Blog: Not much of AGOA
Leonie Barrie | 19 April 2004
All eyes in the apparel industry are so firmly fixed on 31 December as a turning point in garment sourcing patterns that another – and more imminent - milestone is likely to be missed. In just five months time – 30 September to be precise – a key provision in the African Growth and Opportunity Act is due to expire and, unless the rules are relaxed, orders from US retailers could soon start to dry up and manufacturing could make a mass exodus to Asia.
The provision lets African factories use fabric from Asian countries like Taiwan and China, which is then cut and assembled in Africa before being shipped to the United States. It was hoped that during the first few years of AGOA, which came into effect four years ago, African countries would develop their own fabric industry to feed the clothing sector. The reality, of course, is that the level of finance and skill required to get this off the ground just hasn’t been forthcoming. Clothing manufacturers in sub-Saharan Africa are facing a stark choice: either seek out non-existent African-made fabric or use Asian material and lose the duty-free privilege which makes the American law worthwhile.
A just-published study by the World Bank says AGOA has, in fact, had little benefit on all but a few countries. The authors argue that AGOA should be extended beyond 2008 and that US rules of origin should not be tightened. But with US trade and political priorities increasingly focused on China, it is likely that efforts to deepen US-Africa trade links will be forced to take a back seat for the foreseeable future.
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