Making the Cut?
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Gibbon (2008) divides the recent history of SSA’s international clothing trade into three periods—pre-AGOA, AGOA, and post-MFA. Two further periods can be identified—global economic crisis and post-crisis. Phase 1: Pre-AGOA
The first period extends from 1990 to 1999 (Gibbon 2008). During this phase, besides the MFA quotas (which secured market access for countries with unused quotas), the main preferential treatment offered was duty- and quota-free access to the EU market under the Lomé Convention for African, Caribbean, and Pacific (ACP) countries. Preferential market access to the EU required, however, fulfilling double transformation rules of origin (ROO), which proved to be difficult for most SSA countries. Over the 1990s SSA clothing3 exports roughly doubled, reaching around US$2 billion in 1999 (see table 3.1). Around 60 percent of the exports went to the EU, mostly to the United Kingdom and France; the remainder went almost exclusively to the United States. The majority of exports originated from Mauritius (nearly 50 percent of total SSA clothing exports in 1999). South Africa and increasingly Madagascar were the only two other significant clothing exporters to the EU market. Mauritius and Madagascar traditionally supplied the U.K. and French markets and South African firms typically exported to the United Kingdom. All three countries have local textile mills and thus were capable of satisfying EU double transformation ROO required to obtain preferential market access.4 Mauritius also dominated U.S. exports but in the second half of the 1990s Kenya, Lesotho, Madagascar, and South Africa also became important exporters to the United States. Phase 2: AGOA
The second period started with AGOA in 2000/01 and lasted until 2004. SSA clothing exports increased to around US$3.2 billion in 2004 (see table 3.1) and dramatically changed its composition. Exports to the EU stagnated while those to the United States more than doubled peaking at US$1.8 billion for all SSA AGOA beneficiaries in 2004 (see figure 3.1). The share of SSA clothing exports in global clothing exports increased to 1.3 percent in 2004; in the United States SSA’s import share increased from 1 percent in 1996 to 2.6 percent in 2004. However, only a handful of the eligible countries have been able to take advantage of these preferences: around 95 percent of clothing exports to the United States from SSA originated in Lesotho, Madagascar, Kenya, Swaziland, Mauritius, and South Africa (see table 3.2 and figure 3.2). Of these countries, South Africa and Mauritius were existing exporters before AGOA. Thus, AGOA has mostly benefited Lesotho, which became the largest SSA clothing exporter to the United States, followed by Kenya, Madagascar, and Swaziland (see table 3.3 and figure 3.3). The vast majority of clothing exports (with the exception of Madagascar) from these countries went to the United States, which implies that the clothing sector in these countries is highly dependent on AGOA preferences. Until 2004 the growth of the clothing sector in the la er group was spectacular. Lesotho’s exports grew over 500 percent since 1996 whereas Kenya, Madagascar, and Swaziland’s exports grew more than 10-fold. In contrast, EU exports stagnated after 2000 and continued to be dominated by Mauritius; only Madagascar and South Africa were other significant exporters to the EU (see table 3.4 and figure 3.4).