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Duty-free textiles could lead the way to free trade pact with US - Freight & Trading Weekly - 14 July 2000 edition -
- Freight & Trading Weekly
14 July 2000 edition
Duty-free textiles could lead the way to free trade pact with US
October deadline for new actOCTOBER 1 could see the introduction of the US government's Africa Growth and Opportunities Act (AGOA) into the SA clothing export market.
The AGOA is designed to stimulate export trade from 48 countries in sub-Saharan Africa to the US and offers the "gift" (which needs no reciprocation) of duty-free entry to that marketplace.
In its bill form, the AGOA has just passed through the US senate - with clothing the first product yet detailed for duty-free access to the USA.
But it would be a fair interpretation, said Riaan de Lange, international trade unit manager at Deloitte & Touche, to assume that this act could be the precursor of a free trade agreement between these African nations and the US.
"And certainly," he said, "the US authorities are presently working on a list of other products which will eventually fall under the auspices of the AGOA."
His advice to export companies is that they should clarify what, if any, duty-benefits their products currently get under the generalised system of preferences (GSP) - and determine whether they should lobby the US authorities for these products to be also included in the AGOA.
But, while October 1 is the expected kick-off date for AGOA entry to SA, we still have to be declared eligible - and will need to have in place a visa system to control certificates of origin.
This because there are certain conditions related to the nation's political state, and the product requirements, which must be met before a country is AGOA-acceptable.
To obtain certification, a country has to comply with the following political conditions, according to the Cape Chamber of Commerce and Industry:
There should be respect for property rights and private ownership; The country should have a sound labour legislation - including the prohibition of child labour; The country should be open to US investment.
With the first chosen product category under the AGOA being clothing, the requirements for duty/quota free entry for garments ask that: The fabric is of sub-Saharan origin, and is made from yarn of the same regional origin; The garments are made from US yarn, and stitched together with US thread; They are made from fabrics where the yarn is declared "not-available" in the US - e.g. silk, linen, some fine wools, cashmere, and certain sophisticated cotton yarn for shirts.
The quota cap is set at an initial level of 1.5% of the total US imports of apparel - but will grow to 3.5% after eight years.
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