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Swaziland – US to pull AGOA plug in January

Swaziland is set to lose its preferential access to US markets via the African Growth and Opportunity Act (AGOA). This is because the impoverished country has failed to meet a US deadline to get its act together regarding worker rights and freedom of expression. News agency AFP reports that US ambassador to Swaziland, Malika James, said that the landlocked country had failed to retain its AGOA status and did not meet a May 15 deadline.Swazilanddid not achieve all the benchmarks of the programme, including respect for human rights. Barring a miracle, which South African sources say is now unlikely, Swaziland’s duty-free access to the US economy will expire in January 2015. (A slowdown in orders for especially manufactured goods is expected immediately.) AFP quoted Ms James as saying the US had been reviewing Swaziland’s participation in relation to the fundamentals of freedom of speech and repressive legislation such as the Suppression of Terrorism Act. Swaziland had focused only on industrial relations and overlooked the principles of freedom of speech.

AGOA is a US law which provides duty-free access to the world’s largest economy for qualifying African countries, of which Swaziland is currently one. A US Commerce Department report in December last year said the US government “took special note of its continuing concerns regarding workers’ rights issues in Swaziland”. That was not the end of it either as AGOA’s eligibility criteria include the establishment of a market-based economy, rule of law, economic policies to reduce poverty, protection of internationally recognised worker rights, and efforts to combat corruption. On May 15, the US Departments of Commerce and State conducted their annual review of eligibility to determine whether each country eligible for AGOA benefits has met, or made progress toward meeting, AGOA eligibility criteria. Swaziland did not. South African sources said on Friday, May 16, that the loss of AGOA access would damage the kingdom’s economy, shed thousands of jobs and potentially create further instability. There was some concern over the move and the implications for South Africa, but no major upheaval was anticipated.

WHY DO WE CARE? The loss of AGOA access has the potential to further destabilise Swaziland’s political environment and it may not be robust enough to withstand much more. As stated previously, Swaziland’s vulnerability at the political level is almost exclusively financial – or rather the lack of finances –and not due to popular discontent, but new massed ranks of unemployed could change that. How many jobs are on the line? We estimate at least 6,000 and possibly as many as 10,000. The 2010 Labour Force Survey (the most recent comprehensive labour market document) indicated nearly 200,000 formal jobs in the country during that year, of which manufacturing accounted for around 14% of employment. Jobs related to textiles, wearing apparel, leather and related goods were measured at almost 12,000 during 2010, of which 90% were women. Swaziland’s exports of textiles, clothing, footwear and leather goods represented more than 7% of total export revenues during 2012-13 and contributed 90% of exports to the US under AGOA. By our calculations, just over half of Swaziland’s clothing and apparel exports are sent the world’s largest economy. The manufacturing sector accounted for 42% of Swaziland’s GDP during 2011-13.

Analysts: Gary van Staden & Christie Viljoen

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