25 March, 2002
Botswana faces problems in trade with US
Botswana's exclusion from the generous aspects of the Africa Growth and
Opportunity Act (AGOA) is impeding the country from benefiting from free trade
with the United States.
Baledzi Gaolathe, finance and development planning minister said in
Monterrey, Mexico, on Thursday, March 21, that although the country had no
problems becoming eligible for AGOA, only five textile companies in Botswana
have qualified. This is because Botswana is classified as middle income economy
and is excluded from some of the generous aspects of AGOA such as the freedom
to source raw materials it needs from competitive suppliers. Also, the American
market is highly competitive and the quality standards are high. Consequently,
he said in a panel discussion on AGOA hosted by the Corporate Council for
Africa (CCA), that even companies that have qualified have not been able to
export much to the US. To secure raw materials it needs, Botswana can buy from
the United States at high costs or grow cotton which is also not a good option
as the country's soil is not suited for cotton production.
Gaolathe said Botswana has raised the matter with US authorities and is
hopeful of being included in the next round of AGOA. "We have an open economy
and can compete when the playing field is level," he said. Further, he stated
that predictability is a crucial factor for investment and that the eight-year
period given to AGOA should be extended to enable investors time to recoup
their investments.
Botswana is one of 35 African countries that have qualified for AGOA.
Most export textile and apparels to the US market because they are fairly easy
to manufacture and bring in quick returns on investment. CCA estimates that
AGOA has led to a 96 per cent increase in imports of non-oil items from Africa
to the United States in the first year since it was signed into law. By the
fourth quarter of 2001, it said, 92 per cent of all imports from Africa were
entering the American marketplace duty free. (Daily News Online)
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