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Mixed feelings over AGOA III vote
While fears are being expressed that the sugar protocol may come to an end, the textile industry has had a breath of fresh air with the voting of the Africa Growth and Opportunity Act (AGOA) III in the US Senate. Unfortunately though, as expected, Mauritius has not been granted the exemption for the third country fabric.
AGOA III is an extension of AGOA II, which would have expired in 2008. Now, the preferential agreements on textiles have been extended until 2015 and the exemption until 2007. Before going to the Senate, the legislation had been voted by the House of Representatives two weeks earlier. Now that both institutions have voted this version, the President of the United States of America, George W. Bush, will sign its promulgation.
The Mauritian government, through its minister of Foreign affairs and International trade, Jayen Cuttaree, had asked for the exemption. Raw materials could then have been imported from countries outside the region while still benefiting from duty free access to the US market. Jayen Cuttaree is still hopful about getting the exemption for Mauritius. The Mauritian trade commissioner in Washington, Peter Craig, is just as optimistic. “When I see how the AGOA III was brought back to life – while everyone thought it was already dead – I am still confident about obtaining the exemption.”
There is already a positive sign: the US trade representative, Robert Zoellick, is favourable to Mauritius. The free exchange agreement between Australia, the Caribbean or Singapore and the United States of America could soon be adopted. The exemption for Mauritius could well appear in one of these agreements. But the adoption of this exemption for Mauritius is far from settled.
Negative consequences</B>
The fact that Mauritius may not benefit from the exemption is not “the end of the world”, according to Maurice Vigier de la Tour, the director of the Mauritius US Business Association. After all, the US market represents only 25% of our exports and Europe remains our main market; it will however have negative consequences in the textile industry.
Unemployment may rise because of departures of Hong Kong firms from Mauritius. These factories mainly export to America and were counting on the exemption to benefit from a 17% reduction on tax duties. That would have allowed them to continue their activities in Mauritius and prevent major job losses. If the exemption is out, they have no reason to stay here.
The third country fabric exemption would also have reduced the impact of the abolition of quotas in Mauritius in 2005. As from next year, Mauritius will have to fight against China and India. The 17% drop in selling prices that would have followed the exemption is now only an illusion. Unless it comes at the last minute.
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