TRALAC - Trade Law Centre

Madagascar: Clothing producers face hard times following AGOA suspension

Friday, 22 October 2010 Published: | Just-Style.com

Source: Just-Style.com

Madagascar's textile and clothing sector has been harmed by the country's suspension from the US African Growth and Opportunities Act (AGOA), after losing these trade benefits last December.

"More than 60,000 jobs were lost since the beginning of this year when Hong Kong companies were closed down with the removal of these trade facilities," says John Hargreaves, vice-chairman of the Madagascar Export Processing Zone Association. The duty-free concessions were removed by Washington after President Andry Rajoelina seized power in March 2009 with army backing.

Madagascan clothing exports to the United States earned US$229m for the year to October 2009 and US$278m the previous year, according to association statistics.

Some slack has been redirected towards European exports, however, for instance by Aquarelle Madagascar, a unit of the Mauritius-based CIEL Group, which employs 10,000 in Madagascar.

"We have reviewed our marketing strategy following the Americans' decision, maximising our exports towards the European and South African markets," explains general manager Ayaz Tajoo. He adds US-bound production had been shifted to Mauritius, which still benefits from AGOA facilities.

Madagascar's textile industry has generated US$600m in earnings in recent years, around 6.5% to 8% of GDP. Almost half its clothing and textile production was exported to US markets, before the AGOA suspension.

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