U.S.-Africa Trade: Options for Congressional Consideration to Improve Textile and Apparel Sector Competitiveness under the African Growth and Opportunity Act
Published: 2009-08-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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: (1) Extending the duration of the third-country fabric provision for least developed AGOA countries beyond 2012, and (2) 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: (1) Funding regional trade hubs and focusing on market promotion and business linkages, and (2) Aligning U.S. trade capacity building and development assistance with AGOA objectives

section_title: Letter
paragraphs: 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. AGOA allows  eligible 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.
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….” 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 study 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  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.)
subsections: section_title: Background
paragraphs: 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. All 48 countries in SSA are potentially eligible for AGOA, but  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.  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. 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    Apparel made in designated SSA lesser-developed countries (LDC) 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;”
Apparel made of yarns and fabrics not produced in commercial quantities  in the United States; and   Textile or textile articles originating entirely in one or more lesser- developed beneficiary SSA countries; certain cashmere and merino wool  sweaters; and eligible hand-loomed, handmade, or folklore articles, and  ethnic printed fabrics.
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) were removed, U.S. imports of these products from  SSA declined by about one-third, to $1.2 billion in 2008. See figure 2.
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.
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-ups represent less than 2 percent of all U.S. textile and  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.
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 retailing 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  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  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.
section_title: Expert Panel’s Options for Congressional Consideration of Possible Changes to AGOA or Other Trade Preference Programs
paragraphs: 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.
subsections: section_title: Issues Related to Extending the Duration of AGOA Provisions and Making AGOA Permanent
paragraphs: 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.
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 duty- free benefits on a continuing basis, 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  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 that  permanence could potentially provide a disincentive to implementing  other internal changes in countries’ economies that might allow them to  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 by  panelists.
section_title: Issues Related to Expanding AGOA LDC Benefits to All Beneficiaries and to Improving Use of AGOA
paragraphs: The options considered under this issue area were to:    Expand third-country fabric provision to Sou th Africa to improve regional  tegration in the textile and apparel sector.
Expand AGOA LDC benefits to all AGOA ben tegration in the textile and apparel sector.
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 ale  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 allow  greater access to third-country fabrics for South African apparel n  exporters.” As another example of an attempt to boost industry  competitiveness, the ITC report cites South Africa’s creation of “industry  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 rsue  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 h  the option to expand third-country fabric provisions to South Africa and  the one to expand LDC benefits to all AGOA be support, emerging as generally high priorities.
section_title: Issues Related to C Non-punitive and Voluntary Incentives
paragraphs: The option considered under this issue area was to:    Create a voluntary “duty credit” program for U.S. importers of appare from AG region.
OA beneficiaries that is manufactured using fabric from the  The option to create non-punitive incentives to encourage use of regional  inputs offers a way to stimulate voluntary regional investment. The non- punitive focus is a direct response to the negative results of the previously  implemented “abundant supply” provision, 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 U.S.  content in a specific bilateral relationship, which is not entirely relevant to  AGOA. The earned import program was thus rejected in favor of the  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 origin  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  ch to  expressed concern that the duty credit program is an indirect approa g African textiles that would be ineffective. Ultimately, the duty  stimulatin credit program received extensive support, emerging as a very high  p riority.
section_title: Issues Related to preserving Existing Benefits under AGOA and Modifying Other Preference Programs and Trade Agreements
paragraphs: The options considered under this issue area were to e options considered under this issue area were to:  :    Refrain from extending trade preferences provided under AGOA to    Refrain from extending trade preferences provided under AGOA to  outside SSA to preserve benefits for textile and apparel production in  outside SSA to preserve benefits for textile and apparel production in ficiary countries.  AGOA beneficiary countries.  AGOA beneModify rules of origin provisions under other U.S. trade preference  Modify rules of origin provisions under other U.S. trade preference  programs or free trade agreements to provide duty-free access for  programs or free trade agreements to provide duty-free access for  products that use AGOA textile and apparel inputs.  products that use AGOA textile and apparel inputs.
