Threading Africa's Needle
30 August, 2006
The Wall Street Journal
Everyone talks about helping sub-Saharan Africa. Well, the chance to save more than 100,000 jobs there is on the Congressional table. We should find out some time after Labor Day whether the help-Africa talk is anything more than that.
Senator Bill Frist is trying to renew part of the African Growth and Opportunity Act (AGOA), which since 2000 has provided duty-free access to the U.S. market for substantially all products from most sub-Saharan countries. The full act doesn't expire until 2015 but its textile provisions are set to expire in 2007. These let sub-Saharan-assembled clothing that uses fabric purchased from any third country enter the American market duty-free. If this provision lapses, Africa could lose 150,000 jobs.
Mr. Frist has said he wants to extend the third-country textile provision so that goods sown in Africa will retain their duty-free access to the U.S. But to do that, he'll need Democratic support. Incredibly, it's not a sure thing.
Since the act began in 2000, two-way trade between sub-Saharan Africa and the U.S. is up 115%. In 2005 it increased by 37% to $60.6 billion. The good news is not only that in 2005 the U.S. bought more from Africa, but also that U.S. exports to Africa went up -- with "notable gains in agricultural goods, machinery and transportation equipment," according to the U.S. Trade Representative. This means Africa is opening itself to imports and modernizing, which is key to wealth creation.
Admittedly a large part of the spike in two-way trade with Africa has been in oil, and indeed AGOA non-oil exports to the U.S. were down 16% in 2005. But that doesn't tell the whole story. Africa's apparel makers battled tough circumstances in 2005. Any list would include the expiration of the multifiber agreement, subsidies to U.S. cotton-growers and China's more generalized government subsidies to its apparel manufacturers. The possibility that the textile provision won't be renewed has already caused some manufacturers to shift production out of Africa.
The act originally hoped to push Africa toward making its own fabric, but that hasn't happened to the extent envisioned. Even though local fabric making has increased, it's still not sufficient to meet the needs of African clothing assemblers who want to sell into the U.S.
The bottom line is that if the provision on using outside fabric dies, so will Africa's assembly industry, which is a particularly important source of jobs for women. This explains why the extension is supported by Oxfam America, the Africa Society, Lesotho National Development Corporation and Education Africa USA, as well as the United States Association of Importers of Textiles and Apparel and the American Apparel & Footwear Association.
That leaves Congress. Republican House Ways and Means chairman Bill Thomas isn't likely to put an extension on the legislative agenda in a lame-duck session without assurances from the Democratic leadership. Unfortunately his Democratic counterpart, Congressman Charles Rangel, is on record favoring a replacement for the third-country provision. Mr. Rangel's idea is to give duty-free access to African clothing only if at least 20% of the value-added comes from Africa itself. The idea is to somehow push the region toward buying locally made fabric, creating an integrated industry.
This simply isn't going to work if fabric-making is not to Africa's comparative advantage right now. Meantime apparel makers likely would shift their production elsewhere because of uncertainty along the production chain. This could kill Africa's young assembly business. As one representative of a U.S. apparel importer told us, "You can't imagine how harmful the uncertainty is."
Africa needs whatever jobs it can get while it tries to pull itself up from the bottom rung of the ladder. Apparel assembly is making that possible. Cutting off a source of jobs in the hope that some new industry will spring up strikes us as risk Africans can ill-afford. |
