Trade preference programs were instituted by several advanced economies in the 1970s as temporary measures to help developing countries pursue economic growth and development by increasing exports and diversifying their economies. Trade preferences, which reduce tariffs, or duties, for many products from eligible countries, are “nonreciprocal”—i.e., granted unilaterally, without requiring reciprocal liberalization for U.S. goods for countries receiving them. In 1968, the United States supported a United Nations (UN) resolution to establish a mutually acceptable system of preferences. To permit the implementation of the generalized preferences, in June 1971, developed countries, including the United States, were granted a 10-year waiver from their obligations under the global trading system, now embodied in the WTO, to trade on a most favored nation (MFN) basis. Following the granting of this waiver, developed countries created Generalized System of Preferences (GSP) programs, and Congress enacted the U.S. GSP program in January 1975. At the 1979 conclusion of the Tokyo Round of Multilateral Trade Negotiations, an agreement with no expiration date (known as the Enabling Clause) replaced the waiver. As they developed economically, beneficiary countries were to eventually move on from unilateral preferences and participate more fully in the global trade system, including by undertaking reciprocal trade commitments to liberalize their own markets. Under U.S. law, the AGOA program is linked to the GSP program in several important ways. For example, some of the authorities and limitations on what products can be included in the program are based on or relate to GSP, and country eligibility for AGOA involves first being eligible for GSP. But at the WTO, because the Enabling Clause applies to preference regimes that are “generalized, non-reciprocal, and non-discriminatory,” a separate U.S. waiver was sought for AGOA, as well as other regional preference programs. Despite relatively rapid economic growth in developing countries, developed countries have reformed and extended their programs and the number of preference programs has grown. The WTO’s 2014 World Trade Report shows that, over the 2000-2012 period, developing countries grew faster than developed countries, and now account for nearly half of world exports. Since 2010, Japan, the EU, and Canada have reformed and extended most of their preference programs. Congress recently passed legislation to extend AGOA and other U.S. preference programs by 10 years. Developed countries had already added more generous preferences for least developed countries (LDC) to their GSP programs by the mid-2000s, and some key developing countries have since introduced new trade preferences targeted at LDCs, including some in sub-Saharan Africa. For example, both China and India have established LDC programs in the last decade. These programs are part of broader strategies to strengthen commercial ties, according to Chinese government and international organization documents. According to the WTO, there are now a total of 27 preferential trade programs. They can be categorized into three types: GSP programs, which were put in place by developed countries to help all developing countries. Developed countries’ GSP programs also include subprograms, GSP-LDC, that offer least developed countries more generous preferences than the other GSP beneficiaries. LDC-specific programs (LDC programs), which were put in place by developing countries to help least-developed countries. Other preferential trade arrangements, which are offered by developed countries and focus on a particular country or subset of developing countries within a particular region. Seventeen countries or groups of countries, such as the EU and the Russian Federation, have GSP or LDC programs not restricted to a region.provider, and date of initial entry into force. Various factors can affect the performance of a trade preference program. These factors can be either (1) internal to the program, being key characteristics of the program itself, or (2) external to the program, being specific to the country or region in which the program is operating. Key program characteristics that can affect trade preference programs’ performance include the following: country eligibility, or the ability of a country to qualify for participation in the program; product coverage, which delineates products that may receive tariff rules of origin, which ensure that benefits of a preference program accrue to intended recipients by specifying a proportion of an imported product’s value that must be produced in the preference beneficiary country. The nature of these characteristics directly conditions whether developing country exporters can utilize trade preference program benefits. Trade experts also note that there are a range of factors external to trade preference programs and intrinsic to each recipient country that can also affect trade preference program performance. These include infrastructure—whether the country has adequate transportation, communication, and energy networks available to producers and exporters; governance, or the legal, regulatory and policy environment conducive to promoting market activity and international trade; regional integration—a country’s ability