MASERU — The United States’ Bureau of African Affairs says it is working hard to lobby the US Congress to extend the 3rd Country Provision, which is set to expire on September 30.
The 3rd Country Provision allows sub-Saharan Africa’s least developed countries like Lesotho to export apparel made with non-US fabric and yarn duty-free and quota-free.
Under this provision 91 percent of Lesotho’s textile exports are destined to US markets, according to last year’s Central Bank of Lesotho’s Economy Review.
When that provision expires, Lesotho-based textile companies will have to source fabric from the United States or sub-Saharan countries.
The problem is that US fabric prices are more than double those in Asia from where Lesotho-based factories have been buying all along.
Sourcing from sub-Saharan Africa is equally challenging because the fabric is either not available or too expensive.
This means that apparel produced in Lesotho will be repulsively expensive and United States buyers will shift to Asian suppliers who produce at a lower cost and make their own fabric.
Orders to Lesotho’s textile firms will dry up and the firms will have to shut down.
The bureau’s spokesperson Amy Holman told a press conference on Tuesday that she was hopeful that the US congress will vote in favour of the provision’s extension saying “there is no opposition in the congress.”
“We are all worried.
“All we are doing is working hard,” Holman said.
“We are working hard to sensitise all members of the Congress and other agencies,” she said.
“We are holding our breaths.”
If the bureau fails to lobby the congress, Lesotho’s textile industry will collapse unless the companies can diversify their markets.
The collapse would leave nearly 38 000 Basotho without jobs at a time when the unemployment rate is at 45 percent.
Its impact on the national economy will be huge as other sectors that rely on the textile industry will also suffer.
On June 1 Deputy US Trade Representative Ambassador Demetrios Marantis also told a press conference that he was working with Congress to ensure the renewal of the 3rd Country provision during this summer.
“We are committed to working with Congress to getting that renewed as quickly as possible,” Marantis said.
“We hope to do so as early as this summer in order to provide the predictability and stability that investors need in both the United States and Africa to ensure a smooth flow of textile and apparel trade from Africa to the United States,” he said.
The extension of the provision is expected to be thoroughly discussed at the 11th annual US-sub-Saharan Africa Trade and Economic Cooperation Forum in Lusaka, Zambia today.
A similar forum, the biggest, started on Tuesday in Washington DC and will end tomorrow.
Marantis says the forum will also discuss the possibility of extending AGOA beyond 2015.
The theme for this year’s summit is “Enhancing Africa’s infrastructure for trade.”
Trade ministers will focus on issues of developing transport, energy, telecommunications, and other hard infrastructure to improve African competitiveness and promote regional and US-sub-Saharan Africa trade.
The ministers will also discuss development of regional transportation, power generation capacity, telecommunications and other infrastructure services that promote larger markets, cross-border production and value chains.
The forum will highlight trade opportunities for US businesses and benefits of US exports of infrastructure-related products and support for US investment and joint ventures — including public-private partnerships — in sub-Saharan African transport, energy, telecommunications and other key infrastructure sectors.