WASHINGTON — President Obama reinstated Madagascar’s benefits under the African Growth & Opportunity Act on Thursday, a move that is likely to pave the way for the renewal of important duty-free benefits for apparel made there.
In a related action, Obama also stated in a proclamation that he plans to withdraw Swaziland’s eligibility under AGOA, effective Jan. 1, 2015.
Madagascar was removed from AGOA on Jan. 1, 2010, following a coup d’état in 2009. U.S. Trade Representative Michael Froman said the decision to renew its benefits came after the country held successful elections in late 2013 and established its first democratic government since the 2009 coup.
The news about Madagascar — once the second-largest AGOA apparel supplier to the U.S. — was lauded by the industry, although there was some uncertainty about when special apparel duty-free benefits would be restored.
AGOA contains a special provision for certain eligible countries known as the “third-country fabric provision,” which helps retailers and brands doing business in 27 designated least-developed countries to use fabrics outside of the region and still receive duty-free benefits when shipping to the U.S.
A USTR spokesman said that Madagascar must reapply for its apparel visa benefit.
“This has been standard practice for all countries removed from AGOA and later redesignated as a beneficiary country,” he noted.
Industry officials expect the U.S. to approve a visa fairly quickly, which will allow companies to start shipping apparel duty-free to the U.S. again.
Apparel imports from Madagascar have fallen over the past five years without the AGOA benefits. In the past 12 months alone through April, apparel imports to the U.S. from Madagascar fell 33.8 percent to 9.9 million square meter equivalents, according to the Commerce Department.
“Madagascar had become a relatively big supplier, but it was obviously hurt by not having duty-free benefits,” said Julia Hughes, president of the U.S. Fashion Industry Association. “We are [pleased] by today’s action and look forward to speedy implementation of the third-country fabric benefits as well as information from Madagascar that verifies they have the appropriate enforcement mechanism in place.”
Stephen Lamar, executive vice president at the American Apparel & Footwear Association, said, “We are pleased to see Madagascar redesignated. We have had a number of member companies do business in Madagascar, and they have been looking to get back in the country.”
Swaziland lost its benefits due to U.S. concerns over inadequate worker rights protections, Froman said. The country had recently been losing apparel import share over the past several months, despite having duty-free apparel benefits under AGOA.