Simplify AGOA rules of origin to allow duty-free access for certain  Simplify AGOA rules of origin to allow duty-free access for certain  partially assembled apparel products with components originating outside  partially assembled apparel products with components originating outside  the region.  the region.
GAO-08-443.
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-free,  quota-free access will go into effect if the Doha Round is successfully  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, such as  textile and apparel production. A panelist representing international  textile and apparel producers in Africa said that some of the major  manufacturers doing business in AGOA countries have stated that they  would move production to Bangladesh or Cambodia if these countries are  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-SSA  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 other  regions. Panelists suggested an option for simplifying rules of origin  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 high- value shirts in one AGOA beneficiary with collars and cuffs produced in a  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 outside  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 programs  and free trade agreements to allow apparel made with SSA fabric to  qualify for duty-free treatment in the United States. Similarly, one panelist  representing companies that produce in Africa noted that the U.S.- Morocco Free Trade Agreement could theoretically be modified to provide  duty-free benefits for textile and apparel items produced with inputs AGOA countries. However, other panelists indicated such changes to m existing free trade agreements would have minimal impact on the  competitiveness of AGOA producers. They noted that, due to the small  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 consideration.
section_title: Expert Panel’s Options for Congressional Consideration of U.S. Government Measures t Competitiveness of the Textile and Apparel Inputs Sector in AGOA Beneficiary Countries
paragraphs: As part of our review, we consulted with experts on measures the U.S.  he  government could take to help increase investment in and improve tcompetitiveness of textile and apparel inputs production in SSA, beyond d  changes to AGOA. Based on our review of the ITC study and other relate research, and in consultation with trade and industry experts,  n  identified five issue areas in which the U.S. government could take actio n  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,  hese issue  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 extremely high priorities for Congress to consider. Many of the experts we  c competitiveness of the textile and apparel inputs indus try in the region.  Furthermore, they consider it necessary to address problems that affect  competitiveness of the industry to maximize the benefits of AGOA. A m detailed description of the issue area and accompanying options is  presented below.
subsections: section_title: Issues Related to Infrastructure Development
paragraphs: The options considered under this issue area were to:  ealign U.S. trade policy and programs to support infrastructure and  energy development in Africa to ensure 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. eauthorize the Millennium Challenge Corporation (MCC) and adjust the  legislation to allow more private-sector involvement, create regional  compacts, and extend the duration of compacts. reate 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 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 general  agreement among experts we consulted, the ITC study, and other  literature we reviewed that inadequate infrastructure is one of the main  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 by  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 unreliable  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 clean  water in many SSA countries affects the production of textile and apparel  inputs. Dyeing fabrics requires the use of clean water, which is  contaminated in the process. Wastewater treatment capabilities are thus  necessary 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  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. Delays  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 how  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, 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  f  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 tric  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 sector interest in developing energy facilities in Ethiopia; however, there is  a investment. Based on this discussion, panelists ranked the option on   which provides a significant level of  licy.
Currently, 10 SSA countries have compacts with MCC. reauthorizing MCC and encouraging programmatic coordination for  infrastructure development as extremely high priorities for congressional  consideration.
section_title: Issues Related to TCB Assistance
paragraphs: he options considered under this issue area were to:    Reauthorize the Africa Global Competitiveness Initiative to provide  funding for U.S. Agency for International Development (USAID) trade  hubs to provide TCB assistance to SSA.
Provide resources to USAID trade hubs designated for TCB assistan address the competitive disadvantages the textile and appa sector faces by implementing business solutions and increased marketing.
Align U.S. TCB and development assistance with AGOA to ensure that addresses the competitive challenges and industries, such as the textile and apparel inputs industry.
Increase and promote organic production and fair labor and trade  practices t ro improve SSA countries’ potential to attract international  etailers that emphasize these practices.
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 TCB 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 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  e consulted to be a key component of improving the  previously reported, funding for this type of assistance is not provided  under the act.
