Origin Africa Magazine

Trade and investment
‘With a ten-year timeframe that starts immediately,
African producers can position themselves
for the inevitable competition that comes from
future trade agreements, such as the ones Europe
and the United States are now negotiating with
Vietnam.’
from temporary unilateral preference
programs to permanent two-way free
trade agreements.
While we look forward to engaging
in those debates at the appropriate
time, we will be focused in the
meantime on more immediate opportunities
created by this ten-year
extension.
• First, it means African producers
can develop a vertical
industry. Since the creation of
AGOA in 2000, policymakers have
wondered over the best way to
foster investment in fabric and
yarn production in Africa. Previous
short-term extensions combined
with strong competition from
elsewhere discouraged this kind of
investment. Now we have a longterm
horizon that gives investors
the stability and predictability to
recoup their return on the kind of
large investments needed for yarn
and fabric production. The tenyear
window also accommodates
the long-term planning needed to
upgrade or build critical infrastructure,
such as ports, railroads, and
utilities.
• Second, it means African producers
can focus on making
quality products under safe
and responsible conditions at
the time and price that their
customers demand. Recognizing
that the customer is king was
a central message that came out
of this past year’s Source Africa
conference, which took place as
Congress was debating the AGOA
extension. It is also an outlook
that African producers can now
adopt. A stable preference program
means factory owners and
managers can build the kind of
long-term partnerships, skills, and
compliance that will lead to repeat
business, as well as larger and
more sophisticated orders.
• Third, it means African producers
don’t have to obsess about
competition from other regions.
With a ten-year timeframe
that starts immediately, African
producers can position themselves
for the inevitable competition
that comes from future trade
agreements, such as the ones
Europe and the United States are
now negotiating with Vietnam.
As those agreements take time
to be completed, approved, and
implemented, AGOA (and existing
duty preferences with Europe)
enable African countries to build
competitive relationships. This
doesn’t mean that African producers
shouldn’t cast a wary eye
toward their competition. It does
mean that they shouldn’t let those
concerns hobble their own ability
to compete.
Finally, the ten-year extension is
coming at the right time. Our members
are telling us that Africa is
featured more prominently in their
sourcing plans. While this trend was
materializing before AGOA’s renewal,
it has been accelerating in the past
few months. In a recent survey, half
our members told us they are currently
sourcing in Africa. Sixty percent of
those NOT sourcing there now tell us
they expect to start shortly. A widely
quoted report by McKinsey released
in August also points to greater interest
in Africa, particularly East Africa.
For the past 15 years, Africa’s main
competitive advantage – duty free
access to its major markets – was
controlled by others. Over the next
decade, with focus and discipline, African
producers can use that duty free
status to build their own competitive
advantage. We will be there to help.
Steve Lamar is executive vice president
for the American Apparel &
Footwear Association and a trade
policy expert. AAFA is a national
trade association representing apparel,
footwear, and other sewn products
companies, and their suppliers,
which compete in the global market.
JANUARY - MARCH 2016 5