AFRICA TRADE PACT GAINS STEAM
Byline: Joanna Ramey
WASHINGTON — A White House forum on increasing trade between the U.S. and Africa provided a rare moment Monday for President Bush to talk about something other than terrorism.
It’s been more than a year since the African Growth and Opportunity Act went into effect. AGOA provides duty-free and quota-free breaks for an array of imports from the continent, including apparel, provided that goods are made from African or U.S. textiles.
The law is “already showing its tremendous power,” Bush told a gathering of African diplomats and officials in a State Department auditorium, citing how imports overall from sub-Saharan Africa are up 17 percent. “Proposed new projects in Lesotho in the textile sector alone are expected to inject $122 million of investment into that country’s economy,” Bush said.
Since the act’s inception, apparel imports from the entire region have increased more than 30 percent, however these shipments account for only 1 percent of all foreign-made garments sold in the U.S. Much of the growth in apparel imports, thus far, also has come from countries like South Africa and Mauritius, which already were geared up for production.
To further stimulate imports, Bush, who early in his administration made bolstering African economies a priority, announced $15 million in funding to create “regional hubs of global competitiveness” on the continent to help tap Africa’s export potential. The Trade for African Development & Enterprise program is aimed at helping businesses take advantage of the trade bill through regional centers that would provide advice and information for local manufacturers and exporters.
Another $200 million will go toward creating an Overseas Private Investment Corporation office in the region to help U.S. firms obtain loans and political risk insurance for investments.
The African trade forum, originally scheduled three weeks ago, had been postponed because of the Sept. 11 attacks.
Like other developing countries, African nations consider apparel production a key economic building block, which Secretary of State Colin Powell said should be aggressively pursued.
Powell, who made joining the administration contingent on its having a strong Africa policy, challenged the audience to think about low-income U.S. consumers when plotting their economic development.
Increased African shipments to the U.S., so far, have been “the result of American consumers going into stores…going into Wal-Marts and Kmarts…and looking for quality goods at low prices so that they can make ends meet,” Powell said.
Although apparel is the fourth-largest African import into the U.S., its value last year was just $750 million. Africa’s biggest import into the U.S. is oil, valued at $16.3 billion last year; followed by platinum, at $1.7 billion; and petroleum products, $950 million.
While retailers and apparel importers are availing themselves of the new Africa apparel breaks, they claim that the continent’s potential as a place to source still faces several obstacles.
One hitch is a provision in the Africa bill — actually a mistake — that misidentifies the micron size of wool used in merino wool sweaters, which has prevented the garments from receiving trade benefits. Another provision excludes knit-to-shape sweaters made from machine-made panels from receiving breaks. Both issues would be fixed in legislation pending in Congress.
“We need to make sure the trade bill is properly implemented,” said Frank Kelly, vice president of customs and international trade operations at Liz Claiborne, who attended the forum.
Mark Neuman, trade adviser for The Limited, also at the forum, said that despite such “missed opportunities” like not being able to ship African knit-to-shape sweaters duty- and quota-free, the region is “really turning out to be a tremendous opportunity.”
He cited South African textile mills, in particular, as developing “sophisticated fabrics, so we can migrate business from the Far East.”