TRALAC - Trade Law Centre

Kenya: President appeals to America to extend favourable rules of origin for apparel exports

Friday, 31 July 2009

Source: The Standard6

President Kibaki wants the US to extend a provision in the African Growth and Opportunity Act (Agoa), which turns a blind eye to the origin of fabric used to make clothing.

Known as the "Third Country Provision", it allows Kenyan textile firms to import fabric from other countries and use it to make apparel for export to America, without paying duty to US Customs.

The provision was originally meant to expire in 2007, but was extended to 2012 during the Third Agoa Summit.

Speaking at the Eighth Agoa Summit at KICC, Nairobi, Kibaki said extending the Third Country Provision would give Kenya and other Agoa-eligible African countries time to develop local sources of fabric to make apparel for the US market.

"It may be important for the US to go an extra mile to facilitate enhancement of the goals and objectives of Agoa," he said.

Kibaki said while some of the manufacturing for the US market may require importation of certain equipment or materials, some would need capacity building.

"This may involve arrangements for skills and technology transfer in the production of goods of direct relevance to the US market and help start-up businesses for export," the President said.

Agoa exploitation

Kibaki added adequate technical training and product inspection could also be done at the country of origin, to lower the cost of the exercise, and, therefore, encourage more African businesspersons to join export trade to the US.

He also challenged African countries to develop ways of overcoming obstacles hindering full exploitation of Agoa.

He petitioned African countries to produce enough of the 6,400 eligible products for export to the US under the Agoa framework.

Limited financing

"It is clear the vast US market is at the disposal of Africa. It is incumbent upon African countries to grab the opportunity and produce the 6,400 exports envisaged under Agoa for the US market," he said.

Trade under Agoa, the President said, faces challenges among them inadequate financing for exporters, stringent standardisation certification procedures, high transport costs and inefficient production procedures.

He termed the free access of about 6,400 products to the large American market under a generalised system of preference a remarkable boost to African economies. At the same meeting, Prime Minister Raila Odinga urged the US to address the challenge of subsidies of products, as a way of accommodating competition with Africa products in US markets.

He said while Africa was endowed with natural resources, it continued to wallow in poverty due lack of ability to control prices of its agricultural products.

Raila said Kenya and Africa welcomed partnerships with friendly countries but would not tolerate patronage on internal affairs.

On challenges of climate change, he said Africa continues to suffer the consequences of omissions and commissions of developed countries, including carbon emissions from other continents.

Raila added Kenya is currently suffering the twin jeopardy of drought and floods due to the effects of climate change.

View AGOA apparel export data here.