THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release May 17, 2000
DETAILS OF THE
TRADE AND DEVELOPMENT ACT OF 2000
May 17, 2000
SUMMARY. This bipartisan legislation includes the Africa Growth and Opportunity Act (AGOA) and the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), and other important provisions. This package advances U.S. economic and security interests by strengthening our relationship with regions of the world that are making significant strides in terms of economic development and political reform. It will expand two-way trade and create incentives for the countries of sub-Saharan Africa (SSA) and the Caribbean Basin to continue reforming their economies and increase their participation in the benefits of the global economy. And, it will contribute to the continuation of our own strong economic performance by encouraging the opening of markets and the reduction of poverty in countries with hundreds of millions of potential consumers of American exports.
STRENGTHENING OUR PARTNERSHIP WITH AFRICA THROUGH THE AFRICAN GROWTH AND OPPORTUNITY ACT. This Act promises to deepen our economic partnership with Africa and expand two-way trade to the benefit of both partners. It will also encourage SSA countries to undertake economic reforms and engage in the world economy. As reform spurs growth in Africa, it will create new and bigger markets for U.S. exports, as the following statistics indicate:
- The 48 countries of sub-Saharan Africa constitute a market of more than 700 million people.
- Our exports to Africa, amounting to more than $6.5 billion in 1998, are more than 45 percent greater than those to all the countries of the former Soviet Union combined.
- Although our exports to Africa grew more than eight percent in 1998, our trade with Africa accounts for only 1 percent of our total trade.
- The United States accounted for only 6.1 percent of the African market -- while Asian exports have captured 28 percent.
AGOA lies in America's interest because it promotes the types of reforms in Africa that will make sub-Saharan nations better allies and better trading partners. It has the support of virtually all African governments, including that of South Africa. The Act's specific provisions will:
- Establish, as U.S. policy, a framework of incentives to encourage greater economic growth and self-reliance through enhanced international trade and investment in Africa.
- Expand the Generalized System of Preferences (GSP) program by providing duty-free treatment to virtually all products from sub-Saharan Africa. The GSP program provides preferential tariff treatment for imports of developing countries that satisfy certain eligibility requirements.
- · Extend duty-free, quota-free benefits to apparel made in Africa from U.s. yarn and U.S. fabric or from yarns not available in the U.S.
- Grant duty-free, quota-free benefits to apparel made in Africa from African fabric u to a limit that grows over time. The escalating cap starts at 1.5 percent of U.S. imports of all apparels and rises over eight years to 3.5 percent. Africa's current share is only 1.1 percent of the U.S. apparel market.
- Provide four years of special incentives for apparel industry investments in least developed countries.
- Protect African workers and U.S. jobs by requiring tough safeguards against trans-shipment (i.e., shipping an item through a beneficiary country that was actually manufactured in a third country not eligible for the bill's preferential tariff treatment) and respect for internationally recognized worker rights and human rights.
- Institutionalize annual high-level discussions to promote trade, investment and development through creation of a U.S.-Africa Trade and Economic Cooperation Forum.
- Develop a plan to establish a free trade agreement with SSA countries.
- Provide additional technical assistance to help Africans take maximum advantage of the opportunities available in the expanding global trading system.
- Encourage the American private sector to take a more active role in combating AIDS/HIV in Africa and establish eradication of AIDS as a top priority of the U.S. government. AGOA is the first trade bill to address the challenge of AIDS/HIV directly.
- Other provisions of the Act include: creation of an Overseas Private Investment Corporation (OPIC) Infrastructure Fund to encourage investment in crucial transportation, power, and other infrastructure projects; and expansion of trade financing through the U.S. Export-Import Bank.
STRENGTHENING OUR TIES TO THE CARIBBEAN THROUGH THE U.S.-CARIBBEAN BASIN TRADE PARTNERSHIP ACT. In recent years, the countries of the Caribbean Basin have formed an increasingly important export market for our goods, as the following figures illustrate:
- The 23 independent countries of the Caribbean Basin together formed the sixth largest export market for U.S. goods in 1999.
