East Africa’s eligibility to retain duty-free access to markets in the United States under the Africa Growth and Opportunity Act (Agoa) is at risk following concerns raised by Washington about the bloc’s decision to phase out the importation of second-hand clothes starting this year.
According to the US, the EAC presidents’ directive to ban importation of used clothing will not spur additional US textile and apparel investment in the region, which is largely export-oriented and based on Agoa tariff preferences.
In a senior trade officials’ meeting dabbed “US Beyond Agoa – Trade and Investment,” the American officials said that import substitution policies like the EAC’s ban on second-hand clothes may deter Washington from investing in the region.
The US government now says it will file a petition at the Office of the US Trade Representative (USTR) to initiate an out-of-cycle review of certain EAC partner states.
If East Africa is found not to be making progress in meeting the eligibility requirements, the US is likely to terminate the designation of the EAC as a beneficiary of duty-free market access under Agoa.
A report from the meeting between officials from the EAC and US shows that the regional bloc maintained its stand on the ban, saying that the heads of state prioritised industrialisation as the key pillar of its development strategy and this hinges on the textile, leather and automotive sectors. Phasing out imports of used clothing was part of the EAC’s industrialisation policy.
According to last year’s EAC heads of state directive, the phasing out of importation of used textiles and footwear will be undertaken gradually over three years.
“The EAC wants to promote integrated industries in the textile and leather sector and strategies are being developed to ensure procurement of textile and footwear requirements from within the region where quality and supply capacities are available competitively,” said the Community officials.
They added that the US should look at the EAC strategy as an opportunity for enhancing US investment in the textile and leather sector in the region. This, they said was a result of consultations held with key stakeholders on the matter, including manufacturers of new clothing, as well as importers, sellers and buyers of used clothing.
The EAC officials have, however, asked to meet with American officials before the next US review for Agoa eligibility.
Agoa provides for duty-free entry of goods into the US from designated sub-Saharan African countries, including the EAC partner states, and applies to both textiles and non-textile goods.