africa: AGOA - an instrument of the US ruling class

RELATED LINKS:

* AFRICA: AFRICA AND US TRADE MEETING
http://www.africapulse.org/index.php?action=viewarticle&articleid=821

* MAURITIUS: SOME PROGRESS, SOME UNCERTAINTIES AHEAD OF AGOA FORUM
http://allafrica.com/stories/200301100427.html

Attention Friends and Colleagues in Africa and other countries.

We have the pleasure in sending you an essay on AGOA, written by Rajni
Lallah of Lalit, Mauritius, in the context of the AGOA Business and Head of
States Forum being held in Mauritius in January 2003. This essay is a must
for any thinking citizen wishing to understand AGOA outside the prism of
mainstream propaganda. The essay can be published or circulated to your
friends and contacts via emails.

This essay is from the newly launched book "Diego Garcia in Times of
Globalisation" written by Lalit and published by LPT.

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Welcomed by the bourgeoisie in South Africa and Mauritius
AGOA - an instrument of the US ruling class

The US African Growth and Opportunity Act (AGOA) is directly linked to the
question of the US base on Diego Garcia. Mauritius is immediately brought to
heel, like a pet poodle, when its representative at the UN intimates that
Mauritius may not support the US resolution on Iraq. (B-2's and B-52's set
off from Diego Garcia for attacking Iraq.) The AGOA condition about
submitting to US foreign policy is quoted in the press here, as a reason for
cow towing. Not only that, AGOA is becoming an important link to all
kinds of events on the political and economic scene in Mauritius.
Privatisation, liberalisation, the government voting a "Prevention of
Terrorism Act", factory closures, delocalisation, all these events are
connected in one way or another to AGOA. This article explains how and why.

The US has acquired a new colonial device to get African States to submit to
US imperialist rule, with the active support of African ruling classes. The
US African Growth and Opportunity Act (AGOA), enacted in the year 2000
(after literally years of trying to get it through) , gives President Bush
king-size powers to decide which African State he will open the US market
to, and which African State he will close the US market to. AGOA is ridden
with conditionalities that African States have to submit to in order for
President Bush to favour them by opening the US market to their capitalists'
goods and services. At least once every two years, under AGOA, President
Bush calls in African States that he deems "eligible" to an AGOA Forum to
tell them what he thinks their political and economic agenda should be. This
colonial performance is what the Mauritian government is congratulating
itself on hosting in January 2003.

When President Bush announced he would not be at the World Summit on
Sustainable Development (WSSD) in South Africa, he also added that he was
planning a visit to Africa in January 2003. Clearly, President Bush believes
the AGOA forum to be more of a priority than world sustainable development.
An "AGOA business forum" is also being held at the same time as the official
"AGOA Forum" in January. At this second Forum US businessmen will be looking
for African "brokers" to facilitate their implantation in those African
States labelled "eligible" by President Bush. The Mauritian private sector
is eagerly offering itself as the African "broker" for US multinationals.
This is why the Mauritian ruling class has been tripping over its own feet
as it's in such a hurry to get the AGOA business forum going. The United
States Information Service (USIS) has been funding programs all over Africa
to explain how AGOA can be used to create "Public-Private Partnerships" (the
latest fashion in privatisation) in African countries. The USIS is also
explaining how to use AGOA for "matchmaking" (their term) between African
and American capitalists.

US business and African capitalists see in AGOA, growth and opportunity for
themselves, and are busy negotiating joint ventures in regions of Africa
where working people have less social and economic rights and where wages
are the lowest. In countries like Mauritius or South Africa, there are
massive delocalisation plans in process that will downslide wages, working
conditions, and social and economic conditions of all the peoples of Africa.

Where the US African Growth and Opportunity Act (AGOA) comes from

AGOA has had many names. These last years, it has been called the Africa
Bill, the African Growth and Opportunity Bill, the Africa Act or the Trade
and Tariff Act. The voted version is now known as the African Growth and
Opportunity Act (AGOA) and is part of a law called the Trade and
Development Act of 2000. It has had so many names partly because it was so
unpopular that each time it got defeated in the US Congress, it had to be
re-introduced by another name. It has taken several years for AGOA to be
enacted. The US ruling classes have been persistent in pushing through AGOA
because it is so central for the US imperialist strategy that dates from the
1990's.

In the 1990's, there was a major shift in US policy towards Africa. The US
decided to make Africa a new zone for US capitalist implantation. This was
clearly announced by the late Commerce Secretary Ron Brown of the Clinton
administration in 1995 . The Clinton Administration Record quotes Ron
Brown: " the United States would no longer concede the African market to
former colonial powers."

Clinton's regime had two over-arching, long-term policy goals . Firstly, it
was in favour of US business interests. What the US wanted was to implant
US multinationals in Africa for them to control the rich natural and mineral
resources including oil, gold, copper, diamonds, and for them to get a
larger share of the African market. The Clinton Record refers to this goal
in terms of accelerating Africa's "integration into the global economy"
which would "advance American commercial interests through an invigorated
emphasis on trade and investment". The second US policy goal was to get a
firmer military hold on Africa. The Clinton Record refers to this goal as
addressing "security threats" emanating from Africa. AGOA is based on both
these US long-term policy goals: it imposes conditionalities that dictate
economic policy in Africa so that US multinationals can operate lucratively
and at the same time, coerces African States into supporting US foreign
policy and "national security" interests. Ever since George W Bush was
installed as US President, AGOA has become an instrument that perfectly
addresses the needs of his regimes' aggressive military policies.

What does AGOA mean?

This law means that up till September 2008, the US President, just like a
King, can open the gates of the US market to African goods and services from
48 African States, but will do so only if they accept US conditionalities.
In AGOA, overt conditionalities are referred to as "eligibility
requirements". Up to now, the US President has "declared" 36 African
countries "eligible". AGOA "eligibility requirements" are actually being
used by President Bush to close the US market to goods and services coming
from nine "non-eligible" African countries: Angola, Burkina Faso, Burundi,
the Democratic Republic of Congo, Equatorial Guinea, Gambia, Liberia, Togo
and Zimbabwe. Sudan, Somalia and the Comoros have not sought the
"eligibility" favour from the US President, so, they have escaped AGOA's
zone of influence. Since AGOA has been enacted, the US President has
presented two annual reports to the US Congress which actually includes a
country-by-country report on whether African States are observing AGOA
conditionalities or not.

The United States government constantly harps on the need for the rest of
the world to give capitalism a free rein. It wants, in the long-run, to
transform everything, from goods to services, from water to the land, into
commodities that are bought and sold for profit, without taxes, without
regulations, without any public or democratic control. This is what it calls
the "free-market". When it comes to its own market, the United States is not
inclined to subscribe to "free-market" policy - it adopts protectionist
policies in the interest of US capitalists that do not want their profit
restrained by the entry of cheaper goods and services into the US market.

Supporters of AGOA acclaim it as being some kind of new "Lomé Convention"
for Africa. Strangely enough, these supporters refrain from mentioning that
"free" access of goods and services into the US market (as any other
market), without conditionalities being attached, is due very soon in any
case. The US is part of the World Trade Organisation (WTO) and is supposed
to be committed, like other countries in the WTO, to opening its market
without any conditionalities being imposed. Other protectionist agreements
outside the WTO are also on the way out. The Multifibre Agreement, for
instance, is suppose to be phased out in 2004. So why do our Governments
accept all the conditionalities in AGOA, when the US market is supposed to
have no gates soon, anyway? We do not know.

There are many conditionalities. Some are overt ones called "eligibility"
requirements in AGOA, and others are covert ones, that are implied by the
AGOA law. Let us look at just a few of them.

AGOA says: "Accept the US President as your King"

AGOA transforms the US President into a King with an empire in Africa. It is
the US President who decides which African country to open or close the US
market to. It is the US President who decides whether African countries are
following AGOA conditionalities or not. It is the US President who orders
African Heads of States to an AGOA Forum at least once every two years. It
is he who decides when and where to call them to. It is the US President who
also decides which goods and services from which countries he will give
duty-free treatment to. If the US President decides that an African country
is not in line with AGOA conditionalities, he can close the US market to
that country. The US Congress has given itself so much power that it can
now decide which African country is "poor" or not. The US Congress has just
amended AGOA (referred to as AGOA II), to give Botswana and Namibia "poor
country" status even though the US barometer used in the first version of
AGOA does not classify these two countries as being "poor".

