Under AGOA's apparel provisions, garment exports are subject to an annual quota, which is re-calculated each year and is based on total US imports of garments in the preceding year. The quota period runs annually to September 2006.
According to data just released, AGOA countries utilised only 23.43 percent of the quota for the 12-month period to September 2006.
Lesser developed countries benefiting from the third country rule are subject to a (lower) sub-quota, which had a 43.33 percent utilisation.
While this is still well under the annual quota limit, the AGOA legislation will halve quotas for the 2006/2007 for imports entered under this third country rule under which virtually all LDC garments are shipped.
This means that quotas may well become a reality in the upcoming year. There are however various initiatives underway to extend the third country provisions and remove the lower quota, although little progress appears to have been made in the passage through US Congress.
Trade Law Centre for Southern Africa
marketing@alchempro.com
