Opinion
An AGOA With Even More Teeth
For the record, each and every one of the stateside stakeholder groups wants what is best for Africa’s fast growing middle class just as much as it wants to give China and other countries a bloody nose in trade and investment competition. That said, because Africa brings in only about 2 percent of U.S. imports, who can blame Congress for not realizing that most of sub Saharan Africa does not really benefit much from AGOA?
Exploding Heads
But we must return to the exploding heads and why everyone should feel the way we do: The Obama Administration had taken the African Union’s ideas on a more
effective AGOA; combined these with studies sanctioned by U.S. Trade Representative Ambassador Michael Froman and even placed its outline for an enhanced AGOA on its official whitehouse.gov website. Foreign and trade policy observers felt that the U.S. now had a plan for Africa.
Key to making changes in AGOA lay in analyzing the true dynamic that existed between the world’s fastest growing middle class, and the United States. Here, Africa is a burgeoning economy that does not present a threat to internal producers in the United States. There’s also a focus on agriculture since sub-Saharan Africa is still between Rostow’s traditional agrarian economy and preconditions to take-off stage.
Like on the White House website, had the Africans not requested America for an enhanced AGOA? To this, Obama had specifically said he was keen on ensuring that
AGOA and its third country fabric provision were renewed for a long-enough period to encourage investment. Then, on top of updating AGOA origin rules and eligibility criteria, an appeal was sent to Congress to consider a total of 316 products in AGOA – some that were currently excluded due to out-of-date tariff rate quotas. So, in ministers not asking for specifics to be added to AGOA, Africans was both playing it safe and saying AGOA was good enough for now.
Lesotho’s Dilemma
Today, in February 2015, everyone, like they have been for the past two years, is in a state of panic – more so, countries like Lesotho, Kenya, Mauritius and South Africa.
Kenya’s garment manufacturers are looking to be reassured that AGOA will pass, but even Chairman Ryan’s proposal that Congress publish a legislative agenda may
not calm some nerves in Maseru. Lesotho, which in 2013, exported knit and woven apparel worth over US$321 million is dependent on textiles because it provides work for over 37,000 people.
In 2006, Lesotho textile accounted for 21 percent of Lesotho’s gross domestic product (GDP), and it dipped to 12 percent in 2012. This drastic drop was not due to Lesotho suddenly diversifying its economy to diamonds from the Letseng mine: It came from cancelled orders for Lesotho’s garments.
As Sourcing Journal Online suggests, timing is everything in the apparel and footwear industry: Industry Executives plan production and place orders months, and sometimes years, in advance so goods make it to stores in time for the next season. Panic on AGOA legislation is enough to send buyers to Bangladesh and Vietnam.
So, what is Lesotho to do? Of course, all AGOA beneficiaries must fight their for their specific privileges. And yes – if countries like Namibia or Ghana are not yet ready with their respective products, Lesotho and other countries must forge ahead. While 2012 was unfortunate, this time around, with Obama’s Democrats losing an already hyper polarized Congress in November 2014 to a Republican Party hostile to his agenda, the Africans are right to fear that the Specter of 2012 is back to haunt the garment industry with a vengeance.
