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Kenya May Lose AGOA Market

Published date:
Sunday, 30 November 2003

Countries belonging to the Southern African Customs Union (SACU), namely South Africa, Namibia, Botswana, Lesotho and Swaziland steadily increased their exports to the US under AGOA for the year to September 2003. This is according to the latest trade data - denominated in US $ - released by the United States International Trade Commission (USITC). All five countries are AGOA-beneficiaries, and each has qualified under the “apparel provisions” which grants preferential market access also to garment exports.

In terms of overall exports from SACU, minerals and metals accounted for the largest share of exports. This is followed by textiles and apparel and transportation equipment (see graph). But more importantly, at least in terms of AGOA’s impact on the SACU economies, is the correlation between exports and AGOA-eligibility.

Two industry sectors stand out with regard to the high proportion of total exports qualifying for duty-free access to the US under AGOA. Here, the critical measure is “new AGOA exports”, i.e. exports of products that did not previously qualify for similar access to the US market under the Generalised System of Preferences (GSP).

Textiles and apparel (textiles themselves generally do not qualify, only apparel) and transportation equipment enjoy substantially improved market access as a result of AGOA. Within textiles and apparel, 73% of all exports to the US from SACU countries entered the US duty-free under AGOA. 99% of these products did not previously qualify under the GSP.

Transportation equipment has also benefited significantly, with 77% of exports consisting of “new” AGOA products. Here, passenger motor vehicles (of engine size between 1,500cc and 3,000cc) are the largest individual beneficiary category. In fact, exports in this product category are the second largest export product (by value) to enter the US duty-free under AGOA in the year to September 2003. Only petroleum oil exports surpass automotives.

“Chemicals and related products”, and “agricultural products” are the remaining sectors in SACU countries with significant exports under AGOA. However, much of the trade takes place between South Africa and the US. Within agriculture, it is interesting to note that US$ 80.9mn of the US$ 95.8mn (or 84%) entering the US under GSP/AGOA are goods that did not previously qualify for duty-free access. While preferential treatment effectively still only applies to half of SACU’s agricultural exports to the US, AGOA has substantially increased this proportion.

SACU’s trade profile with the US warrants a closer look at the two dominant sectors in terms of successful exports under AGOA.

Exports of clothing have increased substantially since AGOA’s inception, with Lesotho’s performance standing out as one of the success stories of this trade program. As can be seen on the chart, Lesotho is the largest contributor to the ‘pool’ of SACU exports with US$ 268mn worth of exports so far this year alone. Next in line are South Africa (US$ 93mn) and Swaziland (US$ 90mn), with Namibia and Botswana a distant 4th and 5th place respectively. However, it is worth noting that Namibia’s apparel exports have risen rapidly over the past year, with a recent large investment in a textile and clothing manufacturing facility outside the country’s capital Windhoek starting production and exports.

Overall, SACU’s exports of apparel under AGOA have risen 29% in $-terms on a year-on-year basis compared to 2002. This is despite the fact that the currencies of Namibia and Lesotho are linked to the South African currency, which has appreciated by more than 50% against the US $ over the past 18 months.

Exports of transportation equipment under AGOA have also risen rapidly, and continue to grow in $-terms. Whereas aggregate exports within this broad category have risen by 24% on a year-on-year basis compared with the year to September 2002, exports of goods that previously did not qualify for benefits under the GSP grew by 22%. Once again, the significant movements of the Rand-linked currencies against the US$ must be borne in mind.

Whereas apparel trade under AGOA is relatively spread out among SACU countries, the same does not apply to exports of transportation equipment (i.e. automotives and automotive components). Here, all exports originate in South Africa, both in terms of aggregate exports and AGOA-exports.

Eckart Naumann (11/2003)

Latest AGOA Trade Data on

Click to view the latest sector profiles of bilateral trade with the United States for South Africa, Namibia, Lesotho, Botswana and Swaziland .

For more information on AGOA click here .

Other regularly updated trade statistics on include:

  • All Countries’ AGOA and GSP Trade Overview

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.

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