Successes, shortcomings of Africa trade pact

Well-known American brands, including wrinkle-free Dockers, Gloria Vanderbilt jeans and Izod polo shirts, roll off sewing assembly lines here before being shipped to Target, Sears and other U.S. retailers.

Yet as the African Growth and Opportunity Act, or AGOA, nears its 10-year anniversary and U.S. Secretary of State Hillary Rodham Clinton arrived in Kenya on Tuesday for an international forum to tout its success, many in Africa and the U.S. say the trade agreement isn't living up to its promise.

After a brief export boom five years ago, sales, profits and workforces are tumbling for garment manufacturers in Kenya, who produce the bulk of the nation's AGOA exports. More than a dozen factories have closed.

Other exporters aren't faring much better. Of some 6,400 total products and goods that qualify for duty-free export to the U.S. under the AGOA program, Kenya is shipping only 20, including apparel, flowers and coffee.

The pact “is not realizing its potential,” said Joseph Kosure, acting chief of Kenya's Export Processing Zones Authority, where most of the East African nation's exports are produced.

Signed into law by President Bill Clinton in 2000, AGOA waives U.S. duties for 39 qualifying countries in sub-Saharan Africa, allowing them to sell African goods to U.S. customers for between 15 percent and 30 percent less than rival exporters.

The U.S. program was designed to help free-market African economies diversify their manufacturing bases and create jobs. But critics say it has instead largely subsidized the export of oil to the U.S. by waiving duties for firms in a handful of petroleum-producing nations who hardly needed increased incentives.

More than 92 percent of AGOA's US$66 billion in exports last year consisted of petroleum products, mostly from Nigeria, Angola and the Democratic Republic of the Congo, according to the U.S. Department of Commerce. Minerals and raw materials, such as gold, diamonds and iron, were the next-largest exports.

Exports of agricultural and apparel goods — two industries that AGOA was aimed at bolstering — fell last year by 10 percent and 8 percent, respectively.

At first, Kenya seemed poised to be a major beneficiary. It bet heavily on its textile industry and the number of garment factories jumped from six in 2000 to 35 in 2003. Employment grew 500 percent in the export-processing zone, to 36,000, during the same period.

But after the U.S. opened its market in 2005 to increased apparel imports from China, India and Southeast Asia, many of Kenya's budding garment makers found they could not compete, even with the duty-free advantage.

Questions also arose about who receives most of the benefits of the trade agreement. The majority of exporters in the nation's export-processing zone are foreign-owned, usually by investors from China, the Persian Gulf or Southeast Asia, but also some from the U.S.

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