Although the Generalized System of Preferences program has been reauthorized through July 2013, the fate of the important third-country fabric (TCF) provision of the African Growth and Opportunity Act (AGOA) is still hanging on by a thread. The TCF provision allows eligible countries in sub-Saharan Africa to use fabric from any country in their apparel production and export the finished article to the United States duty-free. This provision is set to expire in September 2012, and with the August recess less than two weeks away, the need to extend the TCF provisions is urgent. In addition to promoting economic development in Africa, the AGOA helps U.S. businesses reduce their costs by enabling access to lower-cost foreign fabrics, diversifying their supply chains, and providing greater low-cost apparel options for U.S. consumers.
Trade Under the AGOA Has Seen Steady Growth
In May 2000, President Clinton enacted the AGOA, which provides trade preference for quota and duty-free entry into the United States for certain goods beyond the benefits granted under the Generalized System of Preferences (GSP) program. Until September 30, 2012, lesser-developed beneficiary sub-Saharan African countries may use non-U.S. fabric and yarn in apparel wholly assembled in their countries and still qualify for duty- and quota-free treatment. Notably, the apparel exports under the TCF provision are subject to a cap.
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