Washington, DC — Despite high profile work on the global financial crisis, the U.S. Congress rightly acted last week to remove restrictions on apparel exports from certain least developed African countries. The change comes after almost two years of pleas from U.S. and African government and apparel industry leaders. Passage of these provisions by both the House and Senate is a welcome short term focus on the challenges to economic development through trade in Africa, especially as Congress typically avoids all votes on trade on the eve of elections.
I am pleased that Congress repealed a harmful provision of the African Growth and Opportunity Act (Agoa) - the 'commercial availability' fabric provision, also known as 'abundant supply', which effectively discouraged U.S. apparel retailers from placing orders in the region.
The 'abundant supply' clause of Agoa restricted least developed African countries' use of fabrics produced outside the region. As Africa largely lacks the capacity to produce its own fabric in sufficient commercial quantities, restrictions on the ability to import fabric would seriously injure its burgeoning garment industry which currently employs hundreds of thousands of workers, mainly woman. The restrictions imposed by Agoa's abundant supply provision also created great uncertainty for both African workers and exporters who depended on Agoa's duty and quota-free access to the U.S. market.
The repeal of 'abundant supply' improves the business environment in least developed countries like Lesotho, sub-Saharan Africa's largest exporter of apparel to the U.S. market. Agoa has generated nearly 50,000 jobs in Lesotho's apparel sector, 85% of which are held by women.
In addition to the important economic empowerment created by these jobs, workers also receive treatment and care for HIV/Aids though partnerships such as the Apparel Lesotho Alliance to Fight AIDS (ALAFA), an industry-wide health care program. Thanks to the repeal of abundant supply, U.S. retailers such as Gap, Levi-Strauss & Co., Jones Apparel and Russell Athletic may continue to source products from Lesotho with confidence.
Unfortunately Congress also used this legislation to reverse course in focusing trade benefits on Africa's most impoverished nations. While this legislation will mitigate some of the damage done by 'abundant supply', the bill may create new troubles for Africa's least developed countries (LDC) because the bill provided Mauritius with a special AGOA apparel benefit heretofore reserved for the poorest of the poor in Africa.
With this move, the United States has distinguished itself as the only nation to deem Mauritius an LDC. Previously Mauritius, a diversified and relatively developed economy in Africa, was required by the United States to source inputs for its Agoa garments from itself or poorer African nations.
This helped to spur regional integration and created jobs in Zambia, Lesotho and elsewhere. Sourcing fabrics from poorer nations and not partaking in benefits reserved for the authentically poor should not be a great sacrifice for Mauritius in light of its standing vis-à-vis its neighbors - Mauritians enjoy one of the highest per capita incomes in all of Africa. LDCs such as Lesotho and Zambia, which have unemployment rates of 45% and 50% respectively, arguably should be treated differently by the US than a country like Mauritius, with its rate of 8.8%. Similarly, Lesotho and Zambia face 23% and 17% HIV/Aids prevalence rates, compared to Mauritius's rate of less than 1%.
I hope that Mauritius will keep its poor brothers and sisters in the region in mind by not replacing them in the value chain with India and China, and by not diverting much needed apparel investments from its significantly poorer neighbors. Congress showed political courage in striking down a measure that it approved only two years ago, demonstrating that it can and will self-correct when a measure fails to deliver its intended result. If deeming Mauritius an LDC for Agoa purposes winds up exacerbating unemployment and poverty in the poorer countries in the region, I hope that Congress will again revisit this issue.
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Hopefully, my fears will be unfounded and Mauritius will be an anchor for growth for its neighbors who are in desperate need of trade, opportunities and hope.
Trade Talk is a regular column by Rosa Whitaker, president and CEO of The Whitaker Group. She was a hands-on architect of the African Growth and Opportunity Act and the first ever Assistant US Trade Representative for Africa. To read other columns by Rosa Whitaker, visit The Whitaker Group website.
