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AGOA rules set to change, ruffles Kenyan clothing exporters
May '11
Free market entry rules into the US are set to change, owing to which the future of Kenya's preferential access benefit to the US is in jeopardy.

African Growth and Opportunity Act's (AGOA) third country rule which authorise countries like Kenya to export items prepared from imported raw material to the US, is expiring in September 2012, which is seen to shut the doors for textile exports from Kenya to the US.

Under the AGOA, around 6,500 African products enjoy either duty-free or quota-free access to the US markets.

Expiry of the third country fabric rule could have severe consequences, and hence, Kenyan producers are pushing the US to review the Act prior to the AGOA 2011 forum which is scheduled to be held in Zambia in June.

African exporters are unanimously demanding that, the Act should be reviewed and the countries which have assimilated their economies should be allowed to build cross border value chains.

As the African exports gained entry to the US market pursuant to the AGOA agreement, garment and apparel have become Kenya's key exports to the US, over last 10 years.

Export oriented textile firms from Kenya took best benefit of the AGOA export window to develop a multi-billion industry, which touched its peak in 2008 by contributing Sh15.8 billion of the total Sh20.5 billion worth of world exports to the US.

This rise in exports is in great contrast with Kenya's overall domestic cotton production, which over the past 10 years is lingering at around 6,000 bales per annum or just three percent of the total consumption of 180,000 bales.

This is indicative of the fact that, 97 percent of the inputs for exported garments have always been procured from foreign countries.

Editor's note –
Despite more than a decade since the African Growth and Opportunity Act's (AGOA) came in to effect, many of the African countries, including Kenya have not been able to develop their textile value-chain and be ready for the change in third country sourcing rules.

AGOA was formulated in order to give these sub-Saharan Afrcian countries to develop their economies, but unfortunately these countries frittered away the benefits, by not concentrating enough on the holistic development of the sector.

Fibre2fashion News Desk - India

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