact sheet, in 2007, 

such an event resulted in an estimated $8 million in new trade deals. 

on. 

try’s 

ts of 

Industry sources indicated that greater TCB assistance for the textile and 

apparel inputs sector is needed. 

Almost all members of the panel agreed that sufficient funding should be

provided for TCB projects that increase the competitiveness of the textile 

and apparel industry by improving the ability to do business in the regi

One panelist representing the private sector said that the reason AGOA 

has had limited results in the textile and apparel inputs sector is that there 

has not been a “supply response”—the textile supply industry did not 

respond to the trade opportunity AGOA created because of the indus

limited capacity. Several panelists agreed that to maximize the benefi

AGOA, problems that affect competitiveness of the industry must be 

addressed, such as low labor productivity, inability to meet industry 

quality standards and volume requirements, and transport efficiency 

 

18GAO-08-443. 

Page 23 GAO-09-916 U.S.-Africa Trade
 

problems. A panelist representing textile and apparel producers in Africa

indicated that better coordination is needed between U.S. governm

trade policy and trade capacity assistance, allowing TCB to complement 

trade preferences and improving competitiveness. One panelist said th

achieve an integrated chain of production in the textile and apparel 

industry, TCB must be provided to other sectors in the supply chain. For 

example, to create an integrated chain of production in the textile and 

ent 

at to 

apparel industry, more assistance should be given to the African cotton 

dustry. Also, for SSA countries to compete in the global market, 

ion and fair labor 

and trade practices, which may attract global retailers that emphasize 

sional consideration. 

 to: 

extile 

l inputs production in SSA countries. 

acilitate 

t in 

•

•

ing 

. 

Issues Related to U.S. 

Government International 

Finance Entities 

in

assistance should be given to promote organic product

these practices. The panel assigned options regarding funding for regional 

trade hubs to support the textile and apparel industry, and aligning TCB 

with AGOA as extremely high priority for congres

The options considered under this issue area were

• Review and adjust the Overseas Private Investment Corporation’s (OPIC) 

mandate to allow greater flexibility to support U.S. investment in t

and appare

• Increase Export-Import (Ex-Im) Bank lending and guarantees to f

investment in the SSA textile and apparel sector. 

• Institute tax-related incentives for U.S. firms making a positive impac

AGOA countries to encourage companies to do business in these 

countries. 

Increase support for institutions to provide access to finance for 

investment, supplier credit, and day-to-day operations. 

Increase flexibility of OPIC, the Ex-Im Bank, and the U.S. Trade and 

Development Agency (TDA) to address local content and economic effects 

restrictions for AGOA countries. 

Options to improve support of U.S. government international finance 

entities for textile and apparel production in SSA are aimed at attract

investment that could help make the industry more globally competitive

This would be particularly important for textile production, which is a 

capital-intensive industry. The ITC report notes several interrelated factors 

that affect industries’ ability to competitively supply textile and apparel 

inputs: the cost and availability of capital (finance); the age of plants and 

Page 24 GAO-09-916 U.S.-Africa Trade
 

equipment; and the cost and quality of the labor pool. Firms need access to 

working capital to finance day-to-day operations and as longer-term 

capital investment to upgrade plants and equipment. However, firms in 

many SSA countries face high domestic bank lending rates, which can 

harm competitiveness. Therefore, they often use internal funds to finance 

operations. Foreign direct investment also has been an important source 

of capital for some SSA textile and apparel producers, particularly larger 

mes 

f textile 

t 

or 

ts 

ers 

a 

oted 

ested that U.S. policymakers 

consider making available an equity fund that could co-invest with local 

and foreign investors in projects in the textile and apparel sectors. 

exporters. Much of the foreign investment in textiles and apparel co

from Asian countries, with a few other European and African countries 

also holding ownership shares. However, a substantial amount o

and apparel-related foreign direct investment has left some SSA countries 

since quotas under the MFA were lifted in 2004, and overall foreign direc

investment to SSA countries has declined. 

