Importer of Garments From Africa Says Investment Frozen Waiting for AGOA Renewal

Rep. John James, R-Mich., chairman of the House Foreign Affairs Subcommittee on Africa, told an audience interested in AGOA that in every conversation he's had when delegations from Africa visit him, and every time he's gone to Africa, he's asked about AGOA renewal.

"We are putting every effort we possibly can to make sure this is authorized this Congress," James said. This Congress runs through Jan. 3, 2025, but generally, lawmakers wouldn't reconvene after Christmas in 2024.

James said that AGOA helps keep prices low for U.S. consumers without jeopardizing American jobs, and also helps African countries create jobs through exports. He said he visited a garment factory in Tanzania in August that's a major AGOA user, and called the trade benefit "a massively successful program."

He said, "I’m very concerned the well-intentioned pursuit of AGOA-plus could have unintended consequences." The Office of the U.S. Trade Representative has emphasized that many countries covered by AGOA don't take advantage of it, and has asked Congress to revise the program to make it better.

James said that while he wants to improve AGOA, he also wants to make sure "AGOA doesn’t fall to the same fate as the Generalized System of Preferences" benefits program. That trade benefit program has been expired since the end of 2020.

"Even now, we’re already hearing of stalled investments in Kenya as a result of policy uncertainty," James said. "We’re not going to wait for a deadline to hit to begin this work. I hear this message loud and clear."

James and some industry representatives were speaking on a Center for Strategic and International Studies webinar Oct. 30 on AGOA. Melissa Nelson, SanMar's general counsel, said her company imported 50 million garments from four countries in Africa that participate in AGOA, up from 9 million in 2010, when they first started sourcing in Africa.

"No one’s going to invest right now -- we can’t even begin to have those conversations until we feel confident that everybody is looking at this as a long-term relationship," she said.

Nelson complained that some members of Congress want to revise the rules of origin for textiles covered by the agreement. Unlike in many free trade agreements, the fabric or notions that are part of the garments exported from AGOA partners don't have to be sourced from either the U.S. or AGOA nations.

She said these members asked: "We gave you all this time. What have you done with it?"

Nelson said the first 10 years of AGOA were just as the garment quota system was dismantled, and China quickly became dominant in apparel. She said that sourcing from China is far easier than in Africa -- if you need a zipper or some other input, it's right down the street. There are no zippers made in Africa so far, she said. China has a trained labor force at the ready, whereas in Africa, the factories are training folks who come from working the land.

"We need more time under the same rules," she said.

SanMar is a back-end apparel provider for U.S. companies that either embroider or screenprint the plain goods SanMar imports.

"The margin of our product is really tight, because it needs to make money at the SanMar side, and at the customer side, before it goes on to community groups," she said. "We need AGOA to make it financially possible."

Nelson said there's a strong incentive to build a vertically integrated supply chain because of the ban on Uyghur cotton. She said it would be great to buy West African cotton, putting tracing technology in the bales that travel to mills, and then sending that yarn or fabric to the factories.

"But you're not going to get any investment in West Africa because you don’t know if it’s going to be affordable, if it’s going to make sense," she said.