Ethiopia will no longer be eligible for benefits under the African Growth and Opportunity Act (AGOA). Ethiopia is home to one of Africa’s largest textile industries and this would threaten Ethiopia’s aspirations to become a light manufacturing hub and dent hard-won economic gains in a nation once a byword for hunger and poverty. Though Ethiopia is not a large global supplier, suspension of its US trade status would be yet another problem on the list for global fashion brands such as The Children’s Place, Tommy Hilfiger and Calvin Klein as Covid-19 disrupts manufacturing capacity, ports and supply chains.
The US has decided on removing Ethiopia from AGOA, citing Ethiopia’s failure to halt human rights violations. So US retailers sourcing from Ethiopia are likely to turn to other countries for their sourcing needs. West Africa, already a major producer of cotton, is a likely beneficiary of any sourcing shift (Benin, Ivory Coast and Burkina Faso respectively rank sixth, seventh, and eighth in the world in terms of cotton production). The sanctions placed on Ethiopia are likely to give West African nations new impetus to attract textile-related investment and improve transportation and logistics. They will be helped by the creation of the African Continental Free Trade Area (AfCFTA), which came into effect in January 2021 and has reduced tariffs up to 90 per cent on goods traded within the area.