Bills
| 3.23.22

Should the U.S. Continue to Offer Duty-Free Imports From African Countries and Haiti? (H.R. 1295)

Do you support or oppose this bill?

What is H.R. 1295?

(Updated May 6, 2020)

This bill was enacted on June 29, 2015

Originally, this bill was all about the IRS, proposing to make it easier for organizations to register as tax-exempt 501(c)(4) entities with the IRS. Passed through committee, and by voice vote in the House, this bill was taken by the Senate and re-purposed (i.e. totally gutted) as the "legislative vehicle" for something completely unrelated. Through a series of amendments, the Senate changes this bill to be about reducing barriers to trade with Africa, Haiti, and other "less-developed" countries by inserting the text of S. 1267 (a related bill to H.R. 1819) into this bill (H.R. 1295).

Okay, now with it's new identity, this bill would extend the African Growth and Opportunity Act (AGOA) for 10 years through 2025. The Act is currently set to expire on September 30, 2015. 

The Generalized System of Preferences (GSP) program would be renewed through December 31, 2017 and retroactive relief would be given to eligible products imported while the GSP was defunct when it expired on July 31, 2013. The GSP program allows the U.S. to import products duty-free from 126 designated beneficiary countries and territories that are considered ‘third-country’ or least developed.

The Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE and HELP) would also be extended until September 30, 2025. These programs enable Haiti to export a variety of products, including certain apparel products, into the U.S. duty-free. This supports Haiti’s apparel industry, which is a primary source of employment in that country.

AGOA allows fabrics, textiles, and apparel produced in ‘third-country’ nations in sub-Saharan Africa to be imported duty-free — which basically means the U.S. won’t apply a tariff on the product, raising costs for purchasers.

African countries that would export to the U.S. through AGOA benefit from a broader definition of AGOA-eligible products — AGOA countries could combine inputs to meet satisfy AGOA’s rule of origin.

A President or their Administration under this bill has to give Congress at least 60 days notice before removing a country from the AGOA program, or withdrawing, suspending, or limiting any benefits. The Administration would be granted greater flexibility in withdrawing, suspending, or limiting AGOA benefits if it believes that would be more effective than terminating them altogether.

Oversight and transparency concerns would be addressed by creating additional Congressional notification and reporting requirements. Mechanisms for public input would be established, and at any time any party could petition the U.S. Trade Representative about whether a country is meeting the AGOA eligibility criteria.

Argument in favor

Eliminating tariffs on some imported goods from Africa, Haiti, and other less developed countries will promote economic growth and stability overseas, while saving American consumers and businesses money at home.

Argument opposed

While the U.S. generally isn’t competing for textile exports, this will make the imported goods cheaper to buy in the U.S. -- which could have a negative impact on domestic jobs.

Impact

Consumers that purchase imported goods, U.S. businesses that would import from countries covered by this bill, Congress, the U.S. Trade Representative, the President and their Administration.

Cost of H.R. 1295

The CBO estimates that this bill would reduce spending by $5.9 billion and reduce revenues by about $5.8 billion over the 2015-2025 period — decreasing deficits over the 11-year period by approximately $81 million. The reporting requirements included in this legislation would cost about $1 million over the 2015-2025 period.

Additional Info

In-Depth: According to the Senate Finance Committee’s summary of this legislation — renewing the GSP would eliminate $2 million per day in tariffs on imported goods, which supports about 80,000 jobs in the U.S. It further states that about 30,000 jobs in Haiti would be supported by the extension of the HOPE and HELP programs.

Sponsoring Rep. Paul Ryan (R-WI) said of his bill that “It will encourage our friends in Africa and Haiti to pursue free enterprise and solidify the rule of law. This legislation demonstrates that more trade can create opportunity at home and promote our economic values abroad.”

The Brookings Institution was generally supportive of this legislation, but points out that: “The vast majority of the 41 African countries that participate in AGOA… need significantly more time for the legislation to achieve its intended results. When Congress does vote to renew AGOA, it needs to ensure that the legislation will be in place for the next 15 years.”

AGOA’s organizational states that since its enactment in 2000, AGOA has generated about 100,000 jobs in the U.S., in addition to 350,000 direct jobs and another 1,000,000 indirect jobs in Sub-Saharan Africa. In 2012, the there were $34.9 billion in exports to the U.S. through AGOA.


Media:


Summary by Eric Revell
(Photo Credit: Flickr user World Bank Photo Collection)