TRALAC - Trade Law Centre

Ugandan Apparel Firm in Trouble?

Tuesday, 18 November 2003

Source: AGOA.info

Energy-related products exported under AGOA continue to account for the largest share of AGOA-eligible exports to the US this year. This is according to figures just released by the US International Trade Commission.

For the year to September 2003, energy-related exports accounted for almost 80% of total exports under AGOA. This amounts to US$ 8.2bn worth of exports thus far in 2003 alone, which is almost the same value as total exports under AGOA for all product categories in 2002. Petroleum oils account for most exports in this product category. Notably, virtually all energy-related exports under AGOA did not previously qualify for duty-free access to the US market under the Generalised System of preferences (GSP).

Apparel goods form the second largest export category under AGOA, with US$ 870mn worth of exports for the year to September. This represents a 42% year-on-year increase over the same period in 2002. Lesotho and Kenya dominate exports in this sector, followed by Mauritius, Kenya and Swaziland. Kenya in particular has achieved notable year-on-year growth in dollar-terms. South Africa’s apparel exports are also up over 50% over the corresponding period last year, although this dollar-denominated value does not take into account the strong appreciation of the South African currency against the US $. Industry sources suggest that South African apparel manufacturers are currently struggling to maintain export-competitive. On the whole, though, apparel exports form a major beneficiary product group, since these exports did not previously qualify under the GSP (see chart). “Mens’ or boys’ woven trousers and pants” (US$ 158mn) and “knitted cotton sweaters and pullovers” (US$ 157 mn) form the largest two product exports within this category.

Energy ExportsApparel Exports

The transportation sector has also benefited significantly from AGOA. For the year to September 2003, qualifying exports stood at US$ 520mn, up almost 24% from the previous year. The largest single product category falling into this group is “passenger vehicles with an engine size between 1500cc and 3000cc”, with US$ 319mn worth of exports under AGOA during 2003 thus far. Exports of passenger vehicles with an engine size over 3000cc are US$ 126mn over the same period.

The fourth-largest export category consists of minerals and metals, with US$ 296mn exports for the year to September. However, more than two thirds of these exports previously qualified for duty-free market under the US’ GSP program, which reduces the marginal or “new” benefits to this sector. Nonetheless, duty-free exports under AGOA increased by 25% year-on-year.

Transportation ExportsMinerals and Metals Exports

Agricultural products are the next largest export category under AGOA, exporting US$ 160mn of goods thus far this year. This represents a 17% year-on-year increase. Major products in this group are oranges (US$ 20mn) and “partly or wholly stemmed tobacco” (US$ 15mn). While AGOA significantly extends duty-free access to this sector, a large proportion previously qualified under the GSP. And despite AGOA, agricultural products qualifying under AGOA still only account for 20% of agricultural exports shipped from these AGOA-eligible countries for the year to September 2003.

Exports of chemicals and related products amounted to US$ 130mn thus far in 2003, up almost 30% over the corresponding period last year. Virtually all of these products previously already qualified for duty-free access under the GSP. Important export products in this sector include titanium dioxide preparations (US$ 11mn).

Agricultural ExportsApparel Exports

Eckart Naumann