The expert panel, our own research, and industry and government 

submissions to the ITC have identified some options for consideration by 

Congress. One submission to the ITC noted that access to U.S. 

government-sponsored or multilateral support will need to be enhanced if

textile production is to become more globally competitive. It noted that 

U.S.-government sponsored financing entities, such as OPIC and the Ex-Im 

Bank, have typically been reluctant to participate in African textile 

production because doing so could be politically controversial. For 

example, OPIC officials stated that OPIC’s ability to provide guarantees f

U.S. investors is limited by its screening criteria, which rules out projec

that could have a negative effect on U.S. employment. The Ex-Im Bank’s 

statutory focus is on promoting U.S. exports by supporting U.S. export

or those who are importing/purchasing U.S.-made products, such as textile 

machinery. One of our panelists noted that the Ex-Im Bank and TDA have 

restrictions on the amount of foreign content that can be included in 

project and still qualify for guarantees or other support. In addition, the 

complications involved in complying with such requirements can be a 

disincentive for U.S. firms that want to do business in SSA countries. Some 

panelists urged that the United States provide more flexibility for the 

financing agencies, but one panelist raised a concern about whether such 

flexibilities would be available for all countries or whether they would be

restricted to African countries. A written submission to the ITC by a

representative of an African textile- and apparel-producing country n

that it would be beneficial if the United Sates could make available a line 

of credit (through OPIC, the Ex-Im Bank, or other entities) to assist private

firms with viable expansion or modernization projects in the textile and 

apparel sector. This representative also sugg

Page 25 GAO-09-916 U.S.-Africa Trade
 

Although one panelist raised some questions about how these latter 

options would be implemented, overall, the panel expressed a high degree 

of agreement in favor of increased flexibilities for U.S. financing agencies 

and exploring other means to provide financing or investment funds f

the SSA textile and apparel inputs industry. 

Other options involved tax-related incentives for U.S. firms to invest o

business with SSA countries. A panelist noted that a more direct approach

would be to offer tax incentives for investment and that such an ap

has been a part of the consideration of AGOA legislation in the past. 

Another panelist concurred, noting some companies would be more 

willing to do business in AGOA countries, rather than in Southeast A

a tax incentive were offered. One proposal was for an SSA economic

activity tax credit that would grant favorable depreciation allowances 

tangible capital investments. Other provisions included credits for 

qualified wages paid to workers; credits

or 

r do 

proach 

sia, if 

on 

 for fringe benefits paid; and 

allowances for the repatriation of profits from SSA investments. While the 

ptions associated with this issue area received a very high level of 

ll panel, one 

panelist said that focusing on investment incentives rather than trade 

m a 

al 

• lace a higher priority on support of regional economic programs in U.S. 

lace a higher priority on regional efforts under U.S. development 

CC 

 encourage economic integration. 

•

• . 

Issues Related to SSA 

Regional Integration 

o

priority for congressional consideration from the overa

incentives could be too complicated and would run into difficulties fro

“tax system management” perspective. 

The options considered under this issue area were to: 

• Support regional economic communities to help enhance the vertic

integration and competitiveness of textile and apparel industries. 

P

development programs. 

• P

programs, such as the African Global Competitiveness Initiative and M

to

Create incentives for countries to participate in regional economic 

communities. 

Support a general capital increase for the African Development Bank

Options to support regional integration stem from a recognition that each 

SSA country is unlikely by itself to achieve full vertically integrated 

Page 26 GAO-09-916 U.S.-Africa Trade
 

production, with linkages throughout the supply chain. According to 

panelists, SSA countries must be able to work together to develop an 

efficient, competitive textile and apparel industry. While there are a 

number of structures and organizations (such as the Southern African 

ill 

nergy 

rel 

o 

ional 

o 

take 

an 

noted that much of the focus of regional integration is on public-sector 

Customs Union, Common Market of Eastern and Southern Africa, and the 

African Union) that foster regional integration in Africa, SSA countries st

face numerous obstacles that hamper competitiveness, such as tariffs on 

cross-border trade, regulations, and access to transportation and e

networks. 

In addressing regional integration, the panel expressed “very high” overall

support for options that would encourage more regional cooperation in 

areas that could help SSA become more competitive in textile and appa

inputs production. The panel emphasized, however, an important 

distinction between supporting integration at the broader level of 

multilateral trade negotiations and supporting it through U.S. development 

assistance programs. It was noted that, in trade negotiations, 

distinguishing between LDCs and non-LDCs is problematic if the goal is t

improve regional integration. This echoed comments the ITC received 

from a representative of an African regional organization and from 

industry sources. The panel also discussed having U.S. development

programs (such as USAID) provide more resources for supporting reg

economic communities. A representative of the development community 

noted that one challenge is that regional communities are not sovereign 

governments, and that it is more important for national governments t

integrate with regional economic organizations. If national governments 

do not effectively coordinate their legislative actions with regional 

organizations, then implementation of development strategies can be 

undermined. Experts also stressed that African governments need to 

action on regional economic integration and other reforms to capitalize on

the economic opportunities presented by trade preference programs.

