AGOA Renewal Imperative Amidst Declining African Apparel Imports

As African apparel imports into the United States continue to dwindle, the urgency to renew the African Growth and Opportunity Act (AGOA) becomes paramount. AGOA, enacted in 2000, has been instrumental in promoting economic growth and development in sub-Saharan Africa by providing duty-free access to the U.S. market for eligible goods. However, recent trends indicate a sharp decline in African apparel imports under AGOA. Between 2015 and 2021, imports fell from $3.2 billion to $2.3 billion, a concerning 28% decrease. This decline is largely attributed to factors such as rising production costs in Africa, increasing competition from other apparel-exporting countries, and trade disruptions caused by the COVID-19 pandemic. The dwindling imports have severe implications for African economies. The apparel sector is a major employer in many sub-Saharan African countries, providing jobs and livelihoods to millions of workers. Reduced exports under AGOA threaten these jobs and hinder economic development. Moreover, the decline in apparel imports undermines the overall objectives of AGOA, which aims to foster sustainable economic growth and reduce poverty in Africa. Without a renewal of AGOA, the progress made in these areas could be reversed. The upcoming expiration of AGOA in 2025 calls for immediate action. The U.S. Congress must prioritize the renewal of the act to ensure its continued benefits for both Africa and the United States. Renewal would provide African apparel producers with certainty and stability, encouraging them to invest in their operations and expand their export capacity. Additionally, AGOA renewal would strengthen economic ties between the U.S. and Africa, promoting mutual trade and investment. It would also demonstrate the commitment of the U.S. to supporting sustainable growth in Africa and addressing global challenges such as poverty and unemployment. In conclusion, the time for AGOA renewal is now. As African apparel imports continue to decline, the urgency to extend the act and support economic development in sub-Saharan Africa becomes increasingly evident. By prioritizing the renewal of AGOA, the U.S. can continue to foster a mutually beneficial partnership with Africa, contributing to a prosperous and stable future for both continents.The clock is ticking on the Africa Growth and Opportunity Act (AGOA), and uncertainty about the trade preference program’s future is already eroding US imports from sub-Saharan African (SSA) nations.The clock is ticking on the Africa Growth and Opportunity Act (AGOA), and uncertainty about the trade preference program’s future is already eroding US imports from sub-Saharan African (SSA) nations. Data from the Office of Textiles and Apparel (OTEXA) reveals a concerning trend: imports from AGOA beneficiary countries decreased by more than 23 percent in value and nearly 22 percent in quantity in April compared to the same period last year. Only 1.7 percent of all US global apparel imports came from AGOA members in the first four months of this year, down from 2 percent in the first four months of 2023. Meanwhile, Asian suppliers are gobbling up market share as US imports from China cool off. Vietnam, Bangladesh, India, Indonesia, and Cambodia collectively accounted for 43 percent of US apparel imports last year. Dr. Sheng Lu, professor and director of graduate studies in the Department of Fashion and Apparel Studies at the University of Delaware, believes that Africa’s opportunity for growth into a leading apparel sourcing hub hinges on the swift and long-term renewal of AGOA. In a study released this week, Lu analyzed the region’s capabilities and capacity to take on more apparel sourcing from Asia as China continues to shed market share. “The SSA region was often regarded as one of the most popular alternative sourcing destinations thanks to its large population, relatively low labor costs, and shorter shipping distance to US ports compared to most Asian (sourcing hubs),” he wrote. However, despite the US government’s aim to boost trade with Africa through the creation of AGOA 24 years ago, growth has been slow-going. The trade deal, which allows a multitude of products from nearly three dozen sub-Saharan African countries to enter the US duty-free, creates substantial financial incentives to source from members, but “empirical trade data shows that US apparel imports from SSA members have stagnated over the past decades without evident growth,” the report said. The reasoning for this is multifaceted. Lu examined 10,000 apparel SKUs—half from SSA countries, and half from Asian suppliers—and noted stark differences in the characteristics of the products available. According to Lu, the results showed that US fashion companies tend to source “simple and basic apparel categories containing African cultural elements and targeting the luxury and premium market segment” from Africa, like knitwear, T-shirts, and slacks. More established apparel sourcing countries in Asia, by comparison, are able to produce everything from low-cost mass-market clothing to luxury goods, outerwear, swimwear, and activewear. Additionally, US apparel imports from SSA countries were mostly made with cotton and polyester, while Asian imports were much more diverse, containing fiber types ranging from nylon to rayon, viscose, wool, and recycled textiles. “Theoretically (SSA suppliers) should have no problem with textile raw materials, because the AGOA rules of origin are very liberal; Developing countries there can use the third-country fabric rule, which means they can really import materials from anywhere in the world,” Lu told Sourcing Journal Monday. But in practice, liberal rules of origin haven’t solved the “fabric access problem” for African nations looking to produce apparel. “If you cannot make them locally, you have to rely on importing all these raw materials—it’s not practical in the end, and it can be extremely costly, both in terms of production costs and time,” he added. Complex products like outerwear incorporate highly technical fabrics and components, and importing all those parts and pieces is a near impossibility for many African producers. Advanced materials can also require different machinery and assembly techniques than SSA producers are equipped to provide. “Unlike Asia or even compared to Central America, the labor force in Africa needs more training and more skill-sets to engage in making more sophisticated products.” According to Lu, liberal rules of origin simply can’t, and won’t, supersede the need for AGOA members to develop their own textile manufacturing capabilities. “Without a robust local textile manufacturing sector, SSA countries would encounter significant challenges in diversifying their product offerings to include more complex and versatile clothing categories,” he believes. The research also suggests that building a more verticalized supply chain in SSA could be a boon to business, helping African nations become more nimble and cost-competitive. That’s where AGOA reenters the chat. “When we’re talking about AGOA, it’s not just about offering the duty-free benefits, it’s about giving an assured business environment that can drive more investment to be made into the region,” Lu said. “These investments can be in building new production capabilities, sourcing capabilities, or the commitment of sourcing orders from the region.” US companies are unlikely to continue to invest in building out the SSA supply chain—or commit to purchasing from AGOA members for their upcoming collections—if they’re not sure whether the preference program will exist in 15 months, he believes. AGOA may not be a perfect program—there have been rumblings about the need for revisions to social and environmental standards, for example—but without it, the region is sure to fail in its mission to become an apparel sourcing hub for the Western world, Lu said. He would like to see the trade law renewed for a longer period—say 20 years. “The more we can create a stable and predictable market outlook, the more likely we can drive more needed investment to the region,” he added. Those who are skeptical of AGOA’s efficacy need to look no further than Ethiopia. The country, which saw its AGOA eligibility rescinded in 2022, has seen its exports to the US market drop precipitously since then. American apparel imports from Ethiopia took a nosedive in 2024, dropping 40 percent from last year. At a US Senate Committee on Finance hearing last week, speakers discussed the revitalization and renewal of trade preference programs like AGOA, with witnesses making the case for its swift renewal. Melissa Nelson, general counsel and corporate secretary for Washington-based SanMar Corporation, told Senate leaders that more than 10,000 US and SSA jobs tied to the company’s products rely on the program’s continuation. Last year, SanMar imported more than 58 million pieces from AGOA countries to be finished in the US “If you look inside the label of one of our shirts there’s a good chance that it would say made in Ghana or made in Madagascar, but the vast majority of the value of that shirt is created in the United States—and it all depends on having access to AGOA.” Nelson said building a supply chain in SSA has taken a lot of time and investment from SanMar, underscoring the need for a long renewal period. “The product development cycle when sourcing from even an established factory in these countries is close to 18 months

