Export Digest: Exporting to the US under AGOA - Domestic Processes
01 August 2012
The Export Digest touches on export-related matters, including SATH export-related activities, export marketing, trade finance, export logistics, international trade law, export administration, export sales contracts and export success stories under the African Growth and Opportunity Act (AGOA). We answer readers' questions about practical export-related matters and highlight important trade-related developments such as new trade agreements or regulatory changes. International trade experts, exporters and importers feature as guest contributors to the column to share their experiences.
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Exporting to the US under AGOA - Domestic Processes
SATH has come across firms whose products are AGOA-eligible but are not taking advantage of AGOA mainly because of lack of knowledge about the required processes and whom to contact.
All companies wishing to export under any trade agreement must meet the trade agreement's requirements, especially with respect to demonstrating the origin of goods.
This issue of Export Digest looks at the processes an exporter under AGOA has to go through domestically.
The processes and requirements below are generic, and exporters are advised to approach their relevant trade departments, Customs and chambers of commerce for procedures and requirements applicable in their country. There are also sector-specific processes, e.g. regarding the textiles/apparel sector and horticultural products that exporters should be aware of.
Registration
The exporter must be registered with the relevant Ministry in the country of origin, e.g. mining, agriculture, etc. Export permits for some agricultural products, for example, are issued by the Ministry of Agriculture, while metals and precious stones permits are issued by the Ministry of Mines or equivalent. These departments require export information for statistical purposes, to monitor movement of products and to implement export bans, where applicable. The registrant can be either a manufacturer or producer, or a distributor. In some countries, like Malawi, the exporter must be registered for Export Processing Zone (EPZ) status.
The basic requirements for registration include:
Exporters may authorize their forwarding and clearing agents to complete and sign certificates of origin and apply for an AGOA visa.
Revenue/Customs Authorities
Customs authorities handle export registration under AGOA. The customs authorities require most of the above-mentioned supporting documents. Some countries have established AGOA desks at Customs to issue AGOA related documents needed in the US. The main roles of the customs departments include:
The inspection process at the exporter's premises includes physically checking the goods intended for export, the style and order numbers on the invoices and their correspondence with the ones on packaging/cartons, the descriptions of goods on the documents against the goods in the cartons and the labels on the goods to confirm that they indicate that they are made in an African country. Also, the inspection site visits help to determine whether the manufacturing process does not fall under a list of minor processes, below the required value-addition threshold of 35%.
Departments of International Trade
The departments play a regulatory and facilitation role: facilitating the registration of AGOA eligible exporters, coordinating the inspection of premises and providing all the necessary information for one to export under AGOA.
The exporter lodges an application for a rebate certificate on machinery and raw materials. This is normally assessed in conjunction with Customs. A site inspection visit is conducted to verify the information before a rebate certificate is issued.
In the case of South Africa, the International Trade Administration Commission (ITAC) administers a variety of rebate provisions for a rebate of custom duties on components and material which are used in the manufacture, processing, finishing, equipping or packaging of goods exclusively for export.
In Lesotho, all manual AGOA applications are submitted to the Ministry of Trade for approval after which the Certificates of Origin are issued to the exporters, who then submit the Certificates together with other export documents to Customs for further processing. Automated exporters simply feed the export information into the One-Stop-Shop System to generate the export documents.
In Malawi, the department of international trade collects samples, where necessary, to send to the US Embassy for verification before exporting is approved.
Exporter
The exporter has to complete all the required customs declaration documents along with the AGOA requirements and submit to Customs for approval.
The exporter has to get the necessary permit, inspections and origin certificates and meet the requirements of the buyer and the export market. He has to ensure all shipping/commercial documents are in order, organize transport and agree on matching International Commercial terms (Incoterms) with the buyer.
It is the exporter's duty to ensure that his products conform to the Animal and Plant Health Inspection Service (APHIS), Food and Drug Administration (FDA), US Bioterrorism Act requirements and general international trade standards.
Exporters have to take the Exchange Control Document (F178) to their local bank for attesting and send the authorized documents to their buyers in the US.
Other
Some countries, such as Malawi, have AGOA Committees, which comprise stakeholders such as the Ministry of Trade, Finance, Labor, Investment/Trade agencies, the Revenue Authority and the Central Bank. The Committee approves the application by the exporter upon satisfaction of conditions required.
From the above general guidelines, it is clear that an exporter must familiarize himself with in-country requirements, talk to the relevant Ministry (e.g. agriculture) and talk to the department of trade and Customs. Where there is decentralization, such as in Tanzania, you find chambers of commerce involved in the process. Key AGOA contacts in a few select countries.
Cos Mamhunze
Column Editor
Cos is an international trade specialist with more than 12 years' experience promoting international trade between Africa and the US and intra-regional trade within Southern Africa. His work has involved working with small and medium enterprises (SMEs) and large firms, women-owned enterprises, importers, exporters, trade support institutions as well as government departments. Cos holds a MBA and has studied International Trade Management.
Opinions expressed in this column are not necessarily those of USAID or SATH.
Next Articles: Subsequent Export Digests will focus on processes on the US side and will share success stories from exporters under AGOA. Also, we will attend to questions from exporters and the public, and share the Q&A for the benefit of other exporters. We invite you to send us your questions.
Write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it with your suggestion for a topic or question. Or start a conversation via our Facebook Page.
Exporting to the US under AGOA - Domestic Processes
SATH has come across firms whose products are AGOA-eligible but are not taking advantage of AGOA mainly because of lack of knowledge about the required processes and whom to contact.
All companies wishing to export under any trade agreement must meet the trade agreement's requirements, especially with respect to demonstrating the origin of goods.
This issue of Export Digest looks at the processes an exporter under AGOA has to go through domestically.
The processes and requirements below are generic, and exporters are advised to approach their relevant trade departments, Customs and chambers of commerce for procedures and requirements applicable in their country. There are also sector-specific processes, e.g. regarding the textiles/apparel sector and horticultural products that exporters should be aware of.
Registration
The exporter must be registered with the relevant Ministry in the country of origin, e.g. mining, agriculture, etc. Export permits for some agricultural products, for example, are issued by the Ministry of Agriculture, while metals and precious stones permits are issued by the Ministry of Mines or equivalent. These departments require export information for statistical purposes, to monitor movement of products and to implement export bans, where applicable. The registrant can be either a manufacturer or producer, or a distributor. In some countries, like Malawi, the exporter must be registered for Export Processing Zone (EPZ) status.
The basic requirements for registration include:
- Company details: name, physical address, contact details;
- Names of directors and their nationalities;
- List of products intended for export under the agreement, including tariff codes;
- List of raw materials used and their tariff codes;
- State the origin criteria of your products;
- Calculation of costs, where necessary;
- Financials;
- Company certificate of registration; and
- Lease agreements and any other supporting documents.
Exporters may authorize their forwarding and clearing agents to complete and sign certificates of origin and apply for an AGOA visa.
Revenue/Customs Authorities
Customs authorities handle export registration under AGOA. The customs authorities require most of the above-mentioned supporting documents. Some countries have established AGOA desks at Customs to issue AGOA related documents needed in the US. The main roles of the customs departments include:
- Inspection of premises – bonded warehouse and issuance of inspection certificates;
- Facilitate clearance of raw materials;
- Visa certification – AGOA visas;
- Compilation of statistics for exports under AGOA;
- Certificates of origin;
- Endorsing the documents which accompany the consignment (inspection certificate, SAD 500 and 501 (South Africa), transit document and the invoice); and
- Endorsing and authorizing export documents (insert AGOA number on the Certificate Of Origin, visa on the invoice and SAD 500, exchange control declaration).
The inspection process at the exporter's premises includes physically checking the goods intended for export, the style and order numbers on the invoices and their correspondence with the ones on packaging/cartons, the descriptions of goods on the documents against the goods in the cartons and the labels on the goods to confirm that they indicate that they are made in an African country. Also, the inspection site visits help to determine whether the manufacturing process does not fall under a list of minor processes, below the required value-addition threshold of 35%.
Departments of International Trade
The departments play a regulatory and facilitation role: facilitating the registration of AGOA eligible exporters, coordinating the inspection of premises and providing all the necessary information for one to export under AGOA.
The exporter lodges an application for a rebate certificate on machinery and raw materials. This is normally assessed in conjunction with Customs. A site inspection visit is conducted to verify the information before a rebate certificate is issued.
In the case of South Africa, the International Trade Administration Commission (ITAC) administers a variety of rebate provisions for a rebate of custom duties on components and material which are used in the manufacture, processing, finishing, equipping or packaging of goods exclusively for export.
In Lesotho, all manual AGOA applications are submitted to the Ministry of Trade for approval after which the Certificates of Origin are issued to the exporters, who then submit the Certificates together with other export documents to Customs for further processing. Automated exporters simply feed the export information into the One-Stop-Shop System to generate the export documents.
In Malawi, the department of international trade collects samples, where necessary, to send to the US Embassy for verification before exporting is approved.
Exporter
The exporter has to complete all the required customs declaration documents along with the AGOA requirements and submit to Customs for approval.
The exporter has to get the necessary permit, inspections and origin certificates and meet the requirements of the buyer and the export market. He has to ensure all shipping/commercial documents are in order, organize transport and agree on matching International Commercial terms (Incoterms) with the buyer.
It is the exporter's duty to ensure that his products conform to the Animal and Plant Health Inspection Service (APHIS), Food and Drug Administration (FDA), US Bioterrorism Act requirements and general international trade standards.
Exporters have to take the Exchange Control Document (F178) to their local bank for attesting and send the authorized documents to their buyers in the US.
Other
Some countries, such as Malawi, have AGOA Committees, which comprise stakeholders such as the Ministry of Trade, Finance, Labor, Investment/Trade agencies, the Revenue Authority and the Central Bank. The Committee approves the application by the exporter upon satisfaction of conditions required.
From the above general guidelines, it is clear that an exporter must familiarize himself with in-country requirements, talk to the relevant Ministry (e.g. agriculture) and talk to the department of trade and Customs. Where there is decentralization, such as in Tanzania, you find chambers of commerce involved in the process. Key AGOA contacts in a few select countries.
Cos Mamhunze
Column Editor
Cos is an international trade specialist with more than 12 years' experience promoting international trade between Africa and the US and intra-regional trade within Southern Africa. His work has involved working with small and medium enterprises (SMEs) and large firms, women-owned enterprises, importers, exporters, trade support institutions as well as government departments. Cos holds a MBA and has studied International Trade Management.
Opinions expressed in this column are not necessarily those of USAID or SATH.
Next Articles: Subsequent Export Digests will focus on processes on the US side and will share success stories from exporters under AGOA. Also, we will attend to questions from exporters and the public, and share the Q&A for the benefit of other exporters. We invite you to send us your questions.
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