Since national governments typically have ministers for integration with 

regional bodies, the panel concurred that any support for regional 

integration should occur through the national agencies responsible for 

integration. In this context, panelists pointed out that the MCC faces 

challenges in that its focus is on working with individual countries rather 

than regional entities. Accountability for projects is also more easily 

focused at the individual country level. One panelist suggested that there 

should be incentives for countries to integrate and implement their 

regional commitments. For example, placing conditions on aid could be 

incentive to achieve more regional cooperation for countries reluctant to

join agreements because they might lose tariff revenue. Another panelist 

Page 27 GAO-09-916 U.S.-Africa Trade
 

structures but that working with the private sector also was important. A

number of issues affect private-sector activities at a regional level, 

including regulations affecting trade and infrastructure. Panelists noted 

k 

ms, 

s. 

In a similar vein, another panelist advocated support for the African Union 

ecause of the role it plays in coordinating positions in trade negotiations 

mmunities into an 

African economic community. In general, the panel gave very high priority 

he options considered under this issue area were to: 

forcement actions 

egarding export subsidies and other unfair trade practices related to 

• onitor U.S. imports of Chinese textile and apparel to expedite self-

• ted to 

s to 

ssions with 

 in 

lopment and 

competitiveness of African textile and apparel industries. However, if 

other competitors access the U.S. market while employing trade practices 

Issues Related to Unfair 

Trade Practices of AGOA 

Competitors 

that entities such as the African Global Competitiveness Initiative wor

through the private sector and help industries solve their own proble

and that USAID-funded trade hubs appear to be having some success in

working with the private sector. 

At a broader level, some panelists mentioned the need for supporting 

other organizations that try to enhance cooperation among Africa’s 

regional organizations. One panelist emphasized the importance of the 

African Development Bank and advocated a general increase in its capital 

to support the role it plays in coordinating regional infrastructure project

b

and its efforts to integrate all the regional economic co

ratings for congressional consideration to the options in this issue area. 

T

• Increase U.S. resources to expand monitoring and en

r

textile and apparel imports. 

M

initiation of dumping and countervailing duty cases. 

Apply pressure to deter Chinese intellectual property violations rela

African ethnic textile designs. 

Options were suggested for the United States to employ trade remedie

address unfair practices of competitors that may indirectly affect the 

competitiveness of SSA textile and apparel production and prompt 

relevant discussions at the WTO. Recent trade data, our discu

experts, and the ITC report indicate that SSA countries face challenges

retaining their small share of global trade compared with other major 

textile and apparel product exporters, such as China, India, Bangladesh, 

Cambodia, and Vietnam. As a major importer of African apparel products, 

the U.S. market is crucial to the continued deve

Page 28 GAO-09-916 U.S.-Africa Trade
 

that violate existing agreements or are otherwise unfair, they not only m

have an adverse impact on U.S domestic industry but indirectly ha

competitiveness of African producers as well. 

A panelist pointed out that across an array of clothing products, recent 

data show that U.S. imports from China have shown double-digit 

increases. The panelist noted further that China had been found to be 

illegally subsidizing textile exports and that the U.S. government has 

a trade dispute with the WTO. It was suggested that this indicates that the 

United States needs to devote more resources to monitoring and enforcing 

trade laws, particularly regarding China. A U.S. government panelist s

that Congress has directed the Commerce Department to undertake 

monitoring of Chinese and Vietnamese apparel imports and to lo

unfair trade practices. It was further noted that three reviews of trade wit

Vietnam had bee

ay 

rm the 

filed 

aid 

ok for any 

h 

n undertaken by the Commerce Department Import 

Administration and that no evidence of dumping had been found. Congress 

port 

ts 

y 

 that 

an 

ion to increase U.S. resources 

to monitor export subsidies and other unfair trade practices related to 

xtile and apparel imports received a very high level of priority for 

rd 

by experts on ways to improve the competitiveness of SSA textile and 

apparel production so that AGOA beneficiary countries can better take 

advantage of the opportunities provided under the program. These options 

Conclusion 

has also asked the ITC to monitor imports from China, and the 

administration has made a commitment to the textile industry to review 

trade practices. 

