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Swaziland textile companies get a lifeline
09
Apr '16
Textile companies of Swaziland which were hard hit by the loss of the lucrative duty free market under African Growth and Opportunity Act (AGOA) of the US Government, have found another preferential market that is ready for textile products.

The market was opened on April 1, 2016 when the Preferential Trade Agreement between MERCOSUR and the Southern African Customs Union (SACU) entered into force, the Times of Swaziland has reported

MERCOSUR is South America's leading trading bloc. Known as the Common Market of the South, it aims to bring about the free movement of goods, capital, services and people among its member States. Its members are Argentina, Brazil, Paraguay and Uruguay. Bolivia, Chile, Colombia, Ecuador and Peru are associate members; they can join free-trade agreements but remain outside the bloc's customs union.

The MERCOSUR-SACU Agreement was signed on December 15, 2008 by the MERCOSUR States Parties and on April 3, 2009 by the members of SACU (South Africa, Botswana, Lesotho, Namibia and Swaziland). The Agreement sets out preference margins of 10 per cent, 25 per cent, 50 per cent and 100 per cent on 1,050 tariff lines on both sides. By virtue of being a preferential trade agreement, it means all the SACU member States are eligible to export and pay lower rates of import Customs Duty and or levy charge, or none at all, on their goods to every member of MERCOSUR.

The productive sectors of MERCOSUR/SACU which will benefit from tariff preferences include chemical, textile, steel, plastic, automotive, electronics and capital goods, in addition to agricultural products. Brazilian exports to the South African bloc totalled $1.36 billion in 2015, with a Brazilian trade surplus of about $720 million. The beneficial impact of the Agreement may be felt mainly in the industrial sector, since two thirds of the Brazilian exports to SACU countries ($ 908 million in 2015) consist of manufactured products.

The entry into force of the Preferential Trade Agreement will contribute to the promotion of trade exchange in the South Atlantic. The MERCOSUR countries are expected to have easier access to a potential market consisting of about 65 million consumers.

Another preferential market that is expected to open for Swazi products is the European Union (EU).

Swaziland's textile industry is looking to make the most of an Economic Partnership Agreement (EPA) with the EU that would allow duty free access to the country's products.

Swaziland is in the process of ratifying the EPA with the assistance of the EU. Once the EPA is ratified, the country will benefit through shipping its goods to the EU without delay.

Swaziland's textile industry had taken a hit after it was excluded from the list of countries eligible to get benefit under the AGOA from January 1, 2015.

The decision to withdraw Swaziland's AGOA eligibility came 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. (SH)

Fibre2Fashion News Desk – India

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