Witnesses Argue Ethiopia Should Remain Out of AGOA, Somalia Should Be In

Africa is a good location for producing labor-intensive apparel, The Children's Place's former chief supply chain and sourcing officer told an interagency committee tasked with considering countries' eligibility for the African Growth and Opportunity Act. The committee, chaired by Jeremy Streatfeild, director of African Affairs at the Office of the U.S. Trade Representative, held an online public hearing on AGOA July 24.

The witnesses who testified addressed some of the issues that were the focus of written submissions (see 2307120041), but allowing Somalia into AGOA was a focus of the hearing, an issue that was the subject of only one written submission.

A number of witnesses asked for at least a 10-year-renewal of AGOA this year, rather than waiting until the fall of 2025, when the program expires, but that is not within the purview of this committee, rather it is up to Congress. This committee makes recommendations on whether countries should maintain their eligibility, or in the case of countries that are ineligible, whether they should receive eligibility.

Several witnesses said Ethiopia should not return to eligibility, even though there was a peace deal that stopped the fighting in Tigray.

Daniel Hagos, who said he was speaking as a private citizen, said he is from Tigray, and that he strongly recommends that Ethiopia remain outside AGOA. "Restoring benefits is premature," he said, and added that if Ethiopia were to return to AGOA in 2024, it "would only further undermine efforts to secure accountability for the people of Tigray."

Hagos said at least 720,000 Tigrayans were forcefully displaced from Western Tigray during the conflict, and that ethnic cleansing continues. He also complained that the federal government is not controlling its northern border, so Eritrean troops are entering the region, and he said that in May, those troops stopped United Nations officials trying to determine if peace was being sustained, and also prevented aid from entering the village they were heading to.

Although The Children's Place sources from Ethiopia, Gregory Poole, the former chief supply chain officer, who testified at the hearing, did not ask for Ethiopia's restoration.

U.S. Fashion Industry Association President Julia Hughes noted that half the companies that had been sourcing from Ethiopia decided not to source in Africa at all after Ethiopia's removal from the program.

She said USFIA members are still committed to developing a successful apparel industry in Ethiopia. (Before it was removed, it had $255 million in textile and apparel exports to the U.S.)

"We recognize this is a complicated issue," she said, and asked that, once the administration determines Ethiopia is no longer violating human rights and is cooperating in international efforts to support human rights, the country -- and its apparel-specific benefits -- be restored promptly.

She added that USFIA is not asking for immediate reinstatement, just asking for action "once there is confirmation that conditions on the ground warrant a reentry into the program."

Streatfeild asked witnesses how Western brands' operating in Ethiopia or Mauritius has affected wages in factories, and how AGOA eligibility has advanced worker rights.

Mauritius Ambassador Purmanund Jhugroo said its economic advisors make sure they are meeting all AGOA criteria.

Frannie Leautier, a senior fellow at The Atlantic Council's Africa Center, said she has visited industrial parks in Mauritius, Benin and Togo, and other countries.

She said when you visit, you notice "the quality of the work environment is much higher than in the rest of the country, which shows labor standards are being implemented and respected.

"The second thing that you observe is the quality of the products is a higher quality than in non-eligible countries," or in industries that are not using AGOA to export to the U.S.

Poole did not directly address wages, but said, "This has been a really good success story for the apparel and textile industry. We’re creating economic opportunities for these workers that without AGOA they would otherwise not experience.

"Like a lot of international brands, we have a set of compliance standards, and in my experience of working in Africa, the African vendors have been very quick to embrace and accept these standards that in other parts of the world we don’t see the same level of engagement."

Leautier also suggested that other products be given looser rules of origin, as apparel has been granted for the majority of AGOA recipients. She said that looser ROO is why apparel has thrived as an AGOA export.

She was asked why many countries have not utilized AGOA much, and she said the U.S. needs to translate information about AGOA into French, and that Francophone countries use it far less than countries where English is one of the official languages.

Arrie Krüger, head of marketing for industrial applications at Sasol Chemicals, a South African country, noted that chemicals imported into South Africa face no tariffs, and that if South Africa were to be expelled from AGOA, that would end the zero-tariff reciprocity in his sector.

Western Cape Province Premier Alan Winde expressed anxiety that South Africa would be removed because it had not condemned the invasion of Ukraine. Winde said his constituents do not support the illegal war that Russia started. "On the other criteria, I think we’re OK," he said.

Krüger was asked how U.S. businesses benefit from AGOA, and he said chemicals Sasol makes are used in electric vehicles, solar panels, advanced packaging, and treatments for diabetes and obesity. He noted that of Sasol's 20,000 employees worldwide, 1,200 are in the U.S., and that U.S. operations receive a product from South Africa, refine it further, and then export almost half a million tons of the finished product.

Aside from witnesses arguing that Ethiopia should not reenter AGOA, no one asked for a country to lose eligibility, though Kevin Rosenbaum, executive director of The International Intellectual Property Alliance, said AGOA recipients should be showing "some progress" in protecting IP. He said his group has seen some improvements in Kenya and Nigeria, but also said they have serious concerns with Kenya, Namibia, Nigeria, and South Africa.

Somalia has never been a participant in AGOA, and Mursal Khaliif, a Somalian member of parliament, told the committee that they have passed anti-money laundering laws, anti-corruption laws, and over the last several months high-ranking government officials "have been brought to justice for their alleged involvement in corruption."

They also recently passed a law providing labor protections to domestic and foreign workers, and allowing for trade unions in all industries.

He said parliament is debating a bill intended to "ensure the legal frameworks are in place to protect both foreign and domestic investors."

He said that in a few months, they will take key steps to ensure the independence of the judiciary.

"The environment is ripe," he said, for joining AGOA.