to engage in commerce and production with neighboring countries to facilitate supply chains and movement of goods to market; and access to finance to support investment and production. Success in improving on these development-related factors within preference beneficiary countries can make them more ready to meet the challenges and access the benefits of global integration. U.S. agencies provided over $5 billion in the 2001-2013 period to bolster AGOA countries’ capacity to engage in and benefit from trade. Other factors are also important drivers of trade between particular partners. Notably, trade experts have stated that factors such as the relative size of each country’s economy, respective rates of economic growth, geographic proximity, and cultural and historic ties between countries affect trade levels and are—in some cases—at least as important as program characteristics. The United States is one of the major markets for AGOA countries’ exports, but its rank among SSA’s export markets has declined as those of China and India have risen. Figure 1 shows the total amount of exports from AGOA countries to their major trading partners from 2010 to 2014. While the total dollar value of exports to many of the AGOA countries’ major trading partners decreased in 2013, in part because of falling commodity prices, the EU remained by far the largest market for AGOA country exports. AGOA country exports to the United States fell significantly after 2011 while AGOA country exports to China and India grew. As a result, by 2014, both China and India outranked the United States as AGOA country export markets. Other major export markets for AGOA countries include Brazil, Japan, South Korea, Australia, and Canada. AGOA has several notable differences from and similarities to other countries’ nonreciprocal trade preference programs, including programs in Canada, China, the EU, and India. (See app. II for a comparison of key characteristics of selected trade preference programs by country.) Available studies of AGOA and the EU’s preference programs suggest that these differences have affected program performance in terms of creating new trade flows (trade creation), increasing the range of products that are traded (diversification), and program utilization. AGOA’s country eligibility requirements are unique among those of other countries’ preference programs, in terms of geographic focus, income eligibility thresholds, and other policy and procedural requirements. Therefore, some countries that are eligible for AGOA are not eligible for other developed countries’ programs, whereas some countries deemed ineligible for AGOA receive preferences in China and India. (App. III shows the eligibility of SSA countries for selected trade preference programs by country.) Unlike most trade preference programs offered by other countries, AGOA restricts eligibility for participation to SSA countries. Of the 27 preferential trade arrangements in existence, 10 are specific to a region or country. The remaining 17 trade preference programs are not restricted to a region. Of the 10 regionally focused programs, only 2, AGOA and Morocco’s duty-free treatment for African LDCs, are specific to sub- Saharan Africa; the other 8 provide preferential benefits to other regions Table 2 compares the total number of countries and total or countries.number of SSA countries eligible for AGOA and selected GSP-LDC and LDC trade preference programs. The United States’ AGOA, followed by the GSP-LDC program in several developed countries, serve the most SSA countries. The income threshold for a country to be eligible for AGOA is less restrictive than the threshold for other developed countries’ trade preference programs based on income classifications determined by the World Bank and the United Nations. Countries may be eligible for AGOA (or the U.S. GSP) unless they are classified by the World Bank as high- income countries. In addition, to determine whether to designate an eligible country as a beneficiary country, the President also considers the economic development, per capita gross national product, living standards, and other economic factors deemed appropriate. AGOA coverage ranges from the poorest countries to those that are more economically advanced and is not limited to only LDCs. Some developed countries, such as those in the EU and Canada, base eligibility for their GSP programs on more restrictive income thresholds than AGOA. Previously, both the EU and Canada considered countries classified as “upper-middle-income” by the World Bank as eligible for their programs. However, after revising the programs, both the EU and Canada began to graduate from their programs upper-middle-income countries classified as such for at least 3 years for the EU and 2 years for Canada. For example, Gabon, Mauritius, and South Africa are eligible for benefits under AGOA but are no longer eligible for benefits or have graduated under the EU and Canadian GSP programs. All of the developing countries’ programs also have more restrictive income eligibility thresholds than AGOA, as they focus exclusively on LDCs. Notably, China and India, two of Africa’s most rapidly growing export markets in Asia, have both put in place preference programs for LDCs, with many African nations among the beneficiaries.