Another important point concerning AGOA is the procedure used for its
establishment. AGOA is not a multilateral agreement negotiated between the
US and African countries. It was unilaterally imposed by the US. It was
proposed by the US President and voted in by the US Congress. This US law is
a kind of "extra-territorial" legislation, as if Africa was a US colony.

Many African countries in Northern Africa (West Sahara, Algeria, Tunisia,
Morocco, Libya and Egypt) do not fall under the AGOA "zone of influence".
The colonial "carving up" of Africa lives on: the US can now, if it is not
stopped, establish its own "colonies" in Africa that will be governed by
AGOA.

AGOA says: "You must follow US foreign policy"

AGOA crudely states that African States, in order to fulfill requirements
for eligibility, must not "engage in activities that undermine United States
national security or foreign policy interests" . This "conditionality" is
real: it has already been used by President Bush. Burkina Faso has been
refused "eligibility" under AGOA partly because it does not submit to US
foreign policy. The US President's May 2002 AGOA report to the US Congress
specifically mentions this under the heading "US National Security and
Foreign Policy Interest". In this section, the US President states that
"Burkina Faso has played an unhelpful role regionally, undermining stability
and US foreign policy interests".

Already, Mauritius is feeling the weight of this conditionality. Since the
passing of AGOA, the Mauritian government has unconditionally backed the US
attack on Afghanistan, has blindly followed the US lead in voting through
the Prevention of Terrorism Act, and is now shamelessly poised to support US
warlords in aggressing the people of Iraq.

As the US pushed hard to get the UN Security Council to follow its
war-mongering lead, the Mauritian government took the decision to support
the key US resolution in the build-up towards attacking Iraq. This decision
was made, according to Raj Meetarbhan of L'Express , after Mauritian
Ambassador Koonjul in Washington signified the Mauritian government's
intention not to vote for the US resolution. It must be said that a few days
earlier, Le Mauricien had reported Prime Minister Jugnauth as asserting, on
the question of Iraq, that he was "confident that a diplomatic way out is
still possible and that war can be averted." He was quoted from his message
on the occasion of the 57th anniversary of the United Nations.

After the government's new decision on the US resolution to be brought to
the UN Security Council, Foreign Affairs Minister Gayan was quoted by Raj
Meetarbhan as saying that the government must not "put the country's
interests in peril" . It is not the "country's" interests he is talking
about: he is talking about the interests of the Mauritian capitalist class
that wants juicy tidbits out of AGOA. Even if it means the loss of thousands
of lives in Iraq. Even if it means the dispossessing of peoples' means of
livelihood in Mauritius and all over Africa. Even if it means the loss of
peoples' basic fundamental rights. Typically, Raj Meetarbhan of L'Express,
true to his tradition of mouth-piecing for Mauritian capitalists and their
regime, qualified Ambassador Koonjul's resistance to savage US cowboy-style
intervention, a "diplomatic blunder".

It must also be said that ever since AGOA was still a Bill, the press in
Mauritius has persistently avoided commenting the fact that AGOA contains
stringent conditionalities. For the first time, as if conditionalities in
AGOA were the most normal thing, the press is now pointing to
conditionalities in AGOA. Raj Meetarbhan of L'Express even quotes the
section in AGOA about how African countries must not go against US national
security policy and foreign policy.

AGOA says: "Protect US national security over security of peoples of Africa
and the rest of the world"

The Mauritian ruling class does not care a whit about Mauritian people's
real national security. It is willing to sacrifice this just to let people
like Mr. Vigier de la Tour sell a few T-shirts and shorts on the US market.
It has supported AGOA and lobbied intensively for other African countries to
accept all its conditionalities even though AGOA might imperil the struggle
to close down the US military base on Diego Garcia, part of the Republic of
Mauritius. Or even other bases in Africa such as the US military base in
Kenya. In Kenya, the US occupies an air base which was used in the attack
against Afghanistan after the 11th of September, 2001. In Mauritius, the
United States occupies a military base on Diego Garcia, an island illegally
dismembered from Mauritius by the United Kingdom during independence
negotiations in the 1960's. This island was "depopulated" by UK-US in order
to transform it into a military base. The Mauritian people living there were
forcibly removed to the main island of Mauritius and to the Seychelles. The
base has subsequently been used to bomb Iraq in 1991 during the "Gulf war",
to bomb people in Afghanistan last year, and is now to be the USA's main
launching pad to bomb people in Iraq yet again. AGOA, and new US policy in
Africa has very serious implications for the struggle to close down the US
base on Diego Garcia, other US bases in Africa and for the struggle to
demilitarise the whole African and Indian Ocean region.

AGOA and Diego Garcia

Since independence, the struggle for the closing-down of the US base on
Diego Garcia and the re-unification of the Chagos with the rest of Mauritius
has often been used by the Mauritian State as a negotiating point for
"trade" on behalf of the Mauritian capitalist class. This sordid deal has
now become "institutionalised" in AGOA: the Mauritian State's silence on the
closure of the US base in return for the entry of Mauritian capitalists'
goods and services into the US market. Mauritian capitalists and their State
were so eager to get AGOA passed by US congress, that they undertook to get
other African States in the region (through regional blocks such as COMESA ,
the SADC and the now defunct OAU ), to lobby for support to encourage the
US Congress to pass AGOA with all its conditionalities.

AGOA can now be used as an instrument to keep the US base on Diego Garcia
intact for what the US would probably call its "national security or foreign
policy interests". Particularly in the interests of its multinationals in
the oil and armament business. The new Bush regime is aggressively using
AGOA to secure these interests through military means. In the first United
States-Sub-Saharan Africa Trade and Economic Cooperation Forum held in
October 2001, barely a month after the 11th of September, President Bush
made it quite clear what he thought African States' political priorities
should be: to follow the US lead in combating US-defined "terrorism"
including providing "the basing and overflight rights (.) by African
countries", show commitment to "cracking down on terrorist financing", and
ratify the 1999 Algiers Convention Against Terrorism. Of course, President
Bush failed to mention that it is the US Government which is the only one
ever found guilty of "terrorism" by the World Court on Nicaragua.

President Bush also made it clear that African States should change their
stand after the WTO Conference in Seattle held in 1999. In the Seattle
Conference, African States, acting as a block, managed to oppose new rounds
that would have further entrenched the world into capitalist rule. This is
why President Bush was so concerned about getting African States to stop
this kind of resistance. He told African States represented at the 1st AGOA
Forum that they should become "a powerful voice for the launch of a new
round of global trade talks in Doha, due to begin next month." The
quasi-ultimatum of President Bush was hardly veiled; at this forum; he said
in very clear terms: "Every nation that adopts this vision will find in
America a trading partner, an investor, and a friend." If they did not
accept the US vision, he would close the US market to them.

Of Oil, US militarisation and AGOA

There has been a growing interest by the US ruling class in African oil.
Africa already provides some 15% of US crude oil imports. This is likely to
increase still more through new production in West Africa and the
construction of a pipeline linking southern Chad to Atlantic ports. In
addition, there have been recently discovered offshore reserves on the West
African coast. Particularly after the 11th of September events, Africa has
become of key strategic importance to the US ruling class. The US no longer
wants to be dependent on countries like Saudi Arabia, an ally that is not
giving unconditional support to the US. The US wants to accentuate its
strategy to increase its oil supply from Africa as it prepares for a US
invasion of Iraq. At the same time, what US oil multinationals are
clamouring for, is for the US to step up pressure for African States to give
them "legally protected land ownership" i.e. to privatise land, and give US
multinationals the land titles. They also want the US military to secure
their operations in Africa. A New York Times article has made this public
knowledge. The article, explaining how Africa has become strategically
important for the US because of its oil, states quite clearly "There has
also been discussion in Congress and the Pentagon about increasing military
exchanges with West African countries and perhaps establishing a military
base in the region, possibly on São Tomé, an island nation in the Gulf of
Guinea".