A related issue raised by the expert panel and referred to in the ITC re

concerned alleged violations of intellectual property rights by the Chinese

involving ethnic African print fabrics. It was noted that the Chinese have 

become very competitive in producing and exporting traditional African 

print fabrics. As the ITC said, “In some cases, Chinese producers are 

alleged to have violated the intellectual property rights of these produc

by borrowing their copyrights or designs without attribution, or by falsel

labeling the print fabric as being of African origin.” The panel noted

the legal basis for action by the United States is less clear in this case than 

in cases of dumping and unfair trade practices affecting U.S. markets. 

However, the United States may be in a better position than the Afric

countries affected to raise the issue, and this might prompt useful 

discussions at the level of the WTO. The opt

te

congressional consideration, while the other recommendations in this 

issue area received generally high priority. 

This report is intended to provide Congress a range of options put forwa

Page 29 GAO-09-916 U.S.-Africa Trade
 

will likely be considered within broader congressional deliberations on 

improving U.S. trade preference programs. Many of these options may b

helpful, but as GAO has previously reported,

e 

ovide 

ram 

s 

these 

as generous 

d before 

re, 

n the economic opportunities presented by trade 

preference programs. 

did 

technical comments, which we incorporated in the report as appropriate. 

of 

 be 

available at no charge on GAO’s Web site at http://www.gao.gov. 

 

19 trade-offs are inherent in 

trade preference programs. For example, although many experts agreed 

on the priority of extending the duration of AGOA beyond 2015 to pr

potential investors greater long-term certainty about the program’s 

benefits, others raised concerns that this could undermine the ability of 

African countries to grow beyond the need for a trade preference prog

and fully integrate into the global trading system. Similarly, although 

limiting certain trade preference benefits to LDCs makes sense, expert

argued that enhancing the competitiveness of SSA textile and apparel 

inputs production necessitates regional integration; thus, extending 

benefits to more advanced economies such as South Africa may be 

appropriate. Furthermore, the link between trade policy and economic 

development complicates potential policy responses. AGOA h

benefits for textile and apparel, but many SSA countries face 

infrastructure and development challenges that must be addresse

they can fully take advantage of these benefits. Export-oriented 

manufacturing cannot survive without adequate physical infrastructu

while capacity-building assistance may be ineffective without global 

demand for production. Finally, government and other experts have 

stressed that African governments need to take action on governmental 

reforms to capitalize o

We provided courtesy copies of the draft report to USTR and ITC, but 

not request official comments. USTR and ITC staff provided informal Agency Comments 

and Our Evaluation 

We are sending copies of this report to interested congressional 

committees, the Secretary of Commerce, the Secretary of State, the U.S. 

Trade Representative, the Administrator of USAID, the Chairman of the 

ITC, the Chief Executive Officer of the MCC, and the Acting President 

the Overseas Private Investment Corporation. This report will also

19GAO-08-443. 

Page 30 GAO-09-916 U.S.-Africa Trade
 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

Loren Yager 

listed in appendix V. 

Director, International Affairs and Trade 

Page 31 GAO-09-916 U.S.-Africa Trade
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

In this report, we present information on options put forward by experts 

for Congress to consider for (1) possible changes to the African Growth 

and Opportunity Act (AGOA) or other U.S. trade preference programs and 

(2) other measures the U.S. government could take to help increase 

investment in and improve competitiveness of textile and apparel inputs 

production in sub-Saharan Africa (SSA). 

To address these objectives, we reviewed the U.S. International Trade 

Commission (ITC) study on the competitiveness of textile and apparel 

inputs in AGOA beneficiaries conducted under the same mandate as 

GAO’s review, as well as other ITC reports on SSA and related hearing 

materials. We examined U.S. trade statistics on textile and apparel imports 

to the United States in recent years, which we determined to be 

sufficiently reliable for the purposes of this report. We also conducted a 

literature review on issues related to the textile and apparel industry and 

investment in SSA. We met with U.S. agency officials familiar with U.S. 

trade preferences and development programs, including the Office of the 

U.S. Trade Representative, the Department of Commerce’s Office of 

Textiles and Apparel, the U.S. Agency for International Development, the 

Millennium Challenge Corporation, and the Overseas Private Investment 

Corporation. We met with trade officials from 12 African embassies in 

Washington, D.C. We also interviewed knowledgeable individuals from 

academia and policy institutes, consultants involved in work related to 

U.S.-Africa trade, and private-sector representatives of U.S. and African 

textile industries and U.S. retail and apparel import industries. Through 

these sources, we identified numerous suggestions for how the U.S. 

government could support competitiveness in the African textile and 

apparel industry. 

