‘The Ministry of Trade informed all and sundry that AGOA would be extended by 10 years but US companies have not yet placed orders for the upcoming season’, says prominent trade unionist, Bahlakoana Lebakae.
The African Growth and Opportunity Act (AGOA) was signed into law in May 2000 by President Bill Clinton to expand American trade with sub-Saharan Africa. The Act sought to provide trade preference for quota and duty-free entry into the United States (US) for certain goods while also facilitating sub-Saharan Africa’s integration into the global economy. However, the US Congress needs the President to annually determine whether countries are still eligible for AGOA benefits based on progress in meeting certain criteria, among them progress towards the establishment of a market-based economy, rule of law, economic policies to reduce poverty, protection of internationally recognised workers’ rights, and efforts to combat corruption. As of August 2014, 41 sub-Saharan African countries were eligible for AGOA benefits, among them Lesotho. Initially, AGOA was set to expire in 2008, but the US Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to September 2015. The US government has since announced the extension of the legislation for another 10 years beginning next month.
In this wide-ranging interview, Lesotho Times (LT) reporter, Lekhetho Ntsukunyane, speaks with prominent trade unionist, Bahlakoana Lebakae, about AGOA, how the legislation has helped the country’s economy particularly the textile industry — its biggest beneficiary in the Kingdom — and Lesotho’s position in terms of eligibility come October.
LT: Could you please give a brief background of what AGOA is and how it came into being?
Lebakae: The African Growth and Opportunity Act or AGOA in short, commenced in May 2000 when former US President, William Jefferson Clinton, signed it into law. The Act followed on the heels of the EU-TDCA, which is the European Union (EU) Trade Development Corporation Agreement that European countries signed with South Africa for bilateral relations covering trade, development cooperation, economic cooperation and numerous other fields such as socio-cultural cooperation and political dialogue. The EU-TDCA was signed in January 2000 and by default, covered the entire Southern African Customs Union (SACU) comprising Botswana, Lesotho, Namibia, South Africa and Swaziland. So when America realised this agreement as an opportunity for European countries to improve their economy, it came up with AGOA later on the same year.
LT: What do the Americans hope to achieve through AGOA?
Lebakae: With AGOA, the US government has not only planned to give African countries greater access to the US market, but eventually establish Free Trade Agreements (FTA) that would lead to free trade areas with specific African regional economic organisations. Basically, AGOA, as a unilateral trade programme, does not have a formal bilateral consultation process that can result in dispute settlements, so only changes to the legislation can be made by US policymakers. This has resulted in long-term uncertainty and investment risks to companies exporting to America from our region. You see the US, like the EU, began to come to terms with the changing dynamics of the global economy. In a 2012 interview, US Ambassador to the African Union (AU), Michael Battle acknowledged that, and I quote, “If we don’t invest on the African continent now, we will find that China and India have absorbed its resources without us, and we will wake-up and wonder what happened to our golden opportunity of investment”. The inference drawn from this is simply that Western countries saw an opportunity to invest in Southern Africa, especially when they considered changing trends in the global economy. You see, our countries are still considered rich in natural resources and minerals and Western nations would like to invest in these fields.
LT: For countries to qualify for AGOA, they need to meet certain criteria. Could you spell these conditions in a nutshell?
Lebakae: For countries to be eligible, they must have a market-based economy that protects private property rights, incorporate an open rule-based trading system, and minimise government interference in the economy through measures such as price controls and subsidies. The countries must also respect the rule of law and political pluralism as well as eliminate barriers to US trade and investment. The countries must further have economic policies that reduce poverty, increase the availability of healthcare and educational opportunities, expand physical infrastructure, promote the development of private enterprises and encourage the formation of capital markets through micro-credit or other programmes. They must have systems to combat corruption and bribery; protect internationally recognised workers’ rights, including the right of association, the right to organise and bargain collectively; prohibit the use of any form of forced or compulsory labour; a minimum age for employment and acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health.
LT: What happens if a country is found wanting in any of these provisions?
Lebakae: If the US President determines that a country does not comply with these conditions, that nation is removed from the eligibility list.
LT: But what was happening before the advent of AGOA? Were these nations not exporting to the US?
Lebakae: Prior to AGOA, sub-Saharan African countries exported to the US under the Generalised System of Preferences which listed 4,650 products that could enter the US market duty-free. With AGOA, 1,835 products were added to the list for duty-free entry into the US by beneficiary countries. The new items could be imported for as long as they did not compete with US domestic producers.
