US fashion brands urge early renewal of Africa trade program

Category: GARMENTS

Country: United States

By Bloomberg
Aug 3, 2023.
2 minutes

US fashion companies urged the early renewal of a trade program that allows thousands of African products to enter the world’s biggest economy duty free, saying that a longer-term arrangement would boost investment in the region.

The African Growth and Opportunity Act, first enacted in 2000, is set to expire in 2025 and US officials have said the qualifying criteria for beneficiaries could be revised or the program replaced.

More than 45% of respondents in a new survey warned that they’ve reduced sourcing from AGOA members given the uncertainty of renewal.

The temporary nature of AGOA discouraged about 60% of respondents “from making long-term investments and sourcing commitments in the region.” That’s according to the survey of 30 chief executives of large US apparel companies conducted by the US Fashion Industry Association and Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware.

Another 45% expect to cut sourcing if the trade program is not renewed by June of next year.

Last week, South Africa asked the US government to consider an early extension of the program to help stimulate investment across the continent.

About 40% of the survey respondents view AGOA as an “essential” factor when deciding to source from countries that are included in the program.

An April report by the US International Trade Commission stated that the majority of AGOA beneficiary apparel exports were from Ethiopia, Kenya, Lesotho, Madagascar and Mauritius in 2021. The value of exports was $1.4 billion in that year compared with $939 million in 2001, it said.

Uncertainty about apparel-provision renewals in AGOA slowed growth in apparel trade from benefiting nations, the USITC found.

“Apparel companies typically make sourcing decisions 12–18 months in advance, which indicates a long period of uncertainty about whether orders using third-country fabrics would be eligible for duty-free entry to the US,” it said.

Courtesy: Bloomberg