Madagascar has been threatened with removal from the list of African Growth and Opportunity Act (AGOA) beneficiary countries after the US issued it with an ultimatum last week.

The State Department outlined four steps the country needed to take by 15 December if it was to retain its duty-free concessions under the AGOA rules.

These included the announcement of the full transitional government cabinet; establishment of a national reconciliation council; clear progress toward establishing an independent electoral commission; and setting an election deadline with an update of those election plans for the international community.

"Failure to achieve these benchmarks by 15 December 2009 would seriously threaten Madagascar's continued eligibility for AGOA's trade benefits in 2010," warned department spokesman Ian Kelly.

The US objects to the overthrow in March 2009 of the country's democratically elected President Marc Ravalomanana, who was replaced with political rival Andry Rajoelina.

This, it believes, breaches one of the key rules of eligibility for AGOA, which requires beneficiary countries to make "continual progress in the rule of law and political pluralism."

The US is now urging the Malagasy political leadership to take "concrete steps toward re-establishing a constitutional democratic government and the rule of law."

Madagascar has been helped by AGOA trade benefits since October 2000, and estimates say between 100,000 and 500,000 direct and indirect jobs would be threatened by the loss of the trade concessions.

Writing on just-style today (18 December), Mike Flanagan, chief executive of Clothesource, said Madagascar could lose its AGOA privileges from 1 January 2010.

"Losing them can add 20-30% to the price of garments delivered to the US, which buys over 70% of Madagascar's garment exports."

He added such a move "would probably devastate Madagascar's garment industry - and this could hit European customers, even though Madagascar's duty-free access to the EU would be unaffected."