Africa-Press-Ethiopia<\/p>\n
In a crowded Addis Ababa factory, Finoteselam Nigussie’s needle plunges in-and-out of the gauzy white cloth she deftly guides through a sewing machine.<\/p>\n
Like thousands of other Ethiopian women, stitching shawls for export to the United States pays the 40-year-old textile worker’s rent and her daughter’s school fees.<\/p>\n
Now though, Finoteselam’s job is in danger as the United States ponders suspending Ethiopia’s duty-free market status, citing abuses and a growing famine in the war-ravaged northern Tigray region.<\/p>\n
Suspension of benefits under the African Growth and Opportunity Act (AGOA) would threaten Ethiopia’s aspirations to become a light manufacturing hub and dent hard-won economic gains in a nation once a byword for hunger and poverty.<\/p>\n
“We have used AGOA since we started business,” said Finoteselam’s boss Sammy Abdella, who set up the company nearly two decades ago and employs 250 people.<\/p>\n
“People … have worked with us since we have started. We have created a family,” he added, his voice cracking.<\/p>\n
Although Ethiopia is not a large global supplier, suspension of its U.S. trade status would be yet another problem on the list for global fashion brands such as The Children’s Place (NASDAQ:PLCE), Tommy Hilfiger and Calvin Klein as COVID-19 disrupts manufacturing capacity, ports and supply chains.<\/p>\n
WAR HORRORS<\/p>\n
The government has denied blocking aid and said individual soldiers have been tried for any abuses, without giving details.<\/p>\n
The act gives sub-Saharan African nations duty-free access to the United States if they meet criteria including removing barriers to U.S. trade and progress towards political pluralism.<\/p>\n
Prime Minister Abiy Ahmed’s chief trade negotiator Mamo Mihretu told Reuters that AGOA had directly created 200,000 jobs and indirectly created millions.<\/p>\n
“We should not politicize trade issues,” he told Reuters.<\/p>\n
Over the past decade, Ethiopia has spent billions constructing a dozen industrial parks and related infrastructure. Some factories produce goods for fashion giant PVH (NYSE:PVH), owner of the Calvin Klein, Speedo and Tommy Hilfiger labels.<\/p>\n
At Finoteselam’s company, Sammy Ethiopia, around 90% of products are exported to the United States, via retailers such as Eileen Fisher and Anthropologie.<\/p>\n
Exports to the United States account for three quarters of the firm’s annual turnover of over $200,000. If Ethiopia is suspended, Sammy said his company will close.<\/p>\n
Ethiopia exported about $237 million worth of goods duty-free to the United States under AGOA in 2020, U.S. commerce department data shows, more than 90% of it textiles and apparel.<\/p>\n
Duty-free access is a major draw for companies including Gap and Sweden’s H&M. The full impact a suspension on foreign investors and Ethiopian companies exporting to the United States is not yet clear, with layoffs and order cancellations possible.<\/p>\n
‘ADDED HEADACHE’<\/p>\n
Mamo warned an AGOA suspension would hurt U.S. companies trying to diversify production from Asia by relocating or expanding to Ethiopia.<\/p>\n
Conlumino, a retail research agency and consulting firm, noted, however, that Ethiopia’s textile exports to the United States were still minuscule compared to the likes of China, Bangladesh and India.<\/p>\n
Though Ethiopia would suffer from a AGOA suspension; retailers will find alternatives despite the havoc from COVID-19, said Neil Saunders, a Conlumino analyst.<\/p>\n
“The suspension of AGOA will not have a huge impact on clothing retail,” he said. “However – as this will come at a time when global manufacturing capacity is already reduced and retailers are struggling to keep up with demand – it is an added headache.”<\/p>\n
An H&M spokesperson said the company was following developments regarding AGOA carefully, but it was too early to comment. In December, H&M said its long-term manufacturing and sourcing strategy involves Ethiopia and it did not plan to change. But its Ethiopia production is comparatively small.<\/p>\n
U.S.-based apparel companies The Children’s Place, Gap and PVH did not respond to requests for comment.<\/p>\n
A senior PVH official previously said the 10-year renewal of AGOA in 2015 “was a critical factor in PVH’s decision to invest”, according to a 2017 case study of PVH in Ethiopia published by the World Bank and co-authored by Mamo.<\/p>\n
In 2018, PVH said Ethiopia could become a top supplier because it grows cotton, dyes fabrics and sews garments. It established a joint venture to operate a factory in Hawassa city, the company’s first such venture in 30 years.<\/p>\n
Raghavendra Pattar is CEO of Nasa Garment, a manufacturer in Hawassa Industrial Park. Nasa exports about 95% of its garments to U.S. companies. It employs 1,200 workers, mostly women, and spent $7 million to set up the factory two years ago.<\/p>\n
But an AGOA suspension would halt expansion.<\/p>\n
“AGOA \u2026 is the reason buyers are coming to Ethiopia and sourcing manufacturing here,” he said. “If the duty benefit is taken away, the buyers will go to another country.”<\/p>\n","protected":false},"excerpt":{"rendered":"
Africa-Press-Ethiopia In a crowded Addis Ababa factory, Finoteselam Nigussie’s needle plunges in-and-out of the gauzy white cloth she deftly guides through a sewing machine. Like thousands of other Ethiopian women, stitching shawls for export to the United States pays the 40-year-old textile worker’s rent and her daughter’s school fees. Now though, Finoteselam’s job is in […]<\/p>\n","protected":false},"author":84,"featured_media":8167,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[241,491,490],"class_list":{"0":"post-8166","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-all-news","8":"category-economy","9":"tag-africa-press-ethiopia","11":"tag-ethiopian-textile-industry"},"yoast_head":"\n