than in 2004. This increase reflects a 25% increase in the quantity of coffee exports and a 40% increase in the average price of Rwandan coffee exported to the EU.

However, the industry still faces a number of challenges, for which further aid for trade will be needed, including: _access to finance_ (donors are already providing some support and funding to streamline rural finance among producers’ organizations); _access to low-cost transport_ (the cost of transporting coffee from the farm gate to the port is 80% of the amount received by the coffee farmer and major upgrading of transport infrastructure is needed); _access to training_ (around half a million Rwandan farmers need extensive training in all aspects of coffee production, but there are few agronomists); and _developing associations and cooperatives_ (technical assistance is needed to strengthen coffee farmer cooperatives and to form an overall industry association, along with reform of unclear government regulations). Diop et al (2005) demonstrate how dealing with these constraints could have a profound impact on rural incomes and poverty in Rwanda.

Source: World Bank-IF, 2005 Rwanda _: Diagnostic Trade Integration Study,_ Washington: World Bank.

# **9. Conclusions**

This paper concludes that, while AGOA has played an important role in stimulating apparel activities in a small group of countries, its broader impact on the exports of Sub-Saharan African countries would be enhanced if

- Preferences were extended to all products. This means removing tariff barriers to a range of agricultural products and to textiles and a number of other manufactured products.

- There is a fundamental change in approach to the rules of origin. Given the stage of development and economic size of Sub-Saharan Africa, non-restrictive rules of origin are crucial. An appropriate rule is an across the board (including apparel) requirement that 10 percent of the value of the product be added in the beneficiary, supported by the option of being able to satisfy a change of tariff sub-heading requirement. This will allow flexibility in sourcing inputs and the basis for long-term competitiveness. It will further promote exports to the US and is more likely to support regional integration than the use of more restrictive rules which act to dampen the activities of final goods producers. There is an immediate need to review the provisions concerning the rules of origin for apparel. The diminution in October 2006 and then removal in 2007 of the third country fabric provisions will seriously undermine the apparel sectors in a number of African beneficiaries and remove the opportunity for other countries to diversify their exports.

It is important that AGOA trade preferences be put into an appropriate development framework. For all countries in Africa, those that have and those that have not benefited from preferences, there are enormous infrastructure weaknesses and often extremely adverse policy environments that raise trade costs and push African producers further away from international markets. Effective trade preferences (those with non-restrictive rules of origin) can provide a limited window of opportunity to export while these key barriers to trade are addressed. But dealing with the barriers is the priority.

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