US signs key AGOA provision into law

MBONGENI MGUNI
Staff Writer | Friday August 17, 2012 00:00

 

Last Friday, the US Senate Committee on Finance confirmed the signing of the bill containing the renewal of the Third Country Fabric (TCF) provision to September 2015.

The signing is expected to boost the competitiveness of the textile sectors of the 40 African states benefitting from AGOA. The TCF in AGOA, through which Botswana companies exported US$15.5 million (P115 million) to the US in goods in 2011, was set to expire in September, with US orders for African textiles drying up ahead of the date as buyers looked elsewhere. Yesterday, officials at Carapparel Botswana, the country's sole AGOA textile exporter, told Business Week the signing into law of the TCF's renewal was a ray of hope in a sector traditionally plagued by challenges.

'We are very grateful to the US government for the provision's extension as buyers were hesitant to put in orders due to its approaching expiry,' Lin said. 'The provision's renewal will encourage buyers to come forward.'Carapparel laid off 500 workers in May, citing the tapering off of orders from the US as well as the December 2011 expiry of government's P38 million textile sector bailout programme. Lin said despite the TCF's renewal, current conditions in the sector were depressed. 'While the provision has been renewed, the downturn in the global economy means that orders are still low and have not showed signs of improving,' he told Business Week.

'The year has been depressed and we are in negotiations with government for a new bailout package to assist manufacturers. We are hoping to have this in place by next year.'Officials at the Botswana Exporters and Manufacturers Association (BEMA) said they were awaiting official confirmation of the TCF's signing into law. A US Senate statement explains that the AGOA provision allows duty-free access to the U.S. market for apparel produced in sub-Saharan countries made from third-country fabric. 'It allows duty-free access to the US market for fabric originally produced anywhere in the world, rather than from AGOA beneficiary countries or from the United States,' the statement reads.

'Because almost 95 percent of apparel imported from AGOA nations is made with third-country fabric, allowing the provision to expire would seriously undermine AGOA's development goals.' Prior to the TCF renewal, US figures had shown orders for shipment of African textile exports after September 30, 2012 down 35 percent.