Clothing And Textile Sector Workshop

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Clothing And Textile Sector Workshop

  1. 1. Clothing and Textile Sector Workshop AGOA I to AGOA III : Trade Performance and Recent Legislative Amendments Eckart Naumann tralac / WESGRO Workshop Cape Town, South Africa 08 October 2004
  2. 2. <ul><li>AGOA overview </li></ul><ul><li>Trade performance under AGOA </li></ul><ul><li>Legislative changes: AGOA I - AGOA III </li></ul><ul><li>AGOA III: earlier proposals absent in the final legislation </li></ul><ul><li>Implications for South Africa and the region </li></ul><ul><li>Implications for SACU-US free trade negotiations </li></ul>Overview
  3. 3. Trade Performance: 2003 – 2004 ytd
  4. 4. Clothing sector trade – sample countries
  5. 5. <ul><li>Exchange Rate </li></ul>Overview
  6. 6. Trade Performance
  7. 7. <ul><li>First changes to AGOA introduced at end 2002 </li></ul><ul><li>Affected only clothing, and country designation (Botswana & Namibia) </li></ul><ul><li>Clothing rule changes: </li></ul><ul><ul><li>Quotas doubled </li></ul></ul><ul><ul><li>Knit -to-shape permitted (previously only cut to shape used in the wording) </li></ul></ul><ul><ul><li>LDCs permitted to use foreign yarns (previous confusion as reference only to foreign fabric – customs interpreted narrowly as meaning ‘from AGOA yarn’) </li></ul></ul>AGOA I - AGOA II
  8. 8. <ul><li>Signed into law mid 2004 </li></ul><ul><li>Extends AGOA to 2015 </li></ul><ul><li>Where migration to FTA, full cumulation </li></ul><ul><li>Extends clothing provisions and Rules of Origin: </li></ul><ul><ul><li>Extends LDC rule 3 years (3 rd with half quota, i.e. 1.18%) </li></ul></ul><ul><ul><li>Quota % stays same 2008 – 2015 </li></ul></ul><ul><ul><li>Expands folkloric provision (commercial production of ethnic fabrics, but conditions, e.g. from US or African yarn) </li></ul></ul><ul><ul><li>Extends value tolerance rules: </li></ul></ul><ul><ul><ul><li>Allows foreign collars and cuffs, drawstrings, shoulder pads and elbow patches </li></ul></ul></ul><ul><ul><ul><li>Foreign fibres and yarns 10% (prev. 7%) </li></ul></ul></ul>AGOA II - AGOA III
  9. 9. <ul><li>Extension to 2015 / 2020 </li></ul><ul><li>LDC provision to 2008 , optional 2-yr extension – countries w/o fabric manuf. </li></ul><ul><ul><li>Increase quotas to 10% (and 3.5% for LDCs) / even remove all quotas – subject to compliance with RoO </li></ul></ul><ul><li>AGOA eligibility continuous w/o annual review (unless non-compliance) </li></ul><ul><li>Removes investment and trade finance restrictions on certain US institutions, </li></ul><ul><li>(e.g. on textile and apparel projects) </li></ul>What was left out of AGOA III ? Earlier versions HR & S Bill
  10. 10. <ul><li>Includes some prev. excl products, e.g. canned peaches, other agric. goods </li></ul><ul><li>Removes import sensitivity rqmt. </li></ul><ul><li>Budget of US$ 85mn for APHIS technical assistance </li></ul>What was left out of AGOA III ? Earlier versions HR & S Bill
  11. 11. <ul><li>In the absence of FTA greater planning horizon for stakeholders </li></ul><ul><li>Value tolerance rules benefit clothing sector in SA and region </li></ul><ul><li>Extension of LDC rule: detrimental to SA ? </li></ul><ul><ul><li>loss in relative competitiveness </li></ul></ul><ul><ul><li>Opportunities for local design (houses), contracting to LDCs? </li></ul></ul><ul><ul><li>investment diversion from (and instead of) SA to region? </li></ul></ul><ul><ul><li>Quotas: a likely problem in year 3? </li></ul></ul><ul><ul><li>Incentive / disincentive for regional textile producers? </li></ul></ul>Implications for South Africa and region
  12. 12. <ul><li>AGOA extension unlikely to fully mitigate end of MFA </li></ul><ul><li>Provision of technical assistance by APHIS very important – e.g. case of Zambian sugar peas, SA oranges </li></ul><ul><li>Besides extension, watered-down AGOA III of little new benefit except to clothing sector </li></ul>Implications for South Africa and region
  13. 13. <ul><li>Extension to 2015 / 2020 </li></ul><ul><li>LDC provision to 2008 , optional 2-yr extension – countries w/o fabric manuf. </li></ul><ul><ul><li>Increase quotas to 10% (and 3.5% for LDCs) / even remove all quotas – subject to compliance with RoO </li></ul></ul><ul><li>AGOA eligibility continuous w/o annual review (unless non-compliance) </li></ul><ul><li>Removes investment and trade finance restrictions on certain US institutions </li></ul><ul><li>Includes some prev. excl products, e.g. canned peaches, other agric. goods </li></ul><ul><li>Removes import sensitivity rqmt. </li></ul><ul><li>Budget of US$ 85mn for APHIS technical assistance </li></ul>What was left out of AGOA III ? Earlier versions HR & S Bill
  14. 14. <ul><li>Extension of AGOA a disincentive to conclude FTA? </li></ul><ul><li>Improved negotiation basis, although uncertainty remains </li></ul><ul><li>Cumulation: non-FTA countries don’t suffer, FTA full cumulation </li></ul><ul><li>Must build future FTA on aquis : expand coverage to non-AGOA goods (e.g. textiles, canned fruit, minerals and metals, etc.) </li></ul><ul><li>Challenge of clothing RoO: push for single CTH for all SACU? Principle has strong basis in AGOA </li></ul><ul><li>AGOA built on VA – what about US-SACU? [NAFTA, US-Chile, US- Singapore based largely on CTH, but US-Jordan and US-Israel largely VA) </li></ul>Implications for SACU-US FTA negotiations

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