The US Congress has voted to renew the African Growth and Opportunity Act (AGOA) and extend it by three years, just two months before its was set to expire
The act has supported thousands of jobs in Africa’s clothing sector in recent years due to the number of benefits it has provided African textile manufacturers.
If the provision failed to get an extension, a large percentage of African countries would have temporarily, if not permanently, lost duty-free access for clothing items exported to the US.
AGOA, which was first passed in 2000, has provided incentives for African nations to open up their economies and build free markets. About 40 African countries have been eligible for AGOA benefits up until now. The renewed legislation has also made South Sudan eligible for the benefits.
The act offers substantial trade preferences that allow almost all goods produced in the AGOA-eligible countries to enter the US market duty free. AGOA’s effectiveness, however, has depended on its third country-fabric (TCF) provision, which was set to expire in September 2012.
Under the TCF provision, lesser-developed beneficiary countries enjoy an additional preference in the form of duty-free access for apparel made from fabric originating anywhere in the world.
Kenyan President Mwai Kibaki said, “The AGOA extension will lead to an expansion in exports from Kenya and the whole of Africa to the USA markets besides promoting a high-level dialogue on trade and investment-related issues.
“The act, which was signed into law 12 years ago, has encouraged economic integration and stimulated job growth in the country,” he added.
The uncertainty that prevailed until recently over whether or not the act would be extended was having a severe impact on the African textile industry.
Manufacturers in Lesotho and Swaziland had been laying off workers in anticipation of a fall in demand.
During a recent interview with German broadcaster DW, African Cotton and Textiles Industries executive director Rajeev Arora remarked, “The amount of business lost is close to US$50mn (€40mn). Kenya has been the most affected country as it is the continent’s major exporter of textiles and lost close to US$20mn dollars worth of or ders.”
