WASHINGTON — U.S. importers are pushing for the extension of a provision in the African Growth & Opportunity Act that lets producers use fabric from countries outside of the region, primarily in Asia.
Hit hard by a shift of apparel production to Asia after quotas were eliminated last year, producers maintain they need third-country fabric to be competitive. In the 12 months ended March 31, apparel and textile imports from sub-Saharan Africa fell 18.9 percent to 366.6 million square meter equivalents, worth $1.4 billion.
The preference program and how the sub-Saharan countries and private firms that use it can adapt was the key topic Monday at the Corporate Council on Africa’s 2006 Private Sector AGOA Forum at the Washington Hilton.
The Bush administration hasn’t taken a position on extending the third-country fabric provision, which expires in September 2007. Deputy U.S. Trade Representative Karan Bhatia said in a speech he was looking into the issue.
“Part of the answer is going to have to be finding ways to promote greater cross-border production sharing within Africa in the long term,” he said. “It’s my view that this is the only way that Africa is going to remain competitive in this sector.”
There is a limit to how much trade policy can influence the industry’s development.
“In the end, those policies will only be successful if businesses, investors and entrepreneurs … make the calculated decision to put their capital and their enterprises at risk by investing, producing and exporting,” he said.
After his speech, Bhatia said the jury was still out as to whether or not the program, which spurred dramatic growth in the continent’s apparel industry, was still working for apparel and textiles.
“We’re going to have to look at how Africa functions over the course of the next couple of years under AGOA,” he said. “Whether African producers are sufficiently flexible to adjust to this new environment and recapture lost market share, I don’t know.”
In a workshop on apparel and textiles, Assistant USTR for Africa, Florizelle Liser, said some African textile producers don’t want the third-country fabric provision extended. That would raise costs for apparel producers.
“The question is, ‘How do we balance it?'” Liser said. “Without the survival of the apparel industry, the African textile industry actually has no future.”
The goal is to help the apparel producers in the short term while not scaring away investment in the African fabric industry, she said.