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Sunday, 4 January 2015

PM WRONG ON AGOA IMPACT



Swaziland’s Prime Minister Barnabas Dlamini is trying to cover up the devastating impact on the kingdom of the withdrawal of a trade agreement with the United States. 

He said it would not affect trade, but an independent report said it would destroy the textile industry.

On 1 January 2015 the United States withdrew Swaziland’s trade benefits under the Africa Growth Opportunity Act (AGOA) and the kingdom’s exports to the US will no longer be free of tariffs. 

The withdrawal came after Swaziland failed to meet five conditions of eligibility, regarding workers’ rights in the kingdom and King Mswati III’s refusal to introduce democratic reforms.

Since the decision was announced in May 2014, the Swazi Government, which is handpicked by King Mswati, who rules as sub-Saharan Africa’s last absolute monarch, has been on a mission to mislead Swazi people and the international community about the shattering consequences of withdrawal of trade benefits.

The Observer Sunday, a newspaper in effect owned by King Mswati, in an article written by the Chief Editor Mbongeni Mbingo, quoted Prime Minister Dlamini saying, ‘there is no need for Swazis to behave like a major catastrophe has happened following the loss of Swaziland’s eligibility status under the African Growth and Opportunity Act (AGOA). Besides, AGOA did not benefit Swazis or the country’s economy much.’

However, an independent report on Swaziland and AGOA concluded the opposite to be the case.

One report, The Impact of AGOA on the Swaziland textile Industry, prepared in 2010 by the African Cotton and Textile Industries Federation, concluded, ‘Swaziland owes the very existence of its apparel and textile industries to the MFA [Multi Fibre Agreement, a previous trade agreement that ended in 2005] and AGOA and exports to the US With one exception, all apparel manufacturers in Swaziland were established post 2000 following the enactment of AGOA.’ 

It added, ‘Between 2000 and 2004, the Swaziland apparel sector grew phenomenally mainly as a result of investment by Taiwanese companies to take advantage of the duty free quota free access to the US market under AGOA. At its peak in 2004, the clothing and textile sectors employed an estimated 30,000 employees in 27 establishments.

Reporting in 2010 on the likely consequences to the Swazi economy if AGOA benefits were removed in 2015, the report said it was ‘quite likely’ that employment in the textile industry would be halved. In 2005 when the MFA ended, it reported, ‘nine foreign owned manufacturers closed down virtually halving employment in a single year, with employment declining from 30,000 employees in mid-2004 to 15,000 in mid-2005.

In 2014 it was estimated there were at least 17,289 people employed by the textile companies in Swaziland.

The report added, ‘Current exports are almost exclusively focused on the US market. The predominant business model of the Taiwanese-owned companies is for the Swaziland subsidiaries to be purely production facilities with product development, marketing and sales being conducted out of Taiwan. The product range appears to be very narrow being principally long-run basic knits.

Should the U.S. market be threatened in any manner or the risk factor raised to any extent, it is quite likely that a scenario similar to the one that followed the demise of the MFA would unfold, namely at least half of the existing factories would close down and approximately 9,000 jobs be lost as the business models would not allow for the focus to shift to the EU and the South African market would not be large enough to absorb the surplus capacity.

Even if it was possible for the South African market to be to a certain extent a viable alternative to the US market for some Swaziland manufacturers, this would negatively impact on South African producers and destabilize the SACU [Southern African Customs Union] region as a whole.

The apparel and textile sectors are significant employers in Swaziland and have a positive impact on other sectors such as transport operators, freight forwarders, commuter transport providers and street vendors. Therefore any decline in the apparel and textile sector will be felt in the broader community.

The report’s predictions are already coming true. Shortly after the loss of AGOA benefits were confirmed, Tex Ray, a Tawianese-owned textile company, announced the loss of 1,450 jobs. In a letter, to the Swaziland Manufacturing and Allied Workers Union (SMAWU) and Labour Commissioner Khabonina Dlamini, factory manager Lisa Chang said, ‘The company exports 100 percent of its products to the United States of America market and due to the country’s exclusion [from AGOA], we have been unable to secure any further orders from our clients.’

In December 2014 media in Swaziland reported that Matsapha Knitwear was retrenching 1,000 of its workers. Kwaluseni Member of Parliament Mkhosi Dlamini reportedly told the Swazi House of Assembly, the ‘factory was terminating the workers’ employment because of the loss of the Africa Growth Opportunity Act (AGOA)’.

The Times of Swaziland, the only independent daily newspaper in the kingdom, reported, ‘The MP said other smaller companies in Matsapha were also retrenching employees under the pretext that it was due to the loss of AGOA.’

Textile factories in Swaziland are mostly owned by Taiwanese companies which have a poor record on industrial relations and exploitation of their workers.
 
In July 2014 a survey of the Swaziland textile industry undertaken by the Trades Union Congress of Swaziland (TUCOSWA) revealed workers in the textile sector were subjected to harsh and sometimes abusive conditions, many of the kingdom’s labour laws were routinely violated by employers, and union activists were targeted by employers for punishment.

More than 90 percent of workers surveyed reported being punished by management for making errors, not meeting quotas or missing shifts. More than 70 percent of survey respondents reported witnessing verbal and physical abuse in their workplace by supervisors.

See also

PM MISLEADS ON AGOA PROGRESS
 
SWAZI TEXTILE WORKERS EXPLOITED
 
EXPLOITATION BY TAIWAN TEXTILES

MINISTER RAIDS TEXTILE FACTORY

SWAZI TEXTILE PAY STRIKE ILLEGAL

SWAZI GOVT AIDS TAIWAN EXPLOITATION

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