Textile industry under threat over AGOA rule

Swaziland's flourishing textile industry is experiencing a crisis, caused by delays in US legislation that would extend a deadline in the African Growth and Opportunities Act (AGOA), and enable Swazi exports to continue entering the market duty-free. "Already, about one thousand garments workers out of 28,000 employed nationally have lost their jobs because of the uncertainty over AGOA. Each worker supports 10 dependants," said Sipho Mamba, Secretary-General of the Swaziland Manufacturing and Allied Workers Union. According to the Ministry of Enterprise and Employment, a quarter of the population is either directly or indirectly dependent on factories that export under AGOA. Exported garments manufactured in African countries from raw materials made in other countries - mainly in Asia - have been accepted under AGOA. However, under current rules this preferential status expires on 30 September, and no Swazi apparel exporter had received an order for delivery after August, the garment exporters' association warned. A bill introduced last November in the US Senate would extend AGOA benefits until 2015, and for the next four years permit raw materials to be imported from non-AGOA countries. Another bill, introduced to Congress in the same month, would extend AGOA to 2020 and allow "third party" fabrics for a further three years. But both pieces of legislation have stalled. Swaziland's association of garment manufacturers met on Wednesday with Prime Minister Themba Dlamini to press for government action on AGOA. The business community has reportedly been frustrated by government's lack of initiative on the issue. "As employers, we are doing everything possible to avert the possible disaster which might befall the country," Robert Maxwell, secretary-general of the Swaziland Exporters Association said in a statement. Because US retailers place orders six months in advance and are now ordering their fall fashion lines, if the AGOA legislation is not passed in two weeks, Swazi garment factories will lose business. Already some orders have been cancelled, resulting in layoffs. "Once we lose customers, it will be hard to get them back. If the delay in AGOA legislation is temporary, we can reopen and rehire workers in six months. If it is permanent, there won't be an Asian-owned garment factory still here next year," said the manager of one Asian-owned garment factory in the Matsapha Industrial Estate near the central commercial city, Manzini. "The uncertainty about the future of AGOA is already having a negative impact on AGOA as the [Bush] administration's primary initiative to boost African economic growth and development. We understand that several major US buyers have already shifted orders to Asia in anticipation of the September 30 expiration date," Florizelle Lister, assistant United States trade representative for Africa, said in testimony to the Senate Foreign Relations Committee last week. One source familiar with the AGOA legislation said election year politicking in the US might be responsible for the delay in the trade scheme's renewal. "Loss of American jobs through outsourcing to other countries is a campaign issue. Trade benefits to Africa may be seen as detrimental to US garment workers." Swaziland needs a time extension on its ability to use "third country" raw materials in its AGOA exports, to give the country time to set up clothing factories. There are two other issues darkening Swaziland's export prospects: the country's monarchical system of government goes against the philosophical grain of AGOA, which seeks to encourage democracy by fostering trade, and its human rights record. Both these issues will be featured in an annual review of all AGOA-eligible countries undertaken by the US State Department in June. The strong South African rand, to which the Swazi currency, the lilangeni, is pegged, has also made Swazi exports less competitive. "Our products are twice as expensive as they were two years ago, because of the strengthening rand. This erases the advantage of our goods going into the US without duty taxes," said the manager of one garment factory.