A newly released study by the U.S. International Trade Commission (USITC) suggests that the African Growth Opportunity Act (AGOA) and its “third-country fabric provision” are critical for US apparel sourcing from sub-Saharan Africa (SSA). Specifically:

U.S. apparel imports from SSA grew faster than the world average. During 2016–19, U.S. apparel imports from SSA enjoyed a compound annual growth rate (CAGR) of 11.8 percent (compared with 1.3 percent CAGR of all countries), from $1.0 billion in 2016 to $1.4 billion in 2019. However, SSA overall remained a small apparel supplier to the U.S. market, accounting for only 1.7 percent of the market shares in 2019 (lower than 2.7 percent in 2004, but was a record high since 2015).

The report suggests that the duty-free preferences awarded under AGOA and the liberal rules of origin available for apparel under the “third-country fabric provision”* are the key competitive advantages of SSA serving as an apparel sourcing destination for U.S. companies. Due to limited yarn and fabric production in SSA, the third-country fabric provision remained critical for SSA exports of apparel to receive duty-free entrance to the United States. Notably, nearly all U.S. imports of apparel from SSA countries entered under AGOA (98 percent). Of these imports, virtually all of them (95.8 percent) used the third-country fabric provision in 2018.