The new US strategy for oil in Africa would also have the effect of breaking
up the Organisation of Petroleum Exporting Countries (OPEC), the Middle
East-centred oil cartel that has considerable control over oil production
and prices. The New York Times article mentions that Gabon was an OPEC
member but quit in 1995, and that now, Nigeria is considering quitting OPEC.
The hacking up of OPEC would greatly enhance US oil multinationals' power in
the oil industry.

There is a strong Israel-based lobby allied to the US oil industry lobby
that wants the US to use AGOA to open up West Africa to the US oil industry,
and to secure this hold by setting up a military base on Sao Tome and
Principe in West Africa. This lobby even has a name. It is called the
African Oil Policy Initiative Group. This working group grew out of a
symposium held in Washington, in January 2002, organised by the Institute
for Advanced Strategic & Political Studies (IASPS)) which describes itself
as a "Jerusalem-based think tank".

In a document produced by this "think-tank", they have quoted declarations
made by the Chairman of the U.S. House of Representatives Subcommittee on
Africa, Ed Royce, linking the US oil strategy to both AGOA and also to the
New Economic Partnership for African Development (a plan generally known as
NEPAD, concocted by a few African Presidents to open up Africa to global
capitalism). Both AGOA and NEPAD are seen as being instruments to ensure US
control over African oil. Note that NEPAD is to be one of the main themes
discussed in the official AGOA Forum.

AGOA imposes economic dictatorship

One of the conditionalities in AGOA is that African countries must have a
"market economy" in order to qualify for "eligibility". This means that the
whole economy must operate on a profit-basis. Even basic services such as
health, education, pensions, water, electricity, telecommunications,
transport, and other social services must be transformed into "commodities"
sold by capitalist business-operations. Measures to re-distribute wealth and
to restrict class inequality such as taxes on companies, on capitalists, on
business operations, must be gradually scrapped until they disappear
altogether. This is an AGOA condition. A completely "free-market", one where
democratic control does not exist, because everything is run by private
companies. In Mauritius, as in many African countries, there has been
intense resistance against such a system. In the 1970's, the IMF-WB
(International Monetary Fund - World Bank) tried to get the government to
impose such a system on Mauritius, but people opposed this so much, that the
government fortunately failed to impose key measures in the IMF-WB
programme. And strong opposition has continued in the trade union movement
until today, thus slowing down the move towards privatising everything.

AGOA says: "Sell off everything that is public-owned"

Another condition is that people cannot own and control anything
collectively. This is what the public sector was supposed to be: the people
owning, running and controlling sectors of the economy. In nationalised
sectors, public ownership and control was already far too limited in that it
was, in practice, governments and their bureaucrats who exercised control.
It was not, even at its best, workers and service-users who exercised
control. However limited this form of control, the possibility of people
organising and taking democratic control over the public sector remains an
open one. What privatisation does is to make it much more difficult to
regain any democratic control. It is a form of dispossessing of our
collective heritage.

In African countries, the public sector's expansion was a means of
decolonisation to stop foreign companies and their governments from
controlling strategic sectors of the economy, and whisking away all the
profits. Privatisation wipes away the historic progress in terms of
decolonisation and exposes African countries to re-colonisation.

AGOA says: "Remove subsidies"

Yet another condition is that African States must eliminate subsidies
altogether. This includes subsidies to ensure food security: subsidies on
basic food such as rice and flour, subsidies on medicine, on vaccines, on
contraception. Subsidies on agriculture for small-scale planters and
farmers, subsidies on fishing, on animal farming; subsidies that are vital
to the lives of many, many people in Africa will have to be wiped out.
Subsidies on export-oriented industry will have to be removed. The US ruling
class wants African States to eradicate subsidies stimulating local
production so as to decrease importation. It wants to remove all other
subsidies that were part of the de-colonisation process altogether.

AGOA says: "Eliminate Price Control"

Withdrawal of price control is included as another conditionality. The
ruling class does not even want price control over the most basic of goods
and services. It does not care a whit if water, electricity, staple foods,
that are essential for peoples' survival, are too expensive for poor people
to buy.
.

AGOA says: "Submit to foreign companies"

AGOA imposes on African States that they must give foreign capital the same
treatment and measures as national capital. In other words, key measures to
protect the sovereignty of African countries will be eradicated. Measures
such as giving subsidies for local production or putting taxes, duties or
tariffs on foreign goods to protect local production will no longer be
possible. It also means that governments, to protect employment, will no
longer be able to pass and enforce regulations on foreign firms that they
employ workers of that country. Governments will no longer be able to limit
foreign multinationals repatriating all their profit to their country of
origin. This conditionality has even more serious implications: governments
will no longer be able to stop foreign capitalists from actually buying
land. There is now a strong multinational lobby in the US that wants
governments around the world to sell them land, particularly where there are
precious mineral resources, or oil, and hand them over the land titles.
Since independence, laws protecting land and territorial integrity have been
vital in protecting independence and sovereignty of countries with a history
of colonisation. A State is defined partly by its territory. If governments
are able to sell off land to non-citizens and their companies, then this
could threaten independence itself.

The concept of "national treatment" for foreign companies was a key concept
of the "Multilateral Agreement on Investment" (MAI) concocted by the OECD ,
a clubbing up of governments in the richest States in the world. The MAI was
a kind of world-scale Constitution to give multinationals power over nation
States - they could sue States for voting laws and regulations to protect
the environment, workers' rights, to protect social services, strategic
sectors of the economy, or to protect sovereignty. Giving foreign companies
the same "treatment" as national ones, was part of the MAI agenda. The MAI
was defeated because it was so unpopular world-wide, but parts of it are
seeping into agreements and laws such as AGOA.

AGOA lowers wage rates and slashes work conditions in Africa

There are other specific conditionalities mentioned in AGOA that threaten
employment in countries like Mauritius, that are pushing down wage rates and
slashing up work conditions in the region.

AGOA imposes conditions on a country's imports

Under AGOA , the US will only open its market to garments made from yarn or
fabric produced and assembled in the US or an African country. This
concession was made by the US Congress to US capitalists in the textile
sector that saw AGOA as being a threat to the American textile business. The
only exception to this "rule" is in the case of "lesser-developed" African
countries. "Lesser-developed" African countries are defined in AGOA as those
with a per capita gross national product of less than $1,500 a year in 1998
(i.e. all "Sub-Saharan" African countries except Equatorial Guinea, Gabon,
Mauritius, Seychelles, and South Africa). In the case of "poor" countries,
the US will not be fussy about where the fabric and yarn come from. This
exception will only last up till the 30th September, 2004.

In Mauritius, there is no cotton grown, no yarn produced. So Free Zone
capitalists in the textile business have a pretext to close down local
textile assembly plants and re-open them in African countries either where
yarn or thread is produced. Or they can move to countries that fall under
the Special Rule for "lesser developed" African countries. There, they can
continue importing yarn and fabrics from Asia, where it is cheaper, and
export clothes, in certain cases, duty-free to the US. The biggest and
oldest textile plant, Floréal Knitwear, had already started sacking workers.
Almost 40% of its operations had been moved to Madagascar, before the
political crisis that occurred when there were Presidential elections in
Madagascar. Other factories followed suit. 100,000 jobs in the Free Zone are
under threat. In the run-up for the AGOA Business Forum in January 2003,
official State delegations from African countries such as Tanzania and
Madagascar are already coming to Mauritius in order to entice Mauritian
capitalists into delocalising their operations to these countries.

In Mauritius and South Africa, capitalists, particularly in the textile free
zone sector and in the sugar industry, were already poised to delocalise to
African countries where wages and work conditions are inferior to that of
Mauritius. The "Special Rule" for "lesser-developed" African countries is
accentuating delocalisation.

The irony about this "Special Rule" is that it is an incentive for African
countries to get poorer, instead of inducing countries to work towards
economic growth.

AGOA is a key "driver" in pushing wage rates and work conditions down in the
African region: business can move around to wherever in Africa wages are
lowest, trade union activity, the weakest, and oppressed people less
organised.