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 r  reauthorizing this initiative to provide funding for the regional trade hubs,  one government official noted that congressional reauthorization doe s not  mean that funding will be provided. Funding would need to be prov ided  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 el  producers throughout Africa and a cross-section of the apparel industry  doing business in the region. Acc such an event resulted in an estimated $8 million in new trade deals.  Industry sources indicated that greater TCB assistance for the textile and  apparel inputs sector is needed.  ording to a USAID fact sheet, in 2007,  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 on.  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  try’s  ts of  problems. A panelist representing textile and apparel producers in Africa indicated that better coordination is needed between U.S. government  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  apparel industry, more assistance should be given to the African cotton  industry. Also, for SSA countries to compete in the global market,  assistance should be given to promote organic production and fair labor  and trade practices, which may attract global retailers that emphasize  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 congressional consideration.
section_title: Issues Related to U.S. Government International Finance Entities
paragraphs: 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 apparel inputs production in SSA countries.
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  ing  .  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  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  t  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 consider making available an equity fund that could co-invest with local  and foreign investors in projects in the textile and apparel sectors.  ested that U.S. policymakers  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 for  the SSA textile and apparel inputs industry.
section_title: Issues Related to SSA Regional Integration
paragraphs: 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. lace a higher priority on support of regional economic programs in U.S.  development programs. lace a higher priority on regional efforts under U.S. development  programs, such as the African Global Competitiveness Initiative and M to encourage economic integration.
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  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  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 energy  networks.
section_title: Issues Related to Unfair Trade Practices of AGOA Competitors
paragraphs: he options considered under this issue area were to:  Increase U.S. resources to expand monitoring and en regarding export subsidies and other unfair trade practices related to  textile and apparel imports. onitor U.S. imports of Chinese textile and apparel to expedite self- initiation of dumping and countervailing duty cases.
Apply pressure to deter Chinese intellectual property violations related to  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 development and  competitiveness of African textile and apparel industries. However, if  other competitors access the U.S. market while employing trade practices  ssions with   in  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.
section_title: Conclusion
paragraphs: This report is intended to provide Congress a range of options put forward  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  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,  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  n the economic opportunities presented by trade  reforms to capitalize o preference programs.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided courtesy copies of the draft report to USTR and ITC, but did  not request official comments. USTR and ITC staff provided informal  technical comments, which we incorporated in the report as appropriate.
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  of  the Overseas Private Investment Corporation. This report will also  be  available at no charge on GAO’s Web site at http://www.gao.gov.
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  listed in appendix V.
section_title: Appendix I: Scope and Methodology
paragraphs: 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  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  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.
section_title: Appendix II: Panel’s Options for Possible Changes to AGOA or Other U.S. Trade Preference Programs
subsections: section_title: Issues related to extending the duration of AGOA provisions and making AGOA permanent
paragraphs: 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.
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.
section_title: Issues related to expanding AGOA LDC benefits to all beneficiaries and to improving use of AGOA
paragraphs: 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.
section_title: Issues related to creating non-punitive and voluntary incentives
paragraphs: 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.
section_title: Issues related to preserving existing benefits under AGOA and modifying other preference programs and trade agreements
paragraphs: 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.
section_title: Appendix III: Panel’s Options for Other Possible Measures to Support SSA Textile and Apparel Sector
subsections: section_title: Issues related to infrastructure development
paragraphs: 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.
section_title: Issues related to trade capacity building (TCB) assistance
paragraphs: 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.
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.
section_title: Issues related to U.S. government international finance entities
paragraphs: 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.
section_title: Issues related to SSA regional integration
paragraphs: 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.
Create incentives for countries to participate in regional economic  communities.
Support a general capital increase for the African Development Bank.
section_title: Issues related to unfair trade practices of AGOA competitors
paragraphs: 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 self- initiation of dumping and countervailing duty cases.
Apply pressure to deter Chinese intellectual property violations related to  African ethnic textile designs.
section_title: Appendix IV: Further Details about the Panel Ranking Exercises
paragraphs: 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  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.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: 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.