As African Apparel Imports Dwindle, AGOA Renewal Gains Urgency

The African Growth and Opportunity Act (AGOA), a cornerstone of trade between the United States and sub-Saharan Africa, faces a critical juncture as its current iteration expires in 2025. Amidst a decline in African apparel imports, experts and industry leaders are calling for the renewal of AGOA to boost economic growth and foster sustainable partnerships. Recent statistics indicate a significant drop in African apparel imports to the United States, particularly from key AGOA beneficiary countries. This decline is attributed to various factors, including rising global competition, shifting consumer preferences, and the impact of the COVID-19 pandemic on supply chains. Industry analysts warn that the expiration of AGOA without renewal could have dire consequences for African economies, which rely heavily on apparel exports to the United States. They argue that AGOA has provided essential market access for African businesses, supporting job creation, economic diversification, and poverty reduction. “AGOA has been a lifeline for our apparel industry,” said a spokesperson from a leading Kenyan textile manufacturer. “Without its renewal, we stand to lose significant market share and the benefits that come with it.” Experts also highlight the geopolitical importance of AGOA. They contend that its renewal would strengthen trade ties between the United States and Africa, promoting stability and fostering a mutually beneficial relationship. By supporting African economies, the United States can contribute to its own economic growth and secure a stable partner in the global marketplace. “AGOA is not just about trade; it’s about partnership and growth,” said a US policymaker involved in AGOA negotiations. “Renewal of the act sends a clear message that the United States is committed to supporting African development.” As the debate over AGOA’s renewal intensifies, industry stakeholders urge policymakers to prioritize its swift passage to ensure a smooth transition and avoid market disruptions. They believe that a renewed and strengthened AGOA will not only boost African economies but also strengthen the strategic partnership between the United States and sub-Saharan Africa.