TRALAC - Trade Law Centre

Clothing, Textile Exports to US, EU Hurt By SA Rand

Wednesday, 14 April 2004

Source: Finance 24 (South Africa)

The African Growth and Opportunity Act (Agoa) benefits should be extended over a much longer period, if not made permanent, and the special liberal rules of origin for clothing products be extended considerably beyond 2004, World Bank economists Paul Brenton and Takako Ikezuki recommend in a recent working paper.

According to them, the ability to export clothing products under preferences with liberal rules of origin is the key factor currently determining whether Agoa has a significant impact on non-oil exporting African countries.

At present only a small number of countries receive substantial benefits, and Least Developed Countries (LDCs) that do not receive preferences for clothing have yet to see an impact of AGOA on their overall exports.

However, the benefits from exporting clothing under Agoa appear fragile in the face of the removal of quotas in the United States on major suppliers, such as China, at the end of 2004, and the planned removal of the liberal rules of origin that allow for the global sourcing of fabrics from least-cost locations.

The effective inclusion of textile products and a number of high-duty agricultural products would also help to broaden the range of opportunities for African exporters in the US market.

"Nevertheless it is important that the opportunities created by Agoa are integrated into a broader framework for promoting trade, and that it be recognised that if the opportunities offered by more open trade are to be exploited there must be concerted efforts to improve the environment for investment in countries covered by Agoa," the World Bank economists argue.

President Bill Clinton signed Agoa, the first-ever trade pact with the African continent, into law in 2000.