South Africa seeks amendments in AGOA status

07 Aug '12

2 min read

The Government of South Africa is looking forward to commence talks with the US to affect changes in the African Growth and Opportunity Act (AGOA), as domestic textile and clothing firms are not being able to benefit from the existing act.

The US Congress first passed the AGOA Act in 2000, thereby opening the way for sub-Saharan African countries to ship their goods to the US markets without paying any import duty. Though, it even covered some other goods, the legislation was mainly designed to boost apparel trade.

Recently, the US Congress extended the third-country fabric provision under the AGOA, which was scheduled to expire in September 2012, for another three years, and included South Sudan in the list of beneficial countries.

Addressing an African Cotton and Textile Industries Federation (Actif) conference in Accra, Ghana, the Executive Director of Apparel Manufacturers of South Africa (Amsa), Johann Baard, said there are two obstacles impeding the way of South African clothing and textile industry – one is the strong rand and other that the country has been categorized as a developed nation under AGOA.

This means that to enjoy duty-free exports to the US, South African apparel producers necessarily have to use domestically sourced yarn and fabric, but most of the times the fabrics that US retailers demand are not produced in South Africa, Mr. Baard said.

Due to this, in most instances, the South African apparel producers fail to avail the benefit of duty-free exports to the US. On the other hand, countries like Kenya and Malaysia can openly import fabric to produce apparels for duty-free export to the US.

South Africa is at disadvantage as locally produced fabrics do not match the requirements of the American markets, and hence, it is urging the US to amend its status under AGOA.

Fibre2fashion News Desk - India