AAFA: Why Africa must be developed as a major source of apparel

A presentation to the United States International Trade Commission by Nate Herman, Senior Vice President, Supply Chain, American Apparel & Footwear Association (AAFA), on January 29

Thank you for providing us this opportunity to testify today regarding U.S. Trade with Sub‐Saharan Africa. Representing more than 1,000 world famous name brands, the American Apparel & Footwear Association (AAFA) is the trusted public policy and political voice of the U.S. apparel and footwear industry, its management and shareholders, its nearly four million U.S. workers, and its contribution of $384 billion in annual U.S. retail sales.

AAFA and its members have a long history of working on U.S./Africa trade policy, including the development and implementation of AGOA and its extensions.  Our members manufacture and sell clothes, shoes, and travel goods throughout the continent. Africa features prominently in the business decisions of our members. In a recent survey, half our members told us they are currently sourcing in Africa. Sixty percent of those NOT sourcing there tell us they expect to start shortly.

Many point to the African Growth and Opportunity Act (AGOA), and its recent ten‐year renewal, as a main reason why they are in Africa and why they are now looking at expanding their business there. As our members look at the next seven years, they are telling us about three opportunities they see for the continent.

Africa can develop a vertical industry Since the creation of AGOA in 2000, policymakers have pondered the best way to create a vertical industry so Africa can draw upon its own fabric, yarn, and leather production. Many of the raw inputs are there – petroleum for synthetics, cotton, or cattle for hides – but the intermediate materials are almost all imported from outside the continent.

Ten years of uninterrupted duty free access, combined with state of the art flexible rules of origin, has provided members both the time frame and wherewithal to generate demand for local production of these inputs. Africa can develop a responsible industry Africa will be under a lot of pressure to develop its industry quickly – owing to this ten‐year window.

We want to make sure that this is done in a responsible manner. Among other things, this means that:

It means we must avoid the mistakes made in other countries – such as Bangladesh – which built up too quickly and without proper safeguards. But it also means learning and applying the positive lessons– such as Bangladesh – where the industry has worked together to create unified codes and inspection protocols, providing a consistent standard of safety and training throughout the industry, and avoiding burdening factories with costly, duplicative audits.

Africa can develop a competitive industry. Africa’s main competitive advantage is duty free access to various markets. While that is important, it is not a sustainable competitive model. Many other countries receive duty free access to these markets and Africa’s duty‐free access –at least for now – is temporary and is conditional.

African countries and African factories need to cultivate and develop additional competitive advantages by improving reliability, timeliness, and quality. Key to those disciplines will be investments in physical infrastructure and training, implementation of better government policies, such as those embedded in the Trade Facilitation Agreement (TFA), and the development of stronger regional linkages since these countries become better sourcing partners and better markets when they operate together.

So how do we get there.

Let me offer two suggestions.

First, it is important for the U.S. government to support the work in AGOA, as they have been doing, through capacity building and other assistance.  The U.S. Agency for International Development (USAID) has been at the forefront of efforts to stand up and fund trade hubs in West, East, and Southern Africa.  These hubs are incredibly valuable sources of information, contacts, knowhow, and expertise that the industry and the local governments draw upon regularly.  We heartily endorse their continued activities.

Second, we must ensure that AGOA remains stable for at least the duration of the programme.  As noted, the on‐again, off‐again nature of the programme before the ten‐year renewal was extremely disruptive and meant the industry was not able to take advantage of the first 15 years of the programme.  Keeping the programme stable gives companies the certainty they need to grow a vertical, responsible, and competitive industry in Africa. We will be there to help. -  nherman@aafaglobal.org,  https://www.aafaglobal.org/AAFA/AAFA_News/2018_Letters_and_Comments/AAFA_Testifies_on_Future_of_AGOA