Lesotho government’s post-AGOA ambitions could be fast-tracked if the Donald Trump administration’s proposal for a free trade agreement with Africa materialises. But, the main question is whether Lesotho and other smaller sub-Saharan African countries would have made the necessary capacity building steps to compete fairly with the rest of Africa.
Trade and Industry Minister, Tefo Mapesela this week leads the Kingdom’s team at the 2018 AGOA Forum which, among others, will be challenged to come out with the way forward on the Washington’s proposal for a single country policy versus regional pact trading.
According to the new US proposal, the Trump administration wants to harmonise the yet-to-be-effective African Continental Free Trade Agreement (AfCFTA), with the trade model that will among others seek to empower developing countries across sub-Saharan Africa to take full advantage of the trade benefits being offered by the US markets.Trump’s proposal also seeks to set the trade relations stage with Africa when AGOA comes to an end in 2025, with some 40 African countries currently eligible under the Act, including Lesotho.
The Act, which was passed in 2000, abolished import duties on more than 1,800 products manufactured in eligible countries in sub-Saharan Africa under a number of conditions, which include good governance as well as a good record on human and labour rights.In March this year African leaders committed to the establishment of a free trade area for the continent though few member states signed the agreement only instead affirming support for the principle and promising to pen the deal after consultations at their respective constituencies.
Lesotho has recently signed the AfCFTA, though under some unclear conditions, with the localisation process yet to be launched for the deal to become effective under the laws of the country. The signing was reportedly done by the Minister of Foreign Affairs and International Relations at the Mauritania Summit last week, though the ministry of trade which is now represented at the AGOA Forum, expressed ignorance about it.
Lesotho is one of the main beneficiaries under AGOA in the SADC region since joining in 2001 and has recently commissioned the formulation of a strategy post the AGOA era, which chiefly identified capacity issues as the most pressing for the country to continue enjoying US markets benefits beyond the preferential era. With an industrial hub, mainly apparel, having created more than 40,000 jobs, mostly influenced by AGOA, the government of Lesotho has struggled with diversification strategies to tap into other areas that could create opportunities for Basotho producers.
Most of the investments currently in the country are dominated by Asian establishments which are either expansions of their original supply lines or consists of sourcing orders directly from the US buyers. The 2018 AGOA Forum comes at the height of the US-China trade war and with new policy pressure by the Trump administration to register a winning formula for US trade against both China and the European Union with Africa.Default Basic Success warning Info Danger Primary