Garment sector in trouble if AGOA act suspended

24 Jul '09

2 min read

The island country of Madagascar which is located off the eastern shores of the African continent may have to face the ignominy of having to see the collapse of its textile and garment sector, if the US government suspends trade under the AGOA deal.

The US $600 million textile and apparel industry which exports around $275 million worth of duty free goods to the US under the African Growth and Opportunity Act (AGOA), will face pressure due to the nature of the government in power in the country.

The current President of Madagascar had seized power in a coup and the US government had warned him to restore democracy by 2009 end, failing which duty free access to the markets of the US under AGOA act would be suspended.

There are nearly 50,000 workers employed in the textile and garment industry in the country and if the US decides to suspend the trade deal, nearly 50 percent of these workers will face joblessness, due to the suspension.

If the US goes ahead and suspends the trade deal, it could also have a cascading effect on the raw material supplying and neighbouring countries like Mauritius, Swaziland, etc, which supply fabrics, accessories and other goods to the sector.

Madagascar has received overseas investments in the textiles and garments sector due to the duty free access available to its goods to the biggest economy in the world and without AGOA, it will be difficult to sustain due to the high costs.

Fibre2fashion News Desk - India