"Growth and Opportunity" for US business

The US, through AGOA, guarantees that the entry of African goods and
services into the US market will not cut into US business and profits. For
instance, whenever certain African textiles or apparel threatens the US
textile industry, the US President can suspend duty-free treatment. African
States have to conform to US directives on customs regulations so as to
satisfy the US textile companies. Officials of the US can even snoop around
in the Customs offices of African countries seeking AGOA eligibility, to
check whether they are conforming to US Customs directives.

Not only does AGOA aim to pry open the African market to US business by
imposing conditionalities, it also sets up a whole state bureaucracy in the
US to assist US multinational implantation in Africa. The US is also
subsidising its capitalist implantation into Africa. In the October 2001
AGOA forum, President Bush had already announced the creation of a $200
million Overseas Private Investment Corporation support facility to give
American firms "access to loans, guarantees and political risk insurance for
investment projects in sub-Sahara Africa."

Since AGOA was enacted, the USIS has been preparing the way for US
multinationals. It has been funding programs in Africa to explain how AGOA
can be used as "the jumping-off point to create public-private partnerships
in African countries and to establish matchmaking between African and
American entrepreneurs".

It is not surprising then, that so many profit-greedy US companies lobbied
hard to get AGOA through the US Congress (see Annex).

US administrative blockades disguised as "human rights" infringements

As a concession to the wave of resistance against conditionalities in AGOA,
the final version of the law contained a condition that African countries
must respect "labour rights" and other "human rights" in order to be
"eligible". The United States is renowned for interpreting "human rights" in
its own narrow imperialist interests. In Mauritius itself, the Industrial
Relations Act (IRA) makes the quasi-totality of workers' strikes illegal.
Yet the US does not treat this as an infringement of labour or human rights.
Or not yet. If the Mauritian representative at the UN does not follow the US
line, then perhaps they will suddenly see the IRA as an infringement of
human rights.

Customs definitions

The United States also interprets "eligibility" in a manner that corresponds
to its own interests. The US Customs refused duty-free entry of Mauritian
pullovers on the basis that they consisted of "Knit to Shape" that according
to them, do not fall under AGOA. This US Custom's stand came shortly after
the Mauritian government's announcement that it would formally re-iterate
its demand for the return of Diego Garcia to Mauritius.

Ironically, it was Floréal Knitwear, the Mauritian textile company that
lobbied the most for AGOA, that had its pullovers denied duty-free access!
Some weeks later, Mauritian garments were again refused duty-free entry into
the US because the material used to make the pockets came from Asia.
Mauritian capitalists and the Mauritian State had to run to the US
President, to get AGOA clauses revised in their favour.

And in August this year, after the Mauritian State backed the US bombing of
Afghanistan in the UN Security Council, after the Mauritian State passed the
"Prevention of Terrorism Act" this year, despite widespread opposition to
the extent that two Mauritian Presidents handed in their resignations
because of the attacks on human rights and sovereignty contained in this
repressive law, the US amended AGOA to satisfy Mauritian textile company
interests (AGOA II). Even after the passing of AGOA II, African capitalists
in the textile business are scared stiff of the law being reverted to stop
their Knit-to-Shape from getting into the US market duty-free. According to
L'Express, three US Senators are already challenging a Bill that proposes to
refund duty already paid on Knit-to-shape clothes from Africa as from
October 2000.

Since AGOA's apparition as a Bill, various viewpoints emanating from
different economic and political sectors in Africa and the US have been
expressed:

US and African Ruling Classes push for AGOA with all its conditionalities

AGOA, as we have seen, embodies the economic, political and military aims of
the US ruling class in Africa. No wonder it galvanised the support of so
many US multinationals, and was voted by both Democratic and Republican
members of the US Congress.

The Mauritian and Kenyan States were particularly active in pro-AGOA
lobbying work within COMESA. Ex-President Nelson Mandela, in the name of
the South African government, initially opposed conditionalities being
proposed in AGOA (when it was a still a Bill). This kind of State resistance
was quickly quelled through the intervention of US-backed African countries.
In the SADC conference held in Mauritius, the Mauritian PT-PMXD government
proposed that a pro-AGOA statement be adopted by the SADC - this was during
a crucial period when resistance against AGOA conditionalities within the
labour movement and peoples' organisations in Africa and in the US was
rising. African Ambassadors, including Mauritian Ambassador Jesseramsing in
the US also actively lobbied for the US Congress to adopt AGOA. Prime
Minister Navin Ramgoolam personally went to the United States to give his
unconditional support to AGOA.

No wonder the State of Mauritius, with US support, dislodged Sudan (the
officially OAU-backed African candidate) and made its unholy way into the UN
Security Council. The new Jugnauth-Berenger government took to AGOA with the
same ardour as the previous government. As a member of the UN Security
Council, the new Mauritian Foreign Affairs Minister Gayan backed the US-led
coalition's bombing of Afghanistan, called for the passing of laws to
"prevent" terrorism, which has been used as pretext for ruling classes in
various countries to pass repressive laws that whittle down fundamental
human rights. The Jugnauth-Berenger government is now meekly following
President Bush on his warpath to bomb Iraq, in case he takes offence and
closes the US market to Mauritian capitalists' goods and services.

Mauritian capitalists in the Textile Free Zone paid huge sums of money to
lobby for AGOA. Floréal Knitwear even delegated one of its officials, Mr.
Vigier de la Tour, to work full-time, gathering support in the US Congress
for AGOA. He worked hand in hand with the Mauritian State in this lobbying
operation. There was also a Mauritius-United States Business Council (MUSBA)
that lobbied for the adoption of the Bill.

Opposition to AGOA conditionalities in Africa, the US and internationally

In Africa, political organisations such as Lalit spear-headed the political
campaign against AGOA conditionalities. When Prime Minister Navin Ramgoolam
went to the US to support AGOA when it was still a Bill, Ram Seegobin, Lalit
member went to the US to expose AGOA conditionalities, and campaign against
them at the Open World Conference held in California, US, where
representatives of some 55 countries were present. There, there was also a
very strong delegation of the US trade-union movement. Within the African
labour movement, there was widespread resistance against AGOA
conditionalities particularly in Zimbabwe, Uganda and Mauritius.

In Mauritius, trade union leader Atma Shanto and Lalit member Ashok Subron
were publicly insulted when they opposed AGOA conditionalities in the name
of the labour movement united in the All Workers Conference. They were
qualified as being "indécrottable" (a derogatory French term) by Le
Mauricien editorialist, Gilbert Ahnee. Some time after, he invited Ram
Seegobin and Mr. Vigier de la Tour for a face-to-face debate on AGOA. Ram
Seegobin accepted this challenge debate at once. Mr. Vigier de la Tour
refused to debate AGOA, and fled.

The pan-African women's network Women in Law and Development in Africa
(WiLDAF) called on OAU Heads of States and US Senators to oppose AGOA
conditionalities. A wide range of African-based networks, including SAPSN ,
also took the same stand. Networks in Africa such as the Third World Network
have also stood against AGOA conditionalities.

The US labour movement opposed AGOA partly because of its neo-liberal
conditionalities, partly because it meant a downsliding of wages on a global
scale and partly because of the threat against US jobs, particularly in the
textile sector. A wide range of networks, workers' organisations and
political organisations in the US such as the Citizens trade campaign, 50
years is Enough , the International Liason Committee campaigned against AGOA
arguing that it meant a "NAFTA for Africa".

US capitalists took fright at the thought of cheap African goods and
services getting in, duty free, into the US market. US capitalists in the
textile sector were particularly known for having lobbied against AGOA on
the basis that it was a menace to US business. This is why major concessions
were made to them in the final version of the law.

Other international networks such as ATTAC and CETIM have campaigned
against conditionalities in AGOA. CETIM and WiLDAF, in collaboration with
Lalit, have, in the last session of the UN Commission on Human Rights,
circulated a statement outlining the many infringements to human rights
contained in AGOA.

Resistance in the US and in Africa led to an alternative Bill called Hope
for Africa being presented in the House of Representatives by Jesse Jackson
(jnr). Although this Bill did not pass through, it drew attention to the
colonial nature of AGOA.

