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The Trade and Development Act of 2000
THE TRADE AND DEVELOPMENT ACT OF 2000:
STRENGTHENING OUR ECONOMIC PARTNERSHIP WITH SUB-SAHARAN AFRICA AND THE
CARIBBEAN BASIN
May 18, 2000
TODAY, PRESIDENT CLINTON WILL SIGN INTO LAW THE TRADE AND DEVELOPMENT
ACT OF 2000. The measure 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 participate more fully in the benefits of the global economy.
STRENGTHENING OUR PARTNERSHIP WITH AFRICA THROUGH THE AFRICAN GROWTH
AND OPPORTUNITY ACT. The 48 nations of sub-Saharan Africa make up a market
of 700 million people that offers enormous commercial potential for U.S.
exporters. In 1998, for example, our exports to Africa amounted to more than
$6.5 billion -- more than 45 percent greater than those to all the countries of
the former Soviet Union combined. Yet, U.S. trade with Africa still represented
merely 1 percent of our total trade that year. There is room for our trading
relationship to grow and benefit both markets as Africa develops. AGOA will
promote reforms in Africa that will leverage efforts to increase investment,
expand economic growth, and reduce poverty. Among other provisions, the Act
will:
Expand the Generalized System of Preferences (GSP) program to provide
duty-free treatment to virtually all products exported to the U.S. from
sub-Saharan Africa. The GSP program provides preferential tariff treatment for
imports of developing countries that satisfy certain eligibility
requirements.
Institutionalize a high-level economic dialogue and take initial
steps toward consideration of a Free Trade Area.
Protect African workers and U.S. jobs through the creation of tough
safeguards against trans-shipment; i.e., shipping an item through a beneficiary
country that was in fact manufactured in a third country so as to gain illegal
access to the American market on preferential terms.
Require that human rights and internationally recognized worker
rights be respected.
STRENGTHENING OUR TIES TO THE CARIBBEAN THROUGH THE U.S.-CARIBBEAN
BASIN TRADE PARTNERSHIP ACT. The 23 independent countries of the Caribbean
Basin region together form the sixth largest export market for U.S. goods,
totaling $19 billion and absorbing 2.7 percent of U.S. exports in 1999. But the
devastation of Hurricanes Mitch and Georges in 1998 set the regional economy
back. To help repair the damage and promote long-term growth, the aAct, among
other provisions, will:
Expand the CBI program to extend preferential tariff treatment to
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, while improving the global 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 on 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.
Conditions countries’ eligibility for these expanded trade
benefits on Require the fulfillment of WTO obligations, protection of
intellectual property rights, cooperation in counter-narcotics efforts, and
respect for core labor standards.
THE TRADE AND DEVELOPMENT ACT OF 2000 IS PART OF PRESIDENT
CLINTON’S LARGER TRADE AND DEVELOPMENT AGENDA. ForIn too many poor
countries, foreign debt obligations, major public health challenges, infectious
disease (especially HIV/AIDS), and illiteracy and inadequate workforce skills
inadequate basic education impede efforts to reduce poverty and capitalize on
opportunities in the global economypresented by expanding international trade
and investment. To meet this three-pronged challenge, the President has:
Debt Relief: Helped lead our G-7 partners to adopt the Cologne
Debt Initiative, which will reduce the debts of over 30 of the poorest
countries by an estimated 70 percent when combined with previous efforts.
Infectious Disease: Proposed in his budget this year a $1
billion tax incentive aimed at stimulating the development of vaccines for poor
countries, a $50 million contribution to the Global Alliance for Vaccines
Initiative, and a $100 million increase in foreign assistance for AIDS
prevention and care. He has also appealed to the World Bank and other
multilateral development banks to increase low interest loans for infectious
diseases by $400 million to $900 million.
Basic Education/Combating Child Labor: Proposed in his budget
this year a 50 percent increase in U.S. assistance for improving access to
basic education and combating child labor in developing countries, including
$45 million for the International Program to Eliminate Child Labor, and $55
million in new funding for targeted bilateral educational aid to developing
countries.
DETAILS OF THE
TRADE AND DEVELOPMENT ACT OF 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 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.