TRALAC - Trade Law Centre

Lesotho plans for life without US trade lifeline

Tuesday, 15 February 2011

Source: CNN (USA)

All around Lesotho, the tiny nation surrounded by South Africa, thousands of workers ply their trade in the country's many textile factories.

For 35-year-old Esther Maphatle, her job demands that she stands on the production line for sometimes 10 hours a day, looking through pair after pair of jeans for imperfections.

But Maphatle, who is HIV-positive, doesn't complain about the strenuous task. She is considered to be among the lucky ones to have a job in a country where nearly half the population is unemployed and one in four is HIV-positive or has AIDS.

"It's better to work in this factory, because if I didn't work in this factory, maybe I think I would be dead," said Maphatle, who works at the Taiwanese-run Nien Hsing garment factory in Lesotho's capital city of Maseru.

Lesotho is one of Africa's largest textile manufacturers, boasting some 40 cloth and apparel plants, most of which are owned by Asian immigrants.

The country's industry has been boosted in recent years by the influx of Asian investors who haven taken advantage of the African Growth and Opportunities Act (AGOA), a tariff-preference program designed to help Africa achieve greater prosperity.

Passed by the U.S. Congress in 2004, AGOA provides duty-free access to the U.S. market for a number of products, including apparel, made in qualifying sub-Saharan countries.

Lesotho is a good example how even the poorest countries can begin to take advantage of more open markets.

"I think Lesotho is a good example of how even the poorest countries can begin to take advantage of more open markets, if those opportunities in the global markets are made available to them -- and Lesotho has taken advantage of the African Growth and Opportunities Act," said Faizel Ismail, South African trade representative to the World Trade Organization.

The act has given textile manufacturers in Lesotho a big advantage over their international competitors, helping the country become Africa's largest exporter of garments to the United States.

The industry has now grown to be Lesotho's single largest employer with some 40,000 jobs, compared to only about 10,000 in 1999.

But with AGOA poised to expire in 2015, Lesotho's preferential status with the United States is under threat. On top of that, the act will require countries to source fabric locally from next year, a condition that Lesotho is unlikely to meet.

Lin Chin Yi, the head of the Nien Hsing group, said the end of the AGOA deal would signal a crisis for Lesotho's textile manufacturers. Without the act, he said, it would be difficult for the country's producers to compete against other regions, especially Asia.

For the industry to survive, analysts say, it must end its reliance on AGOA.

"Lesotho must begin now to develop its strategy to diversify from a dependence on this preference and move into areas where it can become more competitive and develop niche products," Ismail said.

According to Lin, whose company has some 2,200 employees, the industry is already working toward that direction, finding its niche by transforming Lesotho into a maker of ethically sourced products.

He says that in Lesotho there is no child or forced labor, with each factory trying to provide a comfortable working environment for its employees.

This means that workers in the industry earn a salary that is five times higher than in Bangladesh and two to three times higher than in China.

It also means that women like Maphatle have access to HIV/AIDS treatment on site.

"Buyers can feel at ease sourcing the products, knowing the workers in those factories are cared for," said Bart Vander Plaetse, who runs the Apparel Lesotho Alliance to fight AIDS.

But while Vander Plaetse stressed that turning Lesotho into a sweat-free label is a good prospect for workers, he added that it remains to be seen whether it will be good for business.

The real test for Lesotho will come when preferential treatment from the United States ends and U.S. consumers are asked to pay more for clothes made in Lesotho.

Click HERE to download a recent research paper "AGOA at 10: Reflections on US-Africa trade with a focus on SACU", which contains a chapter on proposed new trade legislation. With reference to the above article, which is sourced from CNN, it should be noted that Lesotho is unlikely to lose preferential access to the US market after 2015 since the proposed legislation foresees continued preferences for countries classified as least-developed.

“ Latest AGOA Trade Data currently available on

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 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.