LT: Apart from fulfilling the said conditions to be able to remain eligible for AGOA, what other challenges do the countries face as far as the Act is concerned?
Lebakae: Least-developed countries such as Lesotho, dominantly export apparel or clothing. And one of the most serious problems with AGOA is it is not a permanent provision so African countries are always concerned about its possible expiry. This fact makes it very difficult to have continuity in investment and employment. Following its introduction in 2000, AGOA was scheduled to expire on 30 September 2012. But it was only on 3 August 2012 that the US Congress extended this provision until the end of September 2015. It is again a case of uncertainty even as we speak because despite our government, through the Ministry of Trade, assuring us of the commitment the American government has already undertaken to extend the Act, the fact is we have nothing to provide as proof that the US Congress has actually endorsed the extension of AGOA. The consequence of this last-minute extension means that many people lose their jobs due to the fact that the US clothing industry places their orders way in advance- six to nine months in the case of Lesotho to be precise. An estimated 35 percent of such orders are lost as American companies decide to source their textile and apparel from non-African producers during that time of uncertainty.
LT: Coming to the ongoing political instability in Lesotho, has the insecurity, in your view, affected how the Americans view the country vis-à-vis AGOA?
Lebakae: Definitely yes. Recently, Lesotho lost orders due to the insecurity caused by the army and police clashes that have since brought a clearer picture that there is political instability in the country. A typical instance is that around 2000 jobs were lost at two textile factories, namely Éclat Evergood in Thetsane Industrial Area and Kopano Textiles in Maputsoe, due to these clashes. American companies actually informed the two firms that their orders had been cancelled for fear of instability in Lesotho. These were leading American companies that had been sourcing T-shirts, jeans and tracksuits, from Lesotho, among other apparel products.
LT: How do you describe the situation at local textile firms?
Lebakae: Most of the workforce, currently around 36 000, are predominantly women and the majority have migrated from the rural, mountainous areas of Lesotho for this employment. However, the employment is characterized by inadequate, low-wage jobs so much that some end up resorting to prostitution to subsidise their pay in order to support their families. Their employment is further characterised with other negative issues like lack of pension and social security cover; walking long distances to and from work; non-provision of health and safety equipment; casualisation of labour; lack of ventilation; a terribly cold working environment that has no heating systems especially in winter; cement floors that have no carpets; high prevalence of HIV that was being addressed by ALAFA (Apparel Lesotho Alliance to Fight AIDS) that provided a range of integrated health services at workplace that included prevention, testing and treatment for HIV, TB and Sexually Transmitted Diseases as well as advice and education on family planning. ALAFA was established in 2006, but had to unfortunately close down in 2014 due to lack of funds.
LT: Isn’t Lesotho a signatory to the International Labour Organisation (ILO) Decent Work Programme, which advocates better working conditions?
Lebakae: Lesotho is a signatory of the ILO Decent Work Country Programme 2012-2017 which complements the National Strategic Development Plan 2012/13- 2016/17 and the Lesotho Employment Policy. Lesotho has further ratified the United Nations Convention on the Protection of the Rights of All Migrants and their Families. In 2013, the Africa-Caribbean-Pacific Migration Facility, in collaboration with the Lesotho Ministry of Home Affairs, supported research which led to the drafting and publication of the Lesotho National Migration and Development Policy. All these documents advocate for better working conditions for factory employees. But they seem to remain just papers without implementation. There is also the ILO Better Work Project where Lesotho is sponsored by the US Department of Labour and International Finance Corporation (IFC), which was launched in August 2006 in order to improve labour standards and competitiveness in global supply chains. Enhancing respect for labour standards helps enterprises meet the social compliance demands of global buyers; improves conditions for workers, and helps firms become more competitive by increasing productivity and quality. However, the project also has the potential of being adjourned in 2016.
LT: So what exactly is the position of Lesotho regarding AGOA’s extension, as we speak?
Lebakae: At the present juncture, the Ministry of Trade informed all and sundry that AGOA would be extended by 10 years but US companies have not yet placed orders for the upcoming season. This creates uncertainty for producers, and the current political impasse is not creating a conducive climate for business as the American Embassy has issued a statement to the effect that AGOA and the Millennium Challenge Compact could be at risk if the government of Lesotho does not address the country’s political instability and observe the rule of law and human rights.