TRALAC - Trade Law Centre

Lesotho and Mr Price Have To Face Reality Soon

Sunday, 12 October 2003

Source: Business Report

Opinion&Analysis: The spat between the unions and organisations such as Mr Price needs a touch of reality. If such organisations are buying vast quantities of clothing from, say Lesotho, it is only because legislation permits it.

I was chairman of the working group for trade protocol for Malawi and have insight into such oddities.

Lesotho is a lesser developed country (LDC) as far as the African Growth and Opportunity Act (Agoa) is concerned. For five years it can import fabric from wherever and sew it, qualifying as Agoa accepted.

Back to Mr Price, because with vast amounts of garments in Lesotho the costs are likely to be very attractive. But now comes the drawback, because unless the US renegotiates Malawi, Lesotho and Mozambique, to name three LDC countries, from 2005 - Agoa has a fixed first-stage time limit - Lesotho will have to source all fabric from within that small country, or from the Southern African Customs Union.

Unless South Africa can help, goodbye Lesotho's output

.

I seriously doubt that there are many South African companies as active as the Far Eastern fellows are in Lesotho - but we also know that such operators are rather mobile.

Mr Price will have to come home eventually, even if only partly, when Agoa forces the Lesotho factories to buy their fabrics locally.

If this is not enough, Lesotho realised its advantage under the Southern African Development Community (SADC) negotiations and pulled a really fast one. It forced through an amendment that gave equal two-way access for clothing into any SADC member state to match up with an individual member state's capacity.

Thus, say Malawi, which has only five garment factories, has to accept under SADC tariffs the might of Lesotho's output, if necessary. Mr Price therefore is a beneficiary twice, because the same clause applies to South Africa.