Additionally, we convened a panel of experts and key informants on June 

2, 2009. To select the experts and key informants for our panel, we 

identified broad categories of the types of individuals and representatives 

that would be needed to ensure we covered as full a range as possible of 

opinions and interests. We drew up a list of potential panelists for each of 

our categories based on our review of the literature and recommendations 

made by knowledgeable parties. Many of the panelists we invited had a 

special interest or expertise in Africa. Sixteen panelists were able to attend 

our panel on June 2, 2009, including representatives of relevant U.S. 

government agencies; private-sector firms and associations in the textile 

and apparel industry; and academia and think tanks. In addition, a 

representative from the Washington-based African embassies’ working 

group on AGOA also attended. However, some of the panelists were not 

able to participate in all of the day’s sessions. We invited representatives 

Page 32 GAO-09-916 U.S.-Africa Trade 
Appendix I: Scope and Methodology 

from the African private sector, the Common Market for Eastern and 

Southern Africa, and the World Bank, but those individuals were not able 

to attend. To the extent possible, we conducted interviews with or 

obtained written input from experts who were not able to attend our 

panel. 

There are differing opinions about whether promoting textile and apparel 

production in SSA countries should be a priority under AGOA. Some 

Africa experts suggest that there should be a greater focus on agricultural 

production, an area were SSA countries appear to have a greater 

competitive advantage. Similarly, other development experts question 

whether the benefits provided under AGOA should be exclusive to SSA 

countries, and support the idea of extending trade preferences equally 

among all lesser-developed countries (LDC). Our report does not take a 

position on these issues, but focuses on textile and apparel inputs 

production in AGOA beneficiary countries according to the requirements 

in the mandate. 

The panel discussed three topics: (1) the ITC’s analysis of potentially 

competitive products and challenges for the textile and apparel industry in 

SSA, (2) possible changes to AGOA or other U.S. trade preference 

programs, and (3) other measures to support African textile and apparel 

inputs production. To facilitate the discussions concerning the last two 

topics, we prepared lists of possible changes and other measures based on 

information and recommendations we obtained from knowledgeable 

parties and relevant literature. We presented these lists to the panel to 

introduce each topic and stimulate discussion. 

To obtain an overall sense of the panelists’ priorities for improvement, we 

conducted ranking exercises at the end of the discussions on possible 

changes to AGOA and other measures to support the African textile and 

apparel inputs industry. For these exercises, we relied on the lists of 

options we developed prior to the panel. During the discussions, we 

invited the experts to comment on the lists, and we made modifications or 

additions based on their input. After the panelists had discussed the 

options and agreed on the wording, we asked them to rank each on a 7-

point priority scale that ran from “extremely low priority” to “extremely 

high priority.” (See app. IV for more details.) 

The options and associated priority rankings presented in this report are 

based on the opinions of the experts and key informants involved in the 

panel and should not be interpreted as GAO recommendations. According 

to generally accepted government auditing standards, GAO makes 

Page 33 GAO-09-916 U.S.-Africa Trade
Appendix I: Scope and Methodology 

recommendations to correct identified problems and improve programs 

and operations when the potential for improvements is substantiated by 

the reported findings and conclusions. These standards generally require 

GAO to develop criteria, condition, cause, and effect to describe a 

problem. Due to GAO’s mandated reporting deadline for this project, 

which required us to submit a report within 90 days of the issuance of the 

ITC report on the same topic, we were not able to employ a methodology 

that allowed us to develop findings and conclusions according to these 

standards. 

Page 34 GAO-09-916 U.S.-Africa Trade
Appendix

Changes

Preference

 II: Panel’s Options for Possible 

 to AGOA or Other U.S. Trade 

 Programs 

Page 35 GAO-09-916 

Appendix II: Panel’s Options for Possible 

Changes to AGOA or Other U.S. Trade 

Preference Programs 

The options considered under this issue area were to: 

• Extend duration of third-country fabric provision for LDCs beyond 2012 to 

provide potential investors greater long-term certainty about the program’s 

benefits. 

Issues related to extending 

the duration of AGOA 

provisions and making 

AGOA permanent 

• Extend duration of AGOA beyond 2015 to provide potential investors 

greater long-term certainty about the program’s benefits. 

• Make AGOA benefits permanent to provide potential investors greater 

long-term certainty about the program’s benefits. 