One interesting development in the resistance movement against AGOA is that
the US labour movement and anti-neo-liberal organisations and networks in
the US, started taking up the arguments put forward by the more progressive
section of the labour movement in Africa and by anti-capitalist
globalisation forces in the region. The AFL-CIO , the confederation of the
labour movement in the United States, for instance, transmitted the
Mauritian All Workers Conference (platform of the quasi-totality of the
Mauritian labour movement) call on US Senators to oppose conditionalities in
AGOA. The US network called Public Citizen delivered a similar appeal of
Pan-African women's network WiLDAF, to each US Senator. WiLDAF at the same
time, submitted an appeal to all African Heads of State to oppose
conditionalities in AGOA. Both WiLDAF appeals were endorsed by 216 women's
organisations in Africa.

AGOA is an instrument of US and African ruling classes

We must continue to expose AGOA for what it really is: a tool of US
imperialism. At the same time we must expose the role of African ruling
classes in using AGOA to dispossess peoples in Africa of our collective
property, of our economic, social, civil and political rights, and of our
sovereignty.

Rajni Lallah

Bait for bosses, Government bites, hook for the people
AGOA: The Sting

There is a lot of noise being made about the AGOA Business Forum to be held
in Mauritius in January 2003. The Africa Growth and Opportunity Act has
recently even been cited as a fitting reason for the Mauritian Government's
UN representative, Mr. Koonjul, to follow USA foreign policy blindly.
The public certainly need to know rather urgently what exactly AGOA is, if
AGOA is "obliging" our Government to act against the interests of the
Mauritian people, just because Mr. Bush, the new self-appointed imperial
master, tells it to do so.
The AGOA forum in January seems to be going to have two parts.
One is a purely business thing to take place at a hotel .

The bite

The other is a meeting between the President of the USA, who according to
the AGOA law itself, has to attend such a forum with African Heads of State,
once every two years. So the Heads of State of the 48 countries concerned
will sit and imbibe the political line President Bush feeds them. No doubt
it will be on questions like Iraq, Afghanistan, the "war on terror", and so
on. This way African Heads of State will know for-sure, for-sure what Bush
wants them to do. Then they can bite.
It was President Clinton who guided the AGOA through until it became a law.
The law was called "AGOB" at the time, when it was still a Bill, and that
was probably a better name for it. In Mauritian Kreol if you "gob" any
passing bit of bait, you're sure to get hooked. The law is literally one
"Agobe ubyen a-lese".
What was that Bill, and what is that law?
It divides Africa up. Splits it. Just as 100 years before it the Berlin
Treaty split up Africa between the European powers. There are 48 countries
named in the law. They make up the "false continent" that the World Bank
created called "Sub-Saharan Africa". The rest of Africa is left to other
means of control, including military attacks like those against Sudan and
Somalia.

The bait

AGOA is an American law. As such, it only applies to the USA. It concerns
the US customs department. What it does is to fix the tax that companies
from different African countries pay as their products go through US
customs. What this means for Mauritian companies, like that of Mr. Maurice
Vigier de la Tour, is that he can get a 17% deduction on tax for his Floréal
Knitwear garments. This way they compete better in the USA market.
That is the bait.
The bait is a 17% discount on tax for the textile bosses.
Never "bait" without a "hook".

The hook

The hook is the "conditions". But while the bait is offered to one set of
people (the textiles bosses), and when it is the Government that "bites"
(kan Guvernman gobe), it is in another set of peoples' throats that the hook
gets stuck: ordinary working peoples'.
We all suffer the conditions if Mr. Vigier de la Tour gets his bait. For
him to qualify for a US customs bargain price, the Mauritian Government has
to impose draconian conditions on the whole of the Mauritian people. These
conditions, broadly speaking, suit what are called US' interests, but that
are more accurately the interests of US capitalists.
Although we said there are 48 countries that the US has decreed to be in
AGOA, this is not automatic. There are fewer actually concerned. A country
has to get a kind of "fitness" first, an "eligibility certificate".
This certificate is awarded by none other than the President of the USA
himself. He gets to decide. And there are conditions to comply with.

Conditions

Conditions are basically of three kinds: (i) production-related, (ii)
economic-policy-related (ii) foreign-policy-realted. Who judges if a country
is in compliance? Of course, you have guessed: the USA. It is US customs
officials for production-related conditions, the President of the USA for
the rest.
The production-related conditions are the only ones, until a few weeks ago,
that were mentioned. Some people even denied that there were any other
conditions at all.
The fact is that from the end of 1998 right up till the law was passed in
the US in 2000, Lalit, Muvman Liberasyon Fam and the trade union movement
(except for Yousouf Sooklall and Auguste Follet) were miles ahead of the
intelligentsia: we had already foreseen the dangers of these conditions. We
still oppose them tooth and nail.

Production-related conditions

For garments to get into the US market, they have to be made from raw
materials from the US or from Africa. They cannot be made from raw materials
from India, Malaysia, China, Pakistan, for example. This means that the US
Customs refused the 17% reduction on Mauritian garments because the pockets
used other material.
This isn't all. Companies operating from places the US decrees to be "very
poor", defined as a per capita income of less than so many dollars per year
, can get the 17% deduction on customs duty without respecting the
country-of-origin rules for raw materials.
It is this condition, as predicted by Lalit that was the very first effect
of AGOA on the Mauritius people. It led directly to sackings. Bosses closed
down big factories in Mauritius, and set them up in Madagascar, which has
the "very poor" certificate.
There are even countries, which do not fit the AGOA criteria for "very
poor" status, but which can be decreed "very poor" if they are particularly
important to US interests. For that status a Minister has to suck up even
more than Anil Gayan and Paul Bérenger do.
And then, it is, of course, the US Customs Officials who interpret AGOA.
This is how they refuse to give the 17% discount for garments that are
"knit-to-shape".
But, even if all the production-related conditions are respected, the
Customs officers only let in garments from a Mauritian boss, if Mauritius
has got a certificate of compliance that the US President hands out.

Economic policy conditions

A country can only get an eligibility certificate if it satisfies the US
President that it is engaged in a constant process of privatization and
liberalization.
This includes turning social and economic rights (water, housing, education
and health) into commodities, which big corporations invest in for profit.
No matter what the electoral platform of the Party in power. No matter what
UN Conventions the State has signed.
This condition includes removal of subsidies on food production, whether to
help planters, fishermen or animal keepers. It means removal of subsidies on
medicines. It means Government gives foreign investors the same treatment as
local capitalists.
It means no more democratic freedom to choose an economic policy.
Otherwise, no certificate for Mr. Textile Boss's garments.

Political conditions

The President of the US can only gives his certificate of eligibility if he
is satisfied on two counts.
First, the country must be acting in accordance with US security needs. (Not
its own security needs, no!) This is important right now for the US bringing
to heel Ministers like Gayan and Bérenger on the Iraq question, whatever
Jugnauth may have said in Beyrouth, or Koonjul may have made people in New
York believe. It is also crucial to making Jugnauth, Gayan and Bérenger act
like well-trained lap dogs on the issue of the Diego Garcia base.
Second, the country must act in accordance with US foreign policy. This
means that Governments like ours, so keen to get Mr. Vigier de la Tour a 17%
profit-increase, are giving up their voice in the United Nations. Government
will just tell Mr. Koonjul to watch what the Bush's man does, and do
likewise. Empires have no allies, only vassals .

The resistance in US

As you would imagine, all thinking people opposed this law over the years
prior to its passing.
For a start in the USA there were citizens' associations, Afro-American
associations and trade unions that opposed AGOB, as it was then called. They
opposed the law for very good reasons, in particular there was massive
concern about the humiliating conditionalities. They also opposed the law,
in some cases, on the egoistical but still reasonable grounds of fear of
losing their own livelihood.
The US textile-producing bosses obviously opposed the law for their
protectionist reasons.
In the US Congress, there were many Representatives and Senators against
the law. The law was processed in "bipartisan" fashion, that is to say
there were Republicans and Democrats both against and for. The law went back
and forth between the two houses and between committees of both houses and
of both parties.
But when President Clinton went on and on with his pressure, and when the US
retailers banded together with huge multinational corporations with mining
interests and organized a massive campaign in favour, the law eventually
scraped through.

