The Africa Growth and Opportunity Act (AGOA)
Malawi is a beneficiary of the Africa Growth and Opportunity Act. AGOA is an economic partnership between the US and sub-Saharan Africa. It is designed to open up new avenues for increased trade, investment and transfer of technology. The Act originally covered the 8-year period from October 2000 to September 2008, but amendments signed into law by US President George Bush in July 2004 further extend AGOA to 2015.
AGOA eligibility does not automatically imply eligibility for the 'Wearing Apparel' provisions. In order to export apparel (and certain textile items)to the U.S. duty-free under AGOA, countries must have implemented a 'Visa System' to the satisfaction of US authorities and one that ensures compliance with the AGOA rules of origin. As of May 2006, 25 of the 37 AGOA-eligible countries had complied with this condition and had obtained the necessary visa system, allowing them to export apparel to the US duty-free under AGOA.
The "Everything But Arms" Agreement
In February 2001, the European Union’s Council adopted Regulation (EC) 416/2001, the so-called "EBA Regulation" ("Everything But Arms"), granting duty-free access to imports of all products from LDC's, except arms and ammunitions, without any quantitative restrictions (with the exception of bananas, sugar and rice for a limited period of time).
Beneficiaries of the special arrangements for least developed countries require formal recognition by the United Nations. At present, 50 developing countries, including Malawi, belong to the category of LDC's.
EBA provides the most favourable regime available and gives the 50 LDC countries duty free access to the EU for all products, except arms and ammunition and 41 tariff lines concerning rice and sugar, for which duty free quotas are established until full liberalization is achieved in September 2009 (rice) and October 2009 (sugar). For the period from 1 October 2009 to 30 September 2012 the importer of sugar shall undertake to purchase such products at a minimum price not lower than 90 % of the reference price.
For Malawi, the Everything But Arms agreement provides nearly all of the benefits of the EPA structure (duty free market access), without most of the threats (increased competition from EU companies). In particular it is expected that in 2009 when sugar joins the list of approved products, Malawi will get a major export earnings boost as it will be able to significantly expand its sugar exports to Europe.