- African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/Nigerians Urged to Maximise AGOA's Benefits

Nigerians Urged to Maximise AGOA's Benefits

Published date:
Tuesday, 17 February 2004

Analysis: Trade statistics released a few days ago by the US Department of Commerce, Office of Textiles and Apparel, confirms Lesotho as the dominant beneficiary of duty-free access to the vast US market for apparel under AGOA. Lesotho’s share of apparel exports under AGOA amounted to 31% (or $ 372 million) in 2003. AGOA removes import duties on a vast range of goods produced in Africa, although to date the clothing manufacturing sector has been one of the largest single beneficiaries.

Lesotho qualifies for a temporary waiver from AGOA’s usual rules of origin relating to garments, as do the other beneficiary countries considered to be “lesser developed”. Only South Africa, Mauritius, Gabon and the Seychelles do not benefit from this waiver, and have to use locally or regionally produced textile inputs in the manufacture of qualifying garments.

During 2003, the total value of apparel exported to the US from AGOA-beneficiary countries rose to US$ 1.53 billion, up 38% in $-terms from the previous year. 78% of these apparel exports qualified under AGOA and thus entered the US duty-free. In 2002, the proportion was 72%.

However, most apparel exported duty-free under AGOA is still manufactured from third-country fabrics and yarns, as provided for under the special “wearing apparel provisions”. In fact, 76% of AGOA-eligible apparel exports did not use local textile inputs. In 2002, this proportion was marginally lower, and stood at 75%. Clearly, insufficient regional capacity exists to manufacture the textiles needed (at the right quality and price) to increase the proportion of local value-added. The AGOA III bill, currently before the US Congress, proposes an extension of the rules of origin waiver for “lesser developed countries” to 2008. Should this extension not materialise, some of the current apparel exporters under AGOA may face a collapse of their preferential exports to the US under AGOA. South Africa and Mauritius – the only two garment manufacturing countries not eligible under the time-bound rules of origin waiver – last year accounted for 99% of apparel exports using “local or regional fabrics”.

Sub-Saharan African apparel manufacturers exporting under AGOA face another challenge with the pending scrapping of quotas under the World Trade Organisation’s Agreement on Textiles and Clothing. The removal of quotas is likely to lead to a streamlining of the global textile and clothing market, with the low-cost producers in the Far East (e.g. China) likely to benefit most. A recent report by the US International Trade Commission (USITC), entitled Textiles and Apparel: Assessment of the Competitiveness of Certain Foreign Suppliers to the U.S. Market predicts that Sub-Saharan African countries share of the US import market is likely to decline from 2005 onwards. (Download an executive summary of this report by following this link to’s Downloads Section.

Click here to view the latest AGOA apparel export data.

You are here: Home/News/Article/Nigerians Urged to Maximise AGOA's Benefits