TRALAC - Trade Law Centre

White House Statement on Administration Policy: AGOA III

Thursday, 17 June 2004

Source: Business Day

South Africa's continued exclusion from key " third-country" provisions in the US African Growth and Opportunity Act (Agoa) is hampering the local clothing industry's exports to the US, and poses a threat to job creation.

South AfricaThe warning on jobs came from Export Council for the Clothing Industry chairman Jack Kipling.

South African trade negotiators are now being urged to ensure local manufacturers are given the same benefits enjoyed by their peers in Southern African Customs Union states.

The third-country provision allows clothing exporters in poor sub-Saharan countries to use textiles sourced from outside the region and still qualify for duty-free entry into the US market.

Because of their more developed economies, SA and Mauritius are the only Agoa beneficiaries that cannot use third-country textiles for US-destined garments under Agoa.

The provision was included in Agoa because African countries do not have the capacity to produce their own fabrics in the quantities required for Agoa.

This has had a negative effect on job creation in the South African textile sector, however.

For example, while Lesotho had seen a growth in employment in the clothing industry from 20000 in 2000 to about 54000 this year, the more sophisticated South African industry saw only 12000 jobs created in the same period.

Kenya and Madagascar, both least- developed countries, have also seen significant growth in job creation.

Kipling said the ability to use third- country textiles would create job opportunities in the local clothing industry, as was the case with Lesotho, Kenya and Madagascar.

Kipling welcomed the imminent extension of access to third-country textiles for least-developed countries by another three years.

"With more than 80% of all exports of apparel out of sub-Saharan Africa still requiring third-country fabrics after four years, it has been recognised that it will take a considerable length of time before a region is able to build up sufficient capacity in yarn spinning and fabric weaving to service a sophisticated market such as the US."

Earlier this week, the US Congress approved the extension of Agoa to 2015, from the initial 2008. The extension is, however, still subject to the approval of the US senate. Since it was launched in 2000, Agoa has helped a number of African countries, such as SA, gain dutyfree access to the US market. The act has, among others, stimulated investment and employment in Africa.

Former US president Bill Clinton introduced Agoa and President George Bush extended it to 2008. However, there has recently been a strong lobby, led by former assistant US trade representative for Africa Rosa Whitaker, for a further extension to 2015.

SA's motor vehicle parts industry has been one of the major beneficiaries of the act, with sales, including passenger vehicles and engines, having topped the 821m mark last year.

South African Chamber of Business policy executive Peggy Drodskie said the free trade agreement between the Sacu and the US would take over from Agoa once the extension to 2015 expired.



“AGOA Latest AGOA Trade Data on AGOA.info


Click here to view a sector profile of South Africa’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include:

  • AGOA-beneficiary Countries’ AGOA and GSP Trade Aggregates

  • 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.