TRALAC - Trade Law Centre

Lesotho: Global Changes Impact Negatively

Monday, 07 August 2006

Source: Business Day - SA Exporter (South Africa)

The efforts of global nongovernmental organisations to get rich countries to open their markets could have unintended negative consequences for many developing countries. ComMark says Lesotho’s textile industry still faces serious challenges, none of which are under its direct control:

Major changes to the US African Growth and Opportunity Act (Agoa), affecting Lesotho, are in the pipeline for September next year. After this date, should Lesotho firms use third-country fabrics to make garments, these exports will not qualify for duty free access.

Lesotho manufacturers will only be able to use fabrics made in the US, within its own borders, or in other Agoa-compliant countries.

The country does not currently have domestic access to knit fabric.

The end of the Southern African Customs Union (Sacu) duty certificate scheme is also in sight. This scheme rewards exporters with tradable value-based financial incentives. ComMark reckons the scheme has kept the Lesotho textile and garment industry afloat in the past two years. SA has announced that the scheme must be replaced by next April. Because the South African textile and clothing industry is also in the doldrums, a replacement duty certificate scheme may well be designed that proves not entirely suitable for Lesotho’s needs.

WTO proposals from the Doha Round for the further reduction in industrial tariffs on a worldwide basis holds a serious threat to Lesotho. If the industrial most-favoured-nation tariffs of the rich economies — which have extended tariff preferences to Lesotho — are reduced, it will undermine the preferences that Lesotho enjoys when its products enter these economies.

At present Lesotho’s apparel products enjoy significant tariff preferences in terms of Agoa. If the US were to drop its most-favoured-nation tariffs on clothing it would mean the removal of the 0% tariff preference extended to Lesotho.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Lesotho’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: (click each link to view)

  • 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.