TRALAC - Trade Law Centre

Clothing industry seeks change in SA’s AGOA status

Monday, 06 August 2012

Source: Business Report (South Africa)

The South African government plans to negotiate with the US to amend the African Growth and Opportunity Act (Agoa) as local textile and clothing companies are not benefiting from this trade agreement.

The Agoa legislation, first passed by the US Congress in 2000, allows countries in sub-Saharan Africa to export goods to US markets without paying import duties. Although other goods can be exported, the legislation was especially designed for the apparel trade.

Last week the US Congress extended the act, which had been due to expire in September. It extended the third-country fabric programme and added South Sudan to the list of eligible countries.

However, in an interview with Business Report on Friday, Trade and Industry Minister Rob Davies said local fabric companies would not benefit from the trade agreement because South Africa was not included in the third-country provision. This meant that South Africa could only export duty-free fabric and clothing made from raw materials sourced locally.

He said other local goods such as minerals, food and chemicals had benefited from Agoa, but not the textile industry. “This is the point that we were debating in this meeting, we need to roll over this provision so that we too can be included,” he said. Davies said this exclusion needed to be debated in future meetings with the US government.

Speaking from Accra, Ghana during an African Cotton and Textile Industries Federation (Actif) conference, Johann Baard, the executive director of Apparel Manufacturers of SA, said the clothing and textile industry faced two hurdles.

These, he said, were the strong rand and the fact that South Africa was classified as a developed country under Agoa.

“This means that in order for us to export clothing for duty free entry into the US, we have to use locally sourced yarn and fabric. Unfortunately, in most instances the fabrics demanded by American retailers are not made in South Africa.

“This effectively nullifies the export opportunities for the local clothing manufacturers,” he said.

Meanwhile, countries such as Mauritius and Kenya could import fabric, convert this to garments for export to the US without duties. “We are at a disadvantage because our fabrics are not suitable for the American market,” he said.

Amsa councillor Ekkerhard Oelz said the difference between South African textile mills and those of countries in Asia was that they only offered limited styles and types of fabric, such as overalls, uniforms and home textile fabrics.

Countries such as China, with a large number of mills, could produce a variety of fabrics for a specific fashion season.





“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of South Africa's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info 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.