President Bush has extended the life of a free trade agreement between the United States and 37 sub-Saharan African countries through 2015. The African Growth and Opportunity Act, or AGOA, promises general duty free and quota free access for African products to American markets. In place since 2000, AGOA already has generated over $340 million in investments and created thousands of jobs in Africa. VOA’s Serena Parker reports on the impact AGOA is having on Africa’s textile and apparel industries.
The United States is the largest importer of apparel in the world. Most of the clothes in Americans’ closets bear labels that say “Made in China” or “Made in Taiwan.” But in recent years there has been an increase in clothing labeled “Made in Lesotho.” Yes, Lesotho. That tiny mountainous country encircled by South Africa is the largest exporter of apparel and textiles to the United States of all the sub-Saharan African countries.
Lesotho is one of 37 African nations participating in the African Growth and Opportunity Act or AGOA, a free trade pact with the United States. President Bush says AGOA, which opens U.S. markets to African goods, helps to spread peace and encourage economic and political reforms across the region.
“There’s a growing consensus in both Africa and the United States that open trade and international investment are the surest and fastest ways for Africa to make progress,” he says.
According to U.S. government trade figures, AGOA exports to the United States increased by 55% in 2003, while American exports to AGOA countries grew by 15%. Although all sorts of export products are included under AGOA, Florizelle Liser, Assistant U.S. Trade Representative for Africa, says clothing exports appear to be giving stagnant African economies the biggest boost.
“And just that tiny increase from where they were when AGOA started -- they were a little less than 1% in 2000 -- to 2.1% in 2003 has made an enormous impact on their end,” she says. “It’s hundreds of millions of dollars of investment and tens of thousands of jobs from just that little piece.”
At this point, most foreign investment in AGOA-countries is in apparel production, but Florizelle Liser says some foreign investors have begun to invest in textile factories. She says people also are investing in the production of items needed for apparel manufacturing such as buttons and zippers. Ann Tutwiler, Chief Executive of the International Food and Agricultural Trade Policy Council, says this is encouraging news.
“In general you want to see the developing countries diversifying their economies so they are not too heavily dependent on one or two commodities or even raw commodities in general because you need to get these countries to extract more value of their production internally,” she says.
But many African textile and apparel plant owners are concerned that the progress they have made in recent years will be undermined by the export of large quantities of used clothing from the United States and other industrialized countries to African nations.
Brian Brink, executive director of the Textile Federation of South Africa, says the sale of second-hand clothing coming from the developed countries has hurt local industry. While local labor is cheap, he says it still costs more to make a new shirt in Africa than to buy a used one from the West.
“We in South Africa have fought long and hard together with our labor unions to prohibit that because all it does is put the local industry out of work and we lose jobs in the apparel factories and so on,” he says.
Even more worrisome, Brian Brink says, is the proposed January 2005 termination of all quotas under the World Trade Organization’s agreement on textiles and clothing. Developing country apparel exporters already are losing ground to China and Mr. Brink expects that trend to worsen in 2005.
But Florizelle Liser is cautiously optimistic about the future of Africa’s textile and garment industries. “China and others will still have to pay duties,” she notes. “And some of the duties in terms of U.S. imports of various textile products as well as apparel products range from 5% up to 32%. And for the Africans -- to the extent that they can continue to take advantage of the duty free margin that they have -- they may be able to solidify their position in terms of those exports.”
Although Florizelle Liser expects some countries in Africa to lose market share to the Chinese, she says the Bush Administration is certain that promoting trade between the AGOA countries and the United States is the key to sustained economic growth in Africa.