Issues related to 

expanding AGOA LDC 

benefits to all 

beneficiaries and to 

improving use of AGOA 

The options considered under this issue area were to: 

• Expand third-country fabric provision to South Africa to improve regional 

integration in the textile and apparel sector. 

• Expand AGOA LDC benefits to all AGOA beneficiaries to improve regional 

integration in the textile and apparel sector. 

Issues related to creating 

non-punitive and 

voluntary incentives 

The option considered under this issue area was to: 

• Create a voluntary “duty credit” program for U.S. importers of apparel 

from AGOA beneficiaries that is manufactured using fabric from the 

region. 

Issues related to 

preserving existing 

benefits under AGOA and 

modifying other 

preference programs and 

trade agreements 

The options considered under this issue area were to: 

• Refrain from extending trade preferences provided under AGOA to LDCs 

outside SSA to preserve benefits for textile and apparel production in 

AGOA beneficiary countries. 

• Modify rules of origin provisions under other U.S. trade preference 

programs or free trade agreements to provide duty-free access for 

products that use AGOA textile and apparel inputs. 

• Simplify AGOA rules of origin to allow duty-free access for certain 

partially assembled apparel products with components originating outside 

the region. 

 U.S.-Africa Trade 
Appendix III: Panel’s Options for Other 

Possible Measures to Support SSA Textile Appendix III: Panel’s Options for Other and Apparel Sector 

Possible Measures to Support SSA Textile 

and Apparel Sector 

Issues related to 

infrastructure 

development 

The options considered under this issue area were to: 

• Realign U.S. trade policy and programs to support infrastructure and 

energy development in Africa to ensure that trade preferences and 

assistance result in projects that will improve competitiveness of 

industries in the region. 

• Increase collaboration with African governments and international donors 

to improve infrastructure and energy. 

• Reauthorize the Millennium Challenge Corporation and adjust the 

legislation to allow more private-sector involvement, creating regional 

compacts and extending duration of compacts. 

• Create incentives for private-sector investment and provision of services 

in infrastructure and energy by leveraging resources in a manner that 

creates better business opportunities. 

• Encourage programmatic coordination among U.S. government entities 

involved in development assistance and trade programs to develop 

infrastructure and energy projects that reduce the cost of doing business. 

• Incorporate metrics to measure reduction in the cost of doing business for 

infrastructure investment. 

• Support renewable energy technology transfer to SSA countries that might 

have a natural disposition for such production to address energy supply 

shortages. 

Issues related to trade 

capacity building (TCB) 

assistance 

The options considered under this issue area were to: 

• Reauthorize the Africa Global Competitiveness Initiative to provide 

funding for U.S. Agency for International Development trade hubs to 

provide TCB assistance to SSA. 

• Provide resources to USAID trade hubs designated for TCB assistance to 

address the competitive disadvantages the textile and apparel inputs 

sector faces by implementing business solutions and increased marketing. 

• Align U.S. TCB and development assistance with AGOA to ensure that it 

addresses competitive challenges and disadvantages of export industries, 

such as the textile and apparel inputs industry. 

Page 36 GAO-09-916 U.S.-Africa Trade
Appendix III: Panel’s Options for Other 

Possible Measures to Support SSA Textile 

and Apparel Sector 

• Increase and promote organic production and fair labor and trade 

practices to improve SSA countries’ potential to attract international 

retailers that emphasize these practices. 

• Intensify U.S. assistance to the SSA cotton industry to improve production 

and further integrate cotton production with the textile and apparel 

industry. 

Issues related to U.S. 

government international 

finance entities 

The options considered under this issue area were to: 

• Review and adjust the Overseas Private Investment Corporation’s mandate 

to allow greater flexibility to support U.S. investment in textile and apparel 

inputs production in SSA countries. 

• Increase Export-Import Bank lending and guarantees to facilitate 

investment in the SSA textile and apparel sector. 

• Institute tax-related incentives for U.S. firms making a positive impact in 

AGOA countries to encourage companies to do business in these 

countries. 

• Increase support for institutions to provide access to finance for 

investment, supplier credit, and day-to-day operations. 

• Increase flexibility of the Overseas Private Investment Corporation, 

Export-Import Bank, and U.S. Trade and Development Agency to address 

local content and economic effects restrictions for AGOA countries. 

Issues related to SSA 

regional integration 

The options considered under this issue area were to: 

• Support regional economic communities to help enhance the vertical 

integration and competitiveness of textile and apparel industries 

• Place a higher priority on support of regional economic programs in U.S. 

development programs. 