Resistance in Mauritius

All over Africa there was stiff resistance to the conditionalities of the
African Growth and Opportunity Act. It came primarily from the trade unions
and the women's movement. MLF organized some 240 women's associations
Africa-wide to sign a petition to oppose the AGOA conditions. African Heads
of States were sent copies of the mass petition. Nelson Mandela opposed the
conditions vociferously.
In Mauritius, the trade unions were divided, and AGOA became one of the
reasons for the break-up of All Workers' Conference. Most trade union
federations opposed the conditionalities, realizing that they favored one of
the sections of the bourgeoisie (textile bosses) at the direct expense of
the rest of the people of the country. However, Yousouf Sooklall of the FDUF
, was influenced by the textile bosses and the Government into thinking that
the AGOA would create employment.
From Mauritius, it was the MEPZA, the Government and the Press that took a
prominent part in getting the AGOA voted in the USA.
Mr. Maurice Vigier de la Tour became a kind of "ambassador" for the law in
the US as well as here.
Peter Craig, the Government representative who promotes trade with the US,
also ran a virulent campaign here and in the US in favor of the
"esclavagiste" legislation.
Navin Ramgoolam, who was Prime Minister at the time, actually went on a
speaking tour in the USA to militate for the law, convincing Americans that
Africans would benefit.
Editorialists called us and trade unionists who opposed AGOA
"anti-patriotic", "indecrottable" and much else.
It is indeed strange that this piece of legislation, which one would expect
to affect only the citizens of the country where it is voted, comes to
affect us. It does this only because of the cowardly collusion of our
Government, influenced by greedy textile bosses. So, it is the Mauritian
State that will imposes the conditions. It does so because the parties in
power are in the grip of the private sector lobby .

Globalization

So, in this way, AGOA is perhaps the finest example yet of exactly how today
's capitalist globalization actually works: The US Congress passes a law; it
gives increased profit opportunities to US and Mauritian capitalists; it
does this through politics imposed by the Mauritian State; all this at the
direct expense of working people in Africa, who have to pay in the form of
the conditions that directly cut their standard of living, strip away their
human rights, diminish the little democratic voice they had won through past
struggles.

LALIT's resistance

Lalit was opposed to the conditions from the very beginning. We ran what
turned out to be a new kind of campaign. We worked in the trade unions, in
the women's movement, at the level of SADC doing petitions against the
conditions to lobby all the African Heads of State against the conditions.
And, we even ran a campaign in the USA, and at international level. We were
represented at the International Tribunal on Africa in Los Angeles, where a
Lalit representative was a witness who deponed on 5th and 6th February
2000, on the negative effects of AGOA conditions on the lives of working
people in Africa. Our representative also attended an Open World Conference
in San Francisco on 12, 13, 14th February, 2000 at a plenary session where
delegates from more than 60 countries were present, he spoke on the
dangerous link between the AGOA conditionalities and the question of the
Diego Garcia military base.
Over 80 US radio stations broadcast interviews with our Representative, on
the question of AGOA and its effects on the working people of Africa.
Lalit's first e-mail and internet campaign was run against the AGOA.

Since AGOA was voted

Although the vote was close, AGOA finally did get through. It was in 2000.
What has its effect been?
First, the US customs have been very good at being "lipu pul" with every
pullover that Mauritian bosses have tried to get Customs exemption on. And
since the "bait" has an expiry date, every delay means the conditions are
being imposed for nothing. According to US ideology, in a few years' time
the WTO will prohibit all the existing customs barriers in the world. So,
AGOA resembles a product with an imminent expiry date that is being sold to
African countries at an exhorbitant price. What the problems at US Customs
mean is that certain well nigh irreversible conditions are being respected
without even Mr. Vigier de la Tour getting his bait, which in any case will
not benefit any of the rest of us.
The message of this fussiness about pockets or about "knit to shape", is
that the Mauritian Government has to become a real "ti-tutu", otherwise
there will be further fussiness.
Second, because the AGOA rules make Madagascar eligible for garments using
cheaper raw materials from traditional Mauritius trading partners in the
East, the bosses in the textile industry here, just, as we have said, closed
down and went and set up in Madagascar. Not only are wages lower and the
labor non-unionised, but raw materials can be got cheaper for qualifying for
entry into the US market. So, Floreal, and several other companies closed
factories, sacked workers, and transferred production. For profit. So much
for patriotism.
So the direct effect was for the number of jobs here to fall, and for
production itself to drop. This happened as the first direct result of AGOA.
As any thinking person can see, the factory closures are not the only loss:
the threat of factory closures has had a downward pressure on already very
low wages in the textile industry in Mauritius. Children eat less well
because of this.
Third, as predicted by us in Lalit, AGOA has unfortunately already been
used as blackmail in order to make our Ministers bow down to George Bush.
The law passed in the Clinton era gets even more draconian effects when a
new emperor like Bush comes to power.
So, the direct effects continue. They are not pretty. The Prevention of
Terrorism Act (POTA) was passed with its ugly certificate of urgency under
direct pressure from the US through the mechanism of AGOA conditionalities.
And there's the US plan to bomb Iraq unilaterally. We again see AGOA raise
its ugly head. The US President decides to hold the AGOA Forum, which the
law obliges him to hold and to attend every two years, in Mauritius.
Preparations begin. Then when the resolution on Iraq comes up, the world is
divided: the USA wants to attack without going through the UN, while even
powerful countries Russia, France, Germany, China don't agree. The Mauritius
Government would previously have been free to say that a blank cheque cannot
be given to the USA. The Prime Minister at the Francophone Conference in the
Lebanon actually did say that. Then when the US press decides to, it spreads
it around that the Mauritian representative at the UN, Mr. Koonjul, may not
vote with the USA, wham! The USA begins a campaign. It completely invents a
story that there is a risk of a specific act of terrorism in Mauritius,
either against a "Christian" church or against a government building. This
is hard for Messrs. Bérenger and Gayan to deny, because in order to please
their US bosses, they had had to come on TV and radio to say how there was
an imminent danger of terrorism in the country, so that people would stop
protesting against the POT Bill. Bérenger even had to come up with the
Lanate lark. So much for patriotism.
What the US is doing is threatening to transplant or cancel the promised
AGOA forum - the ground is being prepared for Bush to say it's too dangerous
to come here - if Mauritius does not blindly follow US foreign policy.
So, Gayan and Bérenger immediately reassure their US masters that Mauritius
is in fact an unconditional vassal. Poor Mr. Koonjul pays the humiliating
price.
Abject.
So, through the AGOA we see the USA threatening, in one stroke, to ruin the
Mauritian tourist industry. A rumour can do that.
Talk about terrorism.
But there you are.

Conclusion

AGOA means short-term benefits, or more often a mere mirage of short-term
benefits, for the Mauritian textile bosses (in terms of a maximum of 17%
profits increase and less restricted market for them) and some big dinners
for Government ministers, while the whole of the Mauritian people will
suffer the effects of the draconian and destructive conditions.
To us in Lalit, of course, this is not news. We did not, at the time when
AGOB was being introduced in the US Congress, just make a prediction. No. We
did our level best - in Mauritius, in Africa, in the USA and at an
international level, too - to stop this law from ever coming on to the US
statute books. We did this precisely because we knew of its truly terrible
effects on the peoples of Africa, whether manual workers, employees of
Government or private sector, planters, animal rearers, fishermen. The
effects are particularly vicious against women, who have the additional
burden of preparing food, raising children, caring for the sick and
disabled.
But these negative effects are only felt because our Government wants them
to be. What we need now is a Government that looks after the interests of
those who elected it to power and not after the interests of its bailleurs
de fond (who finance them legally and/or illegally) nor after the interest
of US foreign policy. What we need is more democracy.
Perhaps a start would be a campaign in their constituencies for the
revocation of Messrs. Gayan and Bérenger, who have decided to be the ones to
bow down furthest to the American bosses and the Emperor they control.

