A trade act that has become pivotal to the supply chains of some major promotional products suppliers, including the industry’s largest in Counselor Top 40 firm SanMar (asi/84863), is unlikely to be renewed before the end of 2024, but officials still believe the agreement will be extended before it expires next year.
Those are key takeaways from the African Growth and Opportunity Act (AGOA) Forum 2024, which was held at the end of July.
First implemented in 2000, AGOA provides eligible sub-Saharan African countries with duty-free access to the U.S. market for over 1,800 products, in addition to the more than 5,000 products that are eligible for duty-free access under the Generalized System of Preferences program.
AGOA is set to expire next year. President Joe Biden’s administration has expressed support for renewing AGOA before it terminates, and bipartisan legislation has been under consideration in Congress that would extend the act.
Nonetheless, a packed U.S. political agenda in a presidential election year, along with ongoing discussions over potential changes to the act and how long to extend it for, have created a situation in which renewal in 2025 appears more probable than this year.
“I do think, as we look at the timeline and all the things that are happening here, it may be unlikely to happen in 2024, but certainly in early 2025 I expect to see it completed,” Constance Hamilton, the United States’ Assistant Trade Representative for Africa, said in a briefing.
Hamilton asserted that the Biden administration supports the “modernization and reauthorization of AGOA … Over the past 24 years, AGOA has made a tangible difference in the lives of millions of Africans – new jobs, new business opportunities.”
Joy Basu, the U.S. Department of State’s Deputy Assistant Secretary of African Affairs, said the discussion over how long to extend the act for remains a central consideration, but it’s possible to be in the 10- to 20-year range.
“Obviously, our colleagues in Congress hold the pen, but if you look at a number of bills that have been introduced already, I think you will see that a longer extension period – at least a stable extension period – is on the table right now, which we would be happy to see in order to give companies and businesses that stability over the period,” Basu said in a briefing.
Promo-Eyed View
Certainly, SanMar is among the industry firms that would like to see a long extension period.
Melissa Nelson, general counsel for the Top 40 promo supplier, testified before the U.S. Senate Finance Committee earlier this year in favor of a sooner-than-later renewal. In July, she spoke on the act at the AGOA Private Sector Forum. She has several upcoming meetings with members of Congress to explain the impact AGOA has on U.S. jobs.
“SanMar is doing everything possible to get AGOA renewed early,” Nelson told ASI Media.
The particulars of a renewed AGOA act are critical, Nelson said. For instance, leaders in Washington, D.C. are considering adjusting rules of origin. SanMar favors maintaining current rules, which allow for the use of fabric made outside the region to be turned into garments in AGOA countries.
“SanMar’s products are made to be customized, and how a design looks depends on the technical aspects of our fabric,” Nelson said. “Our sourcing team spends countless hours making sure we provide the best possible canvas for SanMar customers. The fabrics we need are not yet made in AGOA countries because the evolution of a country’s apparel industry takes time.”
Hamilton said one goal of the renewal process is to get the region’s least developed countries to start participating more in and benefitting from AGOA – something that could potentially open additional sourcing options, especially for promo apparel suppliers and other garment makers, which have been the keenest to source from southern African countries.
“When we look at the experience of AGOA, we’re finding that maybe four or five countries are using it fully, and maybe one or two is using it more than everyone else, but the least developed countries are barely using the program,” said Hamilton. “What we really want to do is strengthen the usage of the program, especially by the least developed countries.”
Attracted by the opportunities AGOA fostered, Issaquah, WA-based SanMar began sourcing in Africa in 2009. These days, the company’s production in five AGOA countries provides jobs for over 9,000 Africans – 70% to 80% of whom are women. Last year, SanMar imported more than 58 million pieces of apparel from AGOA countries, primarily Tanzania, Madagascar and Ghana.
For sure, Nelson said, SanMar and its distributor customers benefit from such sourcing. The supplier has stated that the Africa-based manufacturing is essential to helping it provide quality, cost-effective apparel to its 65,000 customers, supporting small businesses domestically and enabling family-owned SanMar to employ more than 5,000 people across nine U.S. states.
Despite AGOA’s renewal not being a done deal, SanMar has held steady with planned orders from the region and hasn’t pulled any production, Nelson said. A definitive extension of the act would provide more certainty to businesses like SanMar that want to maintain and/or expand sourcing in the covered African nations, likely fostering more investment.
“Given AGOA’s mutual benefit to the U.S. and Africa, we’re confident our leaders on Capitol Hill will ultimately renew the program,” Nelson told ASI Media. “It’s a bipartisan program that’s been a huge win for everyone.”