- Since the enactment of the Caribbean Basin Economic Recovery Act (CBERA) in 1984, U.S. exports to the region have more than tripled to $19 billion in 1999. The Caribbean Basin countries absorbed 2.7% of total U.S. exports in 1999.
But Hurricanes Mitch and Georges of 1998 took a terrible toll -- $12 billion in damages, by some estimates -- on the nations of the Caribbean Basin. Forming a complement to the disaster relief the U.S. has already provided, CBTPA will help CBI countries get back on their feet and grow over the long-term. That will help not only U.S. exports; it will create the conditions in which healthy democracies can thrive. Specifically, CBTPA will:
- Offer temporary trade benefits to Caribbean Basin countries to facilitate their economic development and reconstruction after 1998's devastating hurricanes, place them on a more equal competitive basis with Mexico in the U.S. market, and reinforce the region's trend toward more openness in the conduct of economic policy.
- Encourage development of trade and investment policies that will facilitate their ultimate participation in the Free Trade Area of the Americas (FTAA).
- Expand the CBI program to extend preferential tariff treatment to certain textile and apparel products assembled from U.S. fabric that have been excluded from the program. This will encourage additional U.S. exports of cotton and yarn and U.S. investment in the region and strengthen the international competitive position of the U.S. textile industry.
- Extend preferential tariff treatment to textile handicrafts and all non-textile products currently excluded from such treatment under the existing Caribbean Basin Initiative.
- Reduce duty rates for textiles covered by the agreement by up to 100 percent, and such products would be free of quantitative restrictions. For other products, the tariff rate would be reduced up to 100 percent of the difference between the current rate and the rate applicable to Mexican goods under the NAFTA.
- Provide safeguard provisions on covered textile products. Tariff benefits could be modified under the same conditions as in the NAFTA in the event of disruptive import surges.
- Conditions countries' eligibility for these expanded trade benefits on fulfillment of WTO obligations pertaining to fair trade, cooperation in counter-narcotics efforts, and respect for core labor standards.
OTHER PROVISIONS OF THE TRADE AND DEVELOPMENT ACT OF 2000. The Act also:
- Improves enforcement of fair trade rules by requiring periodic changes in foreign products subject to U.S. retaliation when a foreign government persists in its failure to comply with a WTO decision.
- Expands the list of worker rights criteria countries must meet to be eligible for trade preference programs like GSP, CBI, and AGOA to include implementation of the recent International Labor Organization Convention banning the worst forms of child labor.
- Provides relief from high tariffs on wool fabric that has hurt competitiveness of the U.S. wool suit manufacturing industry.
- Promotes economic growth and democracy in other developing countries. The Act determines that the emigration laws and practices of Albania, Kyrgyzstan, and other countries are in compliance with the Jackson-Vanik amendment of the 1974 Trade Act, and thus are now eligible for normal trade relations status with the United States. That means that the U.S. will grant these countries the same trading rights we grant to other WTO members when these nations join that organization in the near future. Increased trade will lead to a better relationship with the U.S. and a surer path to democracy for these newly independent nations.
BENEFITS OF FREER TRADE. Since the creation of the General Agreement on Tariffs and Trade in 1948, Democratic and Republican Administrations, working in partnership with Congress, have concluded eight negotiating Rounds, signed hundreds of bilateral trade agreements, and opened markets for American goods. All this has helped to:
- increase global trade 15-fold;
- boost real production in the United States 5-fold; and
- augment real average American per capita income 3-fold.
Since the conclusion of the Uruguay Round in 1994, a more open world economy has helped American exports rise by over $200 billion (51 percent). Export expansion accounted for more than one-quarter of U.S. economic growth between 1992 and 1998. Average real wages have grown 6.3 percent under President Clinton, with export-related jobs paying 15 percent more on average than non-export-related jobs.