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Lapse of third country AGOA provision worries Kenyan textile units
29 Oct '11
2 min read
The third country fabric policy under the African Growth and Opportunity Act (AGOA) will lapse in September 2012.
This is making companies jittery in the US as well as Kenyan textile units. Influential US groups are lobbying with the US Congress to extend the deadline.
Under AGOA, African countries can export duty free textiles and clothing to the US, even if the fabric was imported from a third country.
The textile industry in Kenya, one of the countries under the AGOA, could feel the impact if the deadline is not extended.
The US lobby group which is calls itself “Supporters of Africa Trade in Washington” informed that the campaign was necessary so that the economic problems confronting the US do not distract policy makers from improving trade ties with Africa.
The US provided the third country provision to the African countries in order that they may develop the textile value chain within their respective countries.
The third country provision initially lapsed in 2007, but was successfully renewed for a further period of five years ending in September 2012.
At an AGOA forum held in Lusaka, Zambia in June this year, African countries too took a common position to push jointly for the renewal of the window.
Textile industries in Kenya import around 90 percent of the 180,000 cotton bales or semi-finished fabrics to produce apparels for export to US.
Clothing exports to the US under AGOA rose from Sh12.7 billion in 2009 to Sh16.1 billion in 2010, up 26.5 percent, data from the Export Processing Zone Authority reveals.
In case the third country provision is not extended in September 2012, it could result in a massive flight of capital from these zones, worry experts.
This is making companies jittery in the US as well as Kenyan textile units. Influential US groups are lobbying with the US Congress to extend the deadline.
Under AGOA, African countries can export duty free textiles and clothing to the US, even if the fabric was imported from a third country.
The textile industry in Kenya, one of the countries under the AGOA, could feel the impact if the deadline is not extended.
The US lobby group which is calls itself “Supporters of Africa Trade in Washington” informed that the campaign was necessary so that the economic problems confronting the US do not distract policy makers from improving trade ties with Africa.
The US provided the third country provision to the African countries in order that they may develop the textile value chain within their respective countries.
The third country provision initially lapsed in 2007, but was successfully renewed for a further period of five years ending in September 2012.
At an AGOA forum held in Lusaka, Zambia in June this year, African countries too took a common position to push jointly for the renewal of the window.
Textile industries in Kenya import around 90 percent of the 180,000 cotton bales or semi-finished fabrics to produce apparels for export to US.
Clothing exports to the US under AGOA rose from Sh12.7 billion in 2009 to Sh16.1 billion in 2010, up 26.5 percent, data from the Export Processing Zone Authority reveals.
In case the third country provision is not extended in September 2012, it could result in a massive flight of capital from these zones, worry experts.
Fibre2fashion News Desk - India
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