25 March, 2002

Botswana faces problems in trade with US

Botswana's exclusion from the generous aspects of the Africa Growth and Opportunity Act (AGOA) is impeding the country from benefiting from free trade with the United States.

Baledzi Gaolathe, finance and development planning minister said in Monterrey, Mexico, on Thursday, March 21, that although the country had no problems becoming eligible for AGOA, only five textile companies in Botswana have qualified. This is because Botswana is classified as middle income economy and is excluded from some of the generous aspects of AGOA such as the freedom to source raw materials it needs from competitive suppliers. Also, the American market is highly competitive and the quality standards are high. Consequently, he said in a panel discussion on AGOA hosted by the Corporate Council for Africa (CCA), that even companies that have qualified have not been able to export much to the US. To secure raw materials it needs, Botswana can buy from the United States at high costs or grow cotton which is also not a good option as the country's soil is not suited for cotton production.

Gaolathe said Botswana has raised the matter with US authorities and is hopeful of being included in the next round of AGOA. "We have an open economy and can compete when the playing field is level," he said. Further, he stated that predictability is a crucial factor for investment and that the eight-year period given to AGOA should be extended to enable investors time to recoup their investments.

Botswana is one of 35 African countries that have qualified for AGOA. Most export textile and apparels to the US market because they are fairly easy to manufacture and bring in quick returns on investment. CCA estimates that AGOA has led to a 96 per cent increase in imports of non-oil items from Africa to the United States in the first year since it was signed into law. By the fourth quarter of 2001, it said, 92 per cent of all imports from Africa were entering the American marketplace duty free. (Daily News Online)


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