Ram Seegobin and Lindsey Collen
5th November, 2002

Published in biggest Mauritian daily, Le Mauricien

AFRICA ACTION
Africa Policy E-Journal
January 14, 2003 (030114)

US/Africa: Trade Meeting, 1
(Reposted from sources cited below)

US/African meetings in Mauritius this week focusing on the African
Growth and Opportunity Act (AGOA) are proceeding without U.S.
President George W. Bush, whose promised Africa trip was postponed
suddenly in a brief announcement just before Christmas, Then
Secretary of State Colin Powell also backed out, leaving the U.S.
delegation to be headed by trade representative Robert Zoellick. On
Sunday, Mauritian Minister of International Trade Jayen Cuttaree
said Mauritius would make the best of the opportunity, and in the
opening session of the NGO forum, Minister of Women's Affairs
Arianne Navarre-Marie said, "African Women would like to know how
AGOA is going to provide the necesary support for making cheap
anti-retrovirals available to their brothers, sisters and children
who are dying of AIDS because thay cannot afford the price of such
drugs".

Unfortunately, both the reduced level of the U.S. presence in
Mauritius this week and the exclusive focus on trade accurately
reflect the realities of U.S. policy towards Africa. Strikingly,
Bush's balance sheet is deeply in the red even in the realm for
which the U.S. seeks to claim credit: trade policy. The damage done
by other U.S. trade policies far outweighs the impact of increased
AGOA imports from Africa, and an IMF study shows that even those
benefits are far less than they might be.

Today's series of two postings contains (1) excerpts from an IMF
working paper showing that the benefits in increased textile
exports from AGOA are only a fifth of what they could be without
the highly restrictive "rules of origin" imposed by the law (see
below), and, in a separate posting, (2) excerpts from articles by
allAfrica.com on the Mauritius meeting, a press release on the
latest report on US/African trade, and links to other sources on
related issues.

+++++++++++++++++end summary/introduction+++++++++++++++++++++++

2002 International Monetary Fund WP/021158

IMF Working Paper African Department

The African Growth and Opportunity Act and Its Rules of Origin:
Generosity Undermined?

Prepared by Aaditya Mattoo, Devesh Roy, and Arvind Subramanian

September 2002

[brief excerpts: The full paper,including tables, is available at:
http://www.imf.org/external/pubs/ft/wp/2002/wp02158.pdf">

Abstract

The views expressed in this Working Paper are those of the
author(s) and do not necessarily represent those of the IMF or IMF
policy. ...

This paper describes the United States recently enacted African
Growth and Opportunity Act (AGOA) and assesses its quantitative
impact on African exports. The AGOA expands the scope of
preferential access of Africa's exports to the United States in key
areas such as clothing. However, its medium-term benefits -
estimated at about US$100-$140 million, an 8-11 percent addition to
current non-oil exports - would have been nearly five times greater
(US$540 million) if no restrictive conditions bad been imposed on
the terms of market access. The most important of these conditions
are the rules of origin with which African exporters of clothing
must comply to benefit from duty-free access.

Authors E-Mail Addresses:
amattoo @worldbank.org, [email protected],[email protected]

...

INTRODUCTION

...

The African Growth and Opportunity Act (hereafter "AGOA"), signed
into U.S. law as Title 1 of the U.S. Trade and Development Act on
May 18, 2000, is a major plank of U.S. initiatives toward the
African continent. The Act aims at broadly improving economic
policymaking in Africa, enabling countries to embrace
globalization, and securing durable political and economic
stability. As an incentive for Africa to adopt these policy
changes, AGOA offers increased preferential access for African
exports to the United States. It envisages the possible conversion
of AGOA - which is essentially a one-way preferential arrangement
- into reciprocal free trade areas (FTAs) where feasible with
interested African countries.

The paper assesses the impact of AGOA. Its main conclusions are the
following:

* First, AGOA will provide real opportunities to Africa. Even on
conservative estimates about Africa's supply response, Africa's
non-oil exports could be raised by 8 Il percent.

* However, the gains from 2005 onward could have been much greater
if AGOA (i) had imposed the multifiber agreement (MFA) rule of
origin rather than the more stringent"yarn-forward" rule; and (ii)
not excluded certain items from its coverage. Our estimates suggest
that the absence of these restrictions would have magnified the
impact nearly fivefold, resulting in an overall increase in non-oil
exports of US$0.54 billion compared withthe US$100-$140 million
increase that is expected in the presence of these restrictions.

* Third, these restrictions, particularly on apparel, will come at
a particularly inopportune time, as Africa will be exposed to
competition from other developing countries when the quotas
maintained on the latters' exports under the MFA are eliminated in
2005. On the one hand, Africa's apparel exports will be lower by
over 30 percent with the dismantling of the MFA; if, on the other
hand, AGOA had provided unrestricted access, the negative impact of
the dismantling could be nearly fully offset.

This paper adds to the recent work on the benefits to sub-Saharan
Africa of preferential access granted by industrial countries (see
Ianchovicina and others 2001 and Hoekman and others 2001). The main
conclusion of these papers is that Africa stands to gain, but the
bulk of the gains come from preferential access to the Japanese and
European agricultural markets. These papers, however, do not
explore fully the gains from apparel exports and how these are
affected by rules of origin.

II. BACKGROUND: AFRICA'S EXPORTS

... A number of features stand out.

First, at about US$27 billion in 1999, the absolute level of
non-oil exports is very low (Table 1), reflecting a slow rate of
growth during the 1990s. Non-oil exports from the continent grew at
a glacial 0.6 percent per annum, consistent with notion of Africa's
marginalization from global trade (Subramanian and Tamirisa, 2001).

Second, while Europe remains the biggest market for SSA's non-oil
exports, absorbing about 55 percent, developing countries have seen
their share of SSA's exports rise from 25.6 percent in 1990 to over
30 percent in 1999. Interestingly, while the United States accounts
for a sizable share (23 percent) of total exports, it is actually
a much smaller market (7.4 percent) for non-oil exports. In other
words, the bulk of SSA's exports to the United States comprise oil
and related products.

Third, SSA's exports remain predominantly agriculture and natural
resource-based. Oil accounts for close to 50 percent of exports,
agriculture and other commodities for about 36 percent, and
manufacturing for a meager 12 percent. This composition has not
substantially changed during the 1990s. Clothing, a key sector
under AGOA, has been one of the most dynamic, growing at an annual
rate of close to 7 percent and has become one of the largest export
items.

Fourth, in terms of exports of textiles and clothing, there are
interesting differences in the composition and vibrancy of SSA's
exports to the three major markets - European Union, United States,
and developing countries. Developing countries are the largest
market for exports of cotton and textile fibers from SSA, with the
EU being the largest market for fabric and yarns and clothing but
particularly so for the former category. Exports of clothing have
grown most rapidly in the U.S. market, at about 10 percent per
annum, from US$187 million in 1990 to US$620 million in 1999,
compared with 6.5 percent for the EU (Table 3).

Finally, exports of clothing to the United States remain very
concentrated: in 1999 a few countries - those in the South Africa
Customs Union (SACU) and Mauritius - accounted for 80 percent and
another three countries for a further 17 percent, of SSA's exports
(Table 4).

III. AGOA's MAIN PROVISIONS

Prior to AGOA, 48 sub-Saharan African countries were granted
preferential access to the U.S. market - essentially paying a zero
tariff subject to certain conditions - for a range of exports under
the Generalized System of Preferences (GSP). In 2000, the GSP
covered about US$4 billion out of Africa's total exports of US$23
billion. The margin of preference - the advantage faced by African
exporters compared with other most-favored nation (MFN) suppliers
- was about 5 percent (the average MFN tariff rate). AGOA
represents two advances over the GSP scheme:

* First, the existing preferential access enjoyed by SSA countries
under the GSP schemehas been extended in time; and

* Second, it increases the range of products for which preferential
access is granted to include: petroleum products;apparel products,
previously subject to quotas under the MFA and tariffs; [and] a
range of other agricultural and industrial products. ...

In evaluating the benefits accruing under AGOA, however, it is
important to consider not just the import coverage but the
magnitude of current trade restrictions. For example, a large
portion of the increased coverage under AGOA is accounted for by
petroleum products, which faced average tariffs of only 1.5 percent
prior to AGOA. The elimination of these tariffs, which will
increase the price received by African suppliers (mainly Nigeria,
Angola, and Gabon) by about 1 percent, will not yield significant
benefits.

The really important incremental benefits provided by AGOA relate
to the two non-petroleum categories in the lightly shaded panel in
Table 5. The first comprises exports of apparel products and the
second a whole range of non-apparel products, including footwear,
agricultural products, watches etc. ...

In both these categories, although current exports are low,
potential benefits are large because average protection is high:
...

In sum, the conclusions that can be drawn from the above are:

* First, while AGOA has increased the scope for preferential access
for African exports,this increase is important only for categories
of products which have significant protection. These currently
account for 5 percent of total exports and 23 percent of non-oil
exports.

* Second, even for these categories, the real medium-term benefits
will depend upon the impact of the rules of origin requirements
(see below);

* Third, AGOA's generosity was not all encompassing for Africa: for
about 1,067 tarifflines (1 percent of non-oil exports),
preferential access was not extended, For 893 of these lines
preferential access could have been meaningfbl because of the high
level of MFN tariffs,

A. AGOA's Provisions on Rules of Origin

As described above, the benefits of the incremental coverage under
AGOA - the extension of access to apparel and other products - will
hinge crucially on the rules of origin that African exporters will
have to meet. These rules vary across these two categories of
exports.

Rules of origin for non-apparel exports

Under the GSP scheme duty-free treatment is to be applied to any
designated article that meets the requirements of the basic GSP
origin and related rules. ...The key is a requirement of 35 percent
value addition within the customs territory claiming preference.
However, for non-apparel products eligible for duty-free access
under AGOA, the 35 percent value added content can be met also by
counting production or materials from other beneficiary countries
or the United States. The rules of origin clauses are supplemented
with implementation requirements. For example, an importer claiming
duty-free treatment must make and maintain (for a period of five
years from the date of entry) the records validating facts like
proof of production, value addition, shipping papers etc.

Rules of origin for apparel exports

AGOA's provisions on rules of origin relating to apparel are
different and are summarized in Table 8. They require essentially
that apparel be assembled in eligible sub-Saharan African countries
and that that the yarn and fabric be made either in the United
States or in African countries (as explained below this does not
apply to the least developed countries in Africa until 2004).
However, apparel imports made with regional (African) fabric and
yarn are subject to a cap of 1.5 percent of overall U.S. imports,
growing to 3.5 percent of overall imports over an 8-year period.

In addition a number of customs requirements need to be satisfied.
To receive the apparel and textile benefits of AGOA, a USTR-chaired
inter-agency committee must determine, inter alia, that countries
have an effective visa system and enforcement procedures to prevent
unlawful transshipment and the use of counterfeit documents.

There is an interesting difference between the rules of origin
under the Cotonou Agreement, which governs preferential access to
the European Union, and AGOA. The Cotonou rule of origin is based
is based on the concept of "double transformation" i.e., if two of
the processing stages (yarn into fabric weaving; and fabric into
apparel assembly) are done in the beneficiary country, duty free
entry into the EU can be enjoyed. Under Cotonou, therefore, yarn
can be sourced from anywhere in the world, whereas under AGOA the
yarn must come from a beneficiary SSA country or from the United
States.

IV. ECOMOMIC MPACT OF AGOA'S APPAREL PROVISIONS

A. AGOA's Apparel Provisions and Their Timing

In order to quantify the economic impact of AGOA, it is necessary
to understand the provisions and their timing, which are summarized
in Table 9. In the apparel sector, AGOA distinguishes two
categories of SSA countries.

Lesser Developed Beneficiary Countries (LDBCs), namely those with
per capita GNP under $1500 in 1998 (based on the World Bank Atlas
method), and other SSA countries will see their quotas on apparel
exports eliminated beginning 200l. [Forty-two countries in
sub-Saharan Africa fall below the specified GNP level and hence
qualify as an LDBC under AGOA; another two countries Botswana and
Namibia have recently been designated as LDBCs despite their high
GNP levels. Thus, only the following four do not qualify: Gabon,
Mauritius, Seychelles, and South Africa.]

In discussing the empirical findings, an important complication
needs to be borne in mind. The changes unleashed by AGOA will be
accompanied by other important changes to the external trading
environment, most notably the dismantling of the MFA under the
Uruguay Round, scheduled for 2004 (shown in italics in the table
above). In reality, the impact on African countries will be a
combination of these two sets of changes. In the following analysis
we shall attempt to isolate the different effects so that the
marginal contribution of AGOA can be established. In other words,
we shall analyze (i) the marginal impact of AGOA, holding other
factors constant and (ii) the total impact of AGOA in conjunction
with the dismantling of the MFA.

D. Results

The results are illustrated in Table 12. For a country
such as Mauritius, the impact can be summarized as follows

2001-2004

The impact of AGOA during the period 2001 and 2004 will be to raise
exports relative to the pre-AGOA situation by about 5 percent. Had
there been no rule of origin requirement on Mauritius, the increase
in exports due to the tariff preferences accorded by AGOA would
have been 36 percent, substantially higher than with rules of
origin.

2005-2008

In 2005, when the MFA quotas on Mauritius competitors are
eliminated, its exports will be about 26 percent lower than they
otherwise would have been. But if AGOA is modified to eliminate the
rules of origin requirement, the decline in exports would be 18
percent.

For a least developed country such as Madagascar, the results are
more dramatic both on the up side and down.

2001-2004

The impact of AGOA during the period 2002 and 2004 will be to
increase exports relative to the pre-AGOA situation by about 92
percent.

2005-2008

In 2005, when the MFA quotas on Madagascar's competitors are
eliminated, its exports will be lower by about 19 percent compared
with the pre-AGOA situation. But if AGOA is modified to eliminate
the rules of origin requirement, exports in 2004 could actually be
higher than they are currently despite the elimination of the MFA.

V. REVEALED APPAREL TRADE UNDER AGOA

... Apparel exports have recorded a substantial increase following
AGGA: both in terms of values and quantities, exports in 2001 were
about 27 percent higher than in 2000. It is striking that the most
impressive gains have been recorded by the least developed
beneficiary countries: as the table shows, Madagascar, Kenya,
Swaziland, and Lesotho have recorded gains varying from 47 percent
to 83 percent. In contrast, South Africa and especially Mauritius,
have posted more modest growth. ...

A striking feature of the data is that a very small portion of
total exports (9-14 percent) from South Africa and Mauritius have
benefited from the tariff preference, whereas for the least
developed countries not subject to the rule of origin requirement
the corresponding share is close to 50 percent, highlighting the
restrictive impact of the rules of origin. ln other words, close
to 90 percent of the exports of South Africa and Mauritius did not
meet the rules of origin requirement.

Given the fact that the LBDCs will be subject to the same rules of
origin in 2004, the above serves as a cautionary reminder about the
likely effects for the poorer countries after 2004; in other words,
export growth may be considerably muted for the LBDCs after 2004 as
the rules of origin kick in. ...

VI. OVERALL ASSESSMENT AND CONCLUSIONS

AGOA's impact can be evaluated against two possible benchmarks. The
first is current trade and the other is "what might have been" -
that is, trade that would have resulted had all restrictions on
SSA's exports been eliminated. ...

AGOA will raise the level of non-oil exports by between 8 percent
and 11 percent, depending on the restrictiveness of rules of origin
in the non-apparel sector. Most of this increase is accounted for
by the apparel sector, which is expected to see higher cxports of
about 8.3 percent.

We can, however, be a little less circumspect when we compare AGOA
against the second benchmark, of fully unrestricted access, which
is the level that Africa's trade would have attained had the United
States (i) not excluded any product from the scope of AGOA and
(ii) not imposed stringent rules of origin requirements to qualify
for the benefits under it. ... AGOA as it is now stands will yield
only 19-26 percent of the benefits that could have been provided if
access had been unconditional. Nearly 80 percent of this shortfall
is accounted for by the rules of origin requirements in the apparel
sector which will significantly reduce exports below SSA's full
potential. ...

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Date distributed (ymd): 030114
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+

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