Sacu-lesotho wt/tpr/S/aaaa Page Annex 2 kingdom of lesotho contents

Trade Agreements

1. 
   Lesotho is an original member of the WTO; it has been an active participant in the on-going DDA negotiations, as well as in other aspects of the WTO's work programme. Lesotho is a member of the Informal LDC Consultative Group in the WTO, and of the WTO African Group, and the African, Caribbean and Pacific (ACP) Group of countries. Lesotho was, until 31 October 2008, Coordinator of the LDC Consultative Group, which required leadership and advocacy on matters affecting LDCs in the DDA negotiations, and on overall WTO issues.
   
2. 
   Since the last TPR of SACU, Lesotho has made a number of notifications to the WTO (Table II.2).
   

1. 
   Lesotho has limited administrative capacity at the MTICM. In addition to the WTO, the country is a member of the SACU, SADC, and the African Union.³⁵ Within SACU, Lesotho, Namibia, South Africa, and Swaziland (but not Botswana) form the Common Monetary Area (CMA) under which the Lesotho loti is maintained at par with the South African rand, which circulates freely in Lesotho. Lesotho's membership of SACU means that it is also directly affected by the Trade, Development and Cooperation Agreement (TDCA) between South Africa and the EC. Lesotho also benefits from preferential access to the markets of most developed countries under the Generalized System of Preferences (GSP).
   
2. 
   South Africa has hitherto set the main trade policy instruments for the whole SACU area. Furthermore, the revenue available for Lesotho and other smaller SACU members may, in the long run, be affected by the revision of SACU's revenue-sharing formula and the TDCA.³⁶ Lesotho has been dependent on the SACU revenue pool for a large proportion of government revenue and GDP; and is particularly dependent upon the contribution of customs duties to this pool.³⁷
   
3. 
   Lesotho has been an active member of SADC and is committed to its regional integration processes (Main Report, Chapter II). By virtue of its small size, Lesotho also views the broader market of SADC as critical to the development of its economy.
   
4. 
   Lesotho, as an LDC, benefits from unilateral duty-free access to the EC market under "Everything But Arms" (EBA).³⁸ Like other ACP countries, Lesotho is engaged in negotiations towards the Economic Partnership Agreements (EPA) with the EC as part of the SADC Group (SACU plus Angola and Mozambique). In June 2009, Lesotho, along with Botswana, Mozambique, and Swaziland signed an interim EPA on goods with the EC. It is Lesotho's view that the EPA route could bring large benefits for the country. The authorities believe that EPA negotiations are intended to cover much more than goods, and that the economic adjustment resulting from a more liberal trade in services regime, investment or procurement environment would bring more substantial benefits to Lesotho.³⁹
   
5. 
   Lesotho was the first of the BLNS countries, the second in SACU (after South Africa), and the fifth of the 35 originally qualifying sub-Saharan African countries, to qualify for AGOA benefits, as from 23 April 2001.⁴⁰ The major advantage for Lesotho from the AGOA was access to the U.S. market for textiles and clothing. Countries with per capita GDP below US$1,500 in 1998 (defined as lesser developed beneficiary countries) enjoyed, until 2007, duty-free access for clothing made from fabric originating anywhere in the world; in contrast, the general AGOA rule provided unlimited access for clothing made from U.S. fabric, yarn, and thread, and permits up to 3.5% of overall U.S. imports of clothing originating in AGOA beneficiaries (in quantity terms, measured in square metre equivalents) to be made from African fabric and yarn until 2015, while the third-country fabric sourcing rule was extended to 2012.
   
6. 
   The increase in imports into the United States of textiles and clothing from Lesotho was remarkable during 1999-02. However, the AGOA did not generated trade from Lesotho in other areas during the period.⁴¹
   
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