TRALAC - Trade Law Centre

US lobby pushes for Kenya, Madagascar to be retained as AGOA beneficiary

Monday, 02 November 2009

Source: Business Daily (Kenya)

An influential US lobby is pushing for Kenya to remain in the list of countries eligible for trade benefits under the African Growth and Opportunity Act (Agoa).

The deal comes up for review next year, even as Kenya faces relentless pressure from the US to peg the trade regime on good governance.

The United States Association of Importers of Textiles and Apparel (USA-ITA) has strongly supported Kenya and three other African countries— Lesotho, Madagascar and Swaziland —which they want retained when their eligibility comes up for review in 2010.

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The lobby made the submissions to the US Trade Representative’s office which is working on a report to be presented to President Barack Obama, informing the annual review of countries eligible under Agoa, for action by next month.

USTR finished receiving the submissions two weeks ago.

“There has been progress in the apparel sector in the region and it is essential that the United States maintain its commitment to the workers in those countries for whom Agoa has brought much needed employment,” USA-ITA said, arguing that apparel production would be likely inexistent, or smaller, without the opportunities created with Agoa duty-free benefits.

Only last week the US State department announced a visa ban on Attorney-General Amos Wako for allegedly slowing the wheels of reforms, with some exporters warning that such standoff could influence President Obama’s decision on the country’s eligibility for Agoa.

“The confrontation places trade and investment opportunities at risk because America may choose not to deal with Kenyan traders or investors under the initiative until the reforms are in place. Finding a middle ground would be critical for the economy,” Rudolf Isinga, an official of Protex Limited that operates within the Export Processing Zone (EPZ) in Athi River said in an interview last week.

What worries the exporters in the wake of the diplomatic row, is that provisions of the Act showed that President Obama has powers to determine which countries could benefit from the initiative that has helped boost Kenya’s trade profile with the US since its launch in 2000.

“The Act authorises the President to designate countries as eligible to receive the benefits of Agoa if they are determined to have established, or are making continual progress toward establishing the following: market-based economies; the rule of law and political pluralism and elimination of barriers to US trade and investment,” the provision reads in part.

Qualification for eligibility is also hinged on protection of intellectual property, fight against graft, poverty reduction, improved health care and educational opportunities, protection of human rights and worker rights and elimination of certain child labour practices.

Statistics showed that as at 2008 the returns from the Agoa initiative accounted for the bulk of Kenya’s total trade with the US, adding up to some $300 million.

According to the Economic Survey 2009, direct employment in the garment and apparel sector, that is heavily supported by the Agoa initiative, stood at 25,776.

Workers rights

An analysis of the more than 50 submissions to the USTR showed that most people want Madagascar retained in the Agoa roll for 2010, despite a coup in March that saw Mr Andry Rajoelina, 35, came to power after President Marc Ravalomanana stepped aside following pressure from the opposition and army chiefs.

International sports equipment firm, Adidas Group, said in its submission: “As a company that is committed to socially responsible practices and the protection of worker rights, the Adidas Group is writing to state its concern over the US Governments potential suspension of trade for Malagasy exports under Agoa,”

“ We believe this action will result in the down-sizing and possible closure of factories and this will lead to the widespread loss of employment for workers in the garment industry in that country. This could further destabilise an already fragile economy, one which has been seriously weakened by the global economic recession and the ongoing domestic political crisis,”

The private sector-driven, Africa Coalition for Trade (ACT) also rooted for Madagascar’s retention in the Agoa roll to ensure economic stability of the region.

“If Madagascar were to lose its Agoa eligibility, however, it would cause an economic crisis in Madagascar, in neighbouring countries and by US companies that answered Agoa’s call and invested in Madagascar,” it said in its submission.