Renew AGOA for 10 years, restore Ethiopia’s benefits in 2024 – AAFA

Addis Ababa, July 11, 2023 (FBC) – The American Apparel & Footwear Association (AAFA) recently urged the office of the US trade representative (USTR) to renew the African Growth Opportunity Act (AGOA) this year for at least another 10 years—or maybe longer—so that US companies will have the necessary certainty and timeframe they need to grow a vertical, responsible and competitive industry in Africa up to and beyond 2025.

AAFA vice president for trade and customs policy Beth Hughes, in a letter to USTR’s trade policy staff committee chair William Shpiece, said the drop in AGOA utilisation rate can be addressed if Ethiopia’s AGOA benefits are restored next year.

Ethiopia’s AGOA benefits were revoked on January 1, 2022, due to the humanitarian crisis in Tigray and nearby regions, the report by Fibre2Fashion recalled.

“In 2021, 93.1 per cent of all apparel from AGOA countries entered under the AGOA programme. Although the utilisation rate dropped to 68.3 per cent in 2022, most of that decline was due to Ethiopia’s exports entering the US outside of the AGOA programme. While it will not happen overnight, we believe the utilisation rate will rebound if Ethiopia’s benefits are restored in 2024,” the letter, containing AAFA comments to USTR on the annual AGOA review, said.

If Ethiopia cannot regain its benefits, the costs to do business there will ‘eventually become too great for many’, AAFA noted.

“As more companies are beginning to utilise AGOA, and specifically the third-country fabric provision, the quota fill rate will be significantly increasing in the coming years. Therefore, we also suggest raising the existing 3.5 per cent limit to at least 4.5 per cent, with a growth provision, so that it not be a constraint going forward,” the AAFA letter added.