By Pauline Kamiri
The humanitarian crisis and ongoing war in Ