Swaziland Loses U.S. Trade Benefits

AGOA_W1Swaziland has lost its preferential trading status with the United States. US President Barack Obama announced (26 June 2014) that the kingdom would lose its benefits under the African Growth and Opportunity Act (AGOA).

He said this was because Swaziland was not ‘making continual progress’ in enacting civil, political and workers’ rights.

Swaziland is not a democracy and is ruled by King Mswati III, who is sub-Saharan Africa’s last absolute monarch.

The decision to withdraw Swaziland’s AGOA eligibility comes after years of engaging with the Government of the Kingdom of Swaziland on concerns about its implementation of the AGOA eligibility criteria related to worker rights. The statement said after an ‘extensive review’ the US, ‘concluded that Swaziland had not demonstrated progress on the protection of internationally recognized worker rights.

In particular, Swaziland has failed to make continual progress in protecting freedom of association and the right to organize. Of particular concern is Swaziland’s use of security forces and arbitrary arrests to stifle peaceful demonstrations, and the lack of legal recognition for labor and employer federations.

AGOA is a US preferential trade programme that provides duty-free access to the $3 trillion US market for thousands of products from eligible sub-Saharan African countries.

Media in Swaziland have predicted that as many as 20,000 jobs in the kingdom’s textile industry could be lost as a result of the withdrawal of AGOA benefits that comes into force on 1 January 2015. The textile industry in Swaziland is dominated by Taiwanese companies which were drawn to the kingdom by the availability of cheap labour and the AGOA agreement. Source: Swazi Media Commentary

Africa – China’s Export Route to the U.S.?

AGOA_W1The Africa Growth and Opportunity Act intends to support African exports to US markets. It is helping savvy Chinese companies too. US-Africa trade received a boost with the signing of the African Growth and Opportunity Act (AGOA) back in May 2000, which enabled African countries to export over 4,000 products, including apparel, quota-free and duty-free to the US.

Geared to support the integration of African countries into global markets, AGOA has enjoyed broad cross-party support in a usually fraught US legislature – especially on issues of foreign trade – and has been renewed several times. Helping Africa, it seems, is something everyone can agree on.

But they might, unwittingly, have been helping China too. Research by Lorenzo Rotunno and colleagues at the Centre for the Study of African Economies, Oxford University, suggests that savvy Chinese companies have set up shop in Africa as a route to get their products into the US with all the AGOA benefits.

The entrepreneurs’ logic is impeccable. Not only could an Africa platform get them duty free access to US markets, they could also avoid heavy quotas on China’s exports to the US, imposed through previous protectionist measures by the rich world, such as the Multi-Fiber Agreement.

Because AGOA did not contain ‘rules of origin’ provisions, the door is wide open for such creative thinking. “Restrictive quotas on Chinese apparel exports in the US and preferential treatment for African exports resulted in quota-hopping transhipment from China to the US via AGOA countries” the researchers say.

Chinese and Taiwanese producers are now said to comprise the bulk of a textile “diaspora” in Lesotho, Madagascar and Kenya. In one Kenyan processing zone, 80% of the 34 garment plants had Asian owners. While some outfits doubtless have in-country assembly – and therefore generate jobs and incomes for Africans – a number are little more than transporting docks for foreign-sourced, fully assembled goods ready to go to their final destination, tax free.

Chinese entrepreneurs made no bones about it. In one survey, they gave ‘taking advantage of international trade agreements’ in their top five list of motives for investing and operating in Africa. Source: AllAfrica.com 

Tanzania slams US/ EU non-tariff barriers replacing tariffs

Tariff barriers against African exports have fallen, but European and American non-tariff barriers, exacting high standards of compliance, have replaced them, blocking products and produce, Tanzanian deputy trade minister Gregory Teu told the National Assembly.

“American markets are open, but the standards that our products have to meet are too high for our producers to meet,” Teu said in his response to a question from parliamentarian Rita Mlaki who asked what was being done to exploit the two markets under the African Growth and Opportunity Act (AGOA) and Everything but Arms (EBA) arrangements.

He said the government, through the Exports Processing Zones Authority (EPZA), was pursuing strategies to promote exports by local and foreign investors, but said the markets are practically inaccessible due to the stringent standards set. Tanzanian exports are chiefly coffee, cotton, sisal, tea, tobacco, cashew nuts and pyrethrum. Seems it should be called “Pain for Trade” not “Aid for Trade” Source: AllAfrica.com