- Duty-free status for US market a boon to Ethiopian economy
- Suspension would hurt livelihoods and national prosperity
- Washington unhappy over abuses and hunger from war in north
The United States plans to remove Ethiopia, Mali and Guinea from the agreement that gives them duty-free access to the United States, President Joe Biden said in a letter to Congress, citing human rights violations. The move comes amid ongoing conflict and famine in Ethiopia’s northern region of Tigray and after coups d’etat in Guinea in September and in Mali last year.
Biden said Ethiopia was not in compliance with the African Growth and Opportunity Act’s (AGOA) eligibility requirements “for gross violations of internationally recognised human rights.” Guinea and Mali had not made progress toward establishing rule of law and political pluralism, and Mali had failed to establish workers’ rights and human rights, Biden’s letter said.
“Despite intensive engagement between the United States and the Governments of Ethiopia, Guinea, and Mali, these governments have failed to address United States concerns about their non-compliance with the AGOA eligibility criteria,” it said. AGOA provides sub-Saharan African nations with duty-free access to the United States if they meet certain eligibility requirements, such as eliminating barriers to US trade and investment and making progress towards political pluralism.
US Trade Representative Katherine Tai said in a statement that she would provide the countries with clear benchmarks for getting back into compliance with AGOA’s requirements and work with them to achieve that objective. Ethiopian government spokesperson Legesse Tulu said that the suspension would cost Ethiopia 1 million jobs. Ethiopia exported about US$ 237 million worth of goods duty-free to the United States under AGOA in 2020, according to US Commerce Department data.
Ethiopian textile industry at risk if US suspends trade deal over Tigray war
Suspension of benefits under the AGOA would threaten Ethiopia’s aspirations to become a light manufacturing hub and dent hard-won economic gains in a nation once a byword for hunger and poverty. Although Ethiopia is not a large global supplier, suspension of its US trade status would be yet another problem on the list for global fashion brands such as The Children’s Place, Tommy Hilfiger and Calvin Klein as Covid-19 disrupts manufacturing capacity, ports and supply chains. Prime Minister Abiy Ahmed’s chief trade negotiator Mamo Mihretu said that AGOA had directly created 200,000 jobs and indirectly created millions. Over the past decade, Ethiopia has spent billions constructing a dozen industrial parks and related infrastructure. Some factories produce goods for fashion giant PVH, owner of the Calvin Klein, Speedo and Tommy Hilfiger labels.
An H&M spokesperson said the company was following developments regarding AGOA carefully, but it was too early to comment. In December, H&M said its long-term manufacturing and sourcing strategy involves Ethiopia and it did not plan to change. But its Ethiopia production is comparatively small.
In 2018, PVH had said Ethiopia could become a top supplier because it grows cotton, dyes fabrics and sews garments. It established a joint venture to operate a factory in Hawassa city, the company’s first such venture in 30 years.
Raghavendra Pattar is CEO of Nasa Garment, a manufacturer in Hawassa Industrial Park. Nasa exports about 95% of its garments to US companies, employs 1,200 workers, mostly women, and spent US$ 7 million to set up the factory two years ago. But an AGOA suspension would halt expansion. “AGOA … is the reason buyers are coming to Ethiopia and sourcing manufacturing here,” he said. “If the duty benefit is taken away, the buyers will go to another country.”