TRALAC - Trade Law Centre

US orders dip as AGOA provision extension gets stalled

Monday, 30 July 2012

Source: Fibre2Fashion

A bill seeking extension of the third-country fabric provision under the Africa Growth and Opportunity Act (AGOA) has got stalled due to a row in the US Senate over the funding of AGOA.

This has caused a substantial reduction in apparel orders placed by US firms with African companies.

The third-country fabric provision allows for duty-free import of garments made in Sub-Saharan African countries using yarn and fabric imported from non-African countries, especially countries like India and China.

In the event of non-extension of the third-country fabric provision under the AGOA, which expires on September 30, the US buyers would have to pay more for their apparel procured from Africa.

In the midst of ongoing uncertainty over the extension of the provision, apparel workers in African countries now face the risk of losing jobs. Already, sewing machines in many apparel units that usually produce jeans or T-shirts for popular American clothing brands have gone idle.

In fact, time is running out and if the AGOA provision fails to get extension from the US lawmakers before they take a month-long break in August, African countries will temporarily, if not permanently, lose the duty-free access for their clothing items to the US, resulting in a loss of millions of dollars.