With the United States weighing options which include suspending Ethiopia’s duty-free market status, citing abuses and a growing famine in the war-torn Tigray region, thousands of Ethiopians, whose income depend on the export of shawls stitched by them are at risk.
The suspension of benefits under the African Growth and Opportunity Act (AGOA) threatens Ethiopia’s aspirations to become a manufacturing hub and thwarts hard-won economic gains in a nation that was once a poster child of hunger and poverty.
“We have used AGOA since we started business,” said Sammy Abdella, who set up a company nearly two decades ago which employs 250 people. “People … have worked with us since we have started. We have created a family”.
Although Ethiopia is not a large global supplier, the threat of suspension of trade with the US adds to headwinds facing global fashion brands such as Tommy Hilfiger, Calvin Klein and The Children’s Place.
Washington’s concerns arise from reported media reports of widespread sexual violence by Ethiopian and allied Eritrean soldiers in Tigray, where militants have battled the army and its allies for a year.
According to the United Nations, an aid blockade has forced 400,000 people into famine. Last week on Thursday, the UN said, food convoys had not entered Tigray for the last 10 days midst mass killing of civilians.
The Ethiopian government has denied blocking aid saying, individual soldiers have been tried for abuses. It did not share any other details. Eritrea has denied committing abuses.
Washington has laid the ground for sanctions.
The AGOA act gives the sub-Saharan African nations duty-free access to the United States if they meet criteria including removing barriers to U.S. trade and progress towards political pluralism.
According to Ethiopian Prime Minister Abiy Ahmed’s chief trade negotiator Mamo Mihretu, AGOA had directly created 200,000 jobs and indirectly it had created millions of jobs.
“We should not politicize trade issues,” said Mihretu.
In the last decade, Ethiopia has spent billions constructing a dozen industrial parks and related infrastructure for factories producing goods for fashion giants.
90% of Sammy Ethiopia’s products are exported to the United States, via retailers such as Eileen Fisher and Anthropologie. Exports to the US account for three quarters of the company’s annual turnover of over $200,000.
If Ethiopia is suspended from AGOA, Sammy Ethiopia will close. In 2020, the company exported goods worth $237 million to the United States under AGOA, with more than 90% of its exports being textiles and apparel.
“The suspension of AGOA will not have a huge impact on clothing retail,” said Neil Saunders, an analyst with Conlumino. “However – as this will come at a time when global manufacturing capacity is already reduced and retailers are struggling to keep up with demand – it is an added headache.”