• Place a higher priority on regional efforts under U.S. development 

programs, such as the African Global Competitiveness Initiative and 

Millennium Challenge Corporation to encourage economic integration. 

Page 37 GAO-09-916 U.S.-Africa Trade
Appendix III: Panel’s Options for Other 

Possible Measures to Support SSA Textile 

and Apparel Sector 

• Create incentives for countries to participate in regional economic 

communities. 

• Support a general capital increase for the African Development Bank. 

Issues related to unfair 

trade practices of AGOA 

competitors 

The options considered under this issue area were to: 

• Increase U.S. resources to expand monitoring and enforcement actions 

regarding export subsidies and other unfair trade practices related to 

textile and apparel imports. 

• Monitor U.S. imports of Chinese textile and apparel to expedite selfinitiation of dumping and countervailing duty cases. 

• Apply pressure to deter Chinese intellectual property violations related to 

African ethnic textile designs. 

Page 38 GAO-09-916 U.S.-Africa Trade
Appendix IV: Further Details about the Panel Appendix IV: Further Details about the Panel Ranking Exercises 

Ranking Exercises 

To obtain an overall sense of the panelists’ priorities, we conducted two 

ranking exercises at the end of the discussions on (1) possible changes to 

AGOA and (2) other measures to support the African textile and apparel 

inputs industry. For these exercises, we relied on the lists of options we 

developed prior to the panel. During the discussions, we invited the 

experts to comment on the lists, and we made modifications or additions 

based on their input. After the panelists had discussed the options and 

agreed on the wording, we asked them to rank each on a 7-point priority 

scale that designated “7” as an “Extremely High Priority, “6” as a “Very 

High Priority,” “5” as a “Generally High Priority,” “4” as a “Moderate 

Priority,” “3” as a “Generally Low Priority,” “2” as a “Very Low Priority,” 

and “1” as an “Extremely Low Priority.” 

We used electronic hand-held technology to facilitate this exercise, 

provide instant feedback, and also ensure anonymity for each panelist. 

This technology provided us with the average and distribution of votes for 

each option. We conducted two separate ranking exercises, the first for 

the AGOA-related measures, and the second for the other measures to 

improve the competitiveness of the African textile and apparel inputs 

industry. 

Of the 16 experts and key informants that participated in the panel, 14 

were present for the morning session and took part in that ranking 

exercise on changes to AGOA. At lunch, two of the original panelists left 

and two others joined the panel. These changes were due to scheduling 

conflicts and had been discussed beforehand. Therefore, the composition 

of the 14 panelists that took part in the afternoon ranking exercise was 

slightly different from the 14 that took part in the morning exercise. In 

addition, after the first three categories of “other measures” had been 

discussed and ranked, five panelists had to leave the panel; the remaining 

nine panelists took part in the discussion and ranking exercise for the final 

two of the “other measure” categories. Moreover, in the afternoon 

sessions, not all of the panelists chose to rank every recommendation. For 

these reasons, the ranking exercises are not directly comparable; 

therefore, we present the results of the afternoon sessions in the five 

categories. 

An expert panel is a data gathering method that respects the views of all 

the experts, and experts with particular backgrounds or experiences can 

differ greatly; thus, we note in the text when there were differences of 

opinions on the options. In tables 2 and 3, we present the options ranked 

by highest mean score and provide the range of votes, along with the 

average scores, and the number of panelists that voted on each option to 

Page 39 GAO-09-916 U.S.-Africa Trade 
Appendix IV: Further Details about the Panel 

Ranking Exercises 

provide insights and transparency into the ranking exercises. However, the 

results of the ranking exercise should be understood in the context of the 

panelists’ discussions and not just in terms of the ranking exercise itself. 

Table 2: Ranking Session for Possible Changes to AGOA 

Recommendation Mean Range Votes

Standard 

deviation

Extend duration of third-country fabric provision for LDCs beyond 

2012 6.8 5-7 14 0.6

Extend duration of AGOA beyond 2015 6.4 4-7 14 0.9

Allow “duty credit” to U.S. importers of AGOA apparel using AGOA 

fabric 5.5 1-7 14 2.1

Preserve AGOA benefits by not extending textile and apparel 

preference benefits to non-SSA LDCs 5.5 1-7 14 2.4

Make AGOA benefits permanent 5.4 1-7 14 2.4

Simply the rules of origin for partially assembled garments 5.4 1-7 14 2.0

Expand third-country fabric provision to South Africa 5.2 2-7 14 1.8

Expand AGOA LDC benefits to all AGOA beneficiaries 4.9 1-7 14 2.2

Modify rules of origin under other preference programs and free trade 

agreements to allow AGOA inputs 4.9 1-7 14 1.9

Expand duty-free eligibility for other textile products, such as 

synthetic fabrics 4.4 1-7 14 1.7

Source: GAO. 

Note: The last option was eliminated because ITC officials noted that AGOA LDCs are already 

eligible for duty-free export of “synthetic fabrics,” especially everything that is in the “core textile 

chapter.” 

Table 3: Ranking Session for Possible Other Changes 

Recommendation Mean Range Votes

Standard 

deviation

Support infrastructure development 

Reauthorize MCC to allow for greater private sector involvement 6.0 1-7 14 2.0

Encourage programmatic coordination for infrastructure improvement 6.0 4-7 14 1.0

Realign U.S. policy and programs to support infrastructure and energy 

developments in Africa 5.9 2-7 11 1.6

Collaborate with African governments and international donors to 

improve infrastructure and energy 5.8 3-7 13 1.1

Create incentives for private-sector provision of services 5.8 4-7 14 1.1

Incorporate metrics for reductions in the cost of doing business for 

infrastructure investments 5.1 2-7 14 1.7

Page 40 GAO-09-916 U.S.-Africa Trade
Appendix IV: Further Details about the Panel 

Ranking Exercises 

Recommendation Mean Range Votes

Standard 

deviation

Support renewable energy technology transfer to SSA countries to 

improve energy supply 3.6 1-7 13 2.2

Fund targeted trade capacity building 

Fund regional trade hubs including market promotion and business 

linkages 6.9 6-7 14 0.4

Align U.S. trade capacity building (TCB) and development assistance 

with AGOA 6.5 4-7 13 0.9

Reauthorize the African Global Competitiveness Initiative 6.4 4-7 14 0.9

Intensify U.S. assistance to SSA cotton industry 4.2 1-7 13 2.0

Promote organic production and fair labor and trade practices 3.4 2-6 14 1.2

Improve support for government finance entities 

Institute tax-related incentives to U.S. firms making a positive impact in 

AGOA countries 6.3 3-7 14 1.1

Increase support for institutions to provide access to finance for 

investment, supplier credit, and day to day operations 6.2 5-7 14 0.8

Increase flexibility of OPIC, EXIM, and TDA to address local content 

and economic effects restrictions for AGOA countries 6.1 4-7 14 1.1

Increase EXIM lending and guarantees to textiles and apparel sector, 

directed toward Africa 5.9 3-7 14 1.2

Review and adjust OPIC’s mandate to support textiles and apparel 5.6 2-7 14 1.7

Support regional integration efforts in SSA 

Place higher priority on regional efforts under U.S. development 

programs, such as the African Global Competitiveness Initiative and 

MCC 6.3 5-7 9 0.9

Create incentives for countries to participate in regional economic 

communities 6.3 5-7 8 0.9

Support regional economic communities 6.2 5-7 9 0.8

Place a higher priority on support of regional economic programs in 

U.S. development 6.2 5-7 9 1.0

Support a general capital increase for the African Development Bank 5.6 3-7 9 1.4

Address unfair trade practices of competitors of AGOA 

beneficiary countries 

Increase U.S. resources for monitoring and enforcement of export 

subsidies and other unfair trade practices, having to do with apparel 5.7 4-7 9 1.4

Continue pressure against Chinese intellectual property violations of 

African textile and apparel products 5.1 2-7 9 1.8

Monitor U.S. imports of Chinese textiles and apparel to expedite selfinitiation of dumping and countervailing duty cases 5.1 1-7 9 2.0

Source: GAO. 

Page 41 GAO-09-916 U.S.-Africa Trade
Appendix V: 

A

GAO Contact and Staff 

cknowledgments 

Page 42 GAO-09-916 

Appendix V: GAO Contact and Staff 

Acknowledgments 

Loren Yager (202) 512-4347 or yagerl@gao.gov

In addition to the individual named above, the following persons made 

major contributions to this report: Juan Gobel, Assistant Director; Ann 

Baker; Gezahegne Bekele; Ken Bombara; Karen Deans; Martin de Alteriis; 

Francisco Enriquez; Ernie Jackson; and Michael Kniss. 

 U.S.-Africa Trade 

GAO Contact 

Staff 

Acknowledgments 

(320658) 
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