Regional Trade Agreements Affecting African-Asian Trade

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AFRICA
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S SILK ROAD
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CHINA AND INDIA
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S NEW ECONOMIC FRONTIER
Most of the countries that have taken advantage of the AGOA apparel and textile benefits are located in Southern and Eastern Africa. In part, the increased inflow of FDI from Asian economies, such as India and China, to these countries has been driven by these preferential arrangements. As illustrated in table 3.12, benefits enjoyed by the apparel sector grew significantly between 1999 and 2002 and exports surged. AGOA’s apparel benefits had such visible impacts because general tariff and quota barriers were relatively high for these products in accordance with the MFA.
AGOA and EBA have provided market access for Africa, based on supply capacity largely built by Asian investors. The most well-known case is the sudden surge of Lesotho textile and garment exports to the EU and the
United States, facilitated by Asian investors who had capital, technology,
and know-how. Textiles were produced locally and exported to the EU and the United States duty free. The repeal of MFA has enabled China to dominate global textile trade and has significantly reduced AGOA’s apparel benefits. Many Asian investors abandoned their apparel factories in
Lesotho, for example. Non-AGOA countries also suffered. It is reported that South Africa’s textile and clothing industry lost 44,000 jobs between and Overall, African textile, apparel, and footwear exports to the United
States and EU suffered a big drop in 2005, as shown in figure 3.13. However, the full effect of China’s global textile domination remains to be seen.
It is still possible that African textile exports could recover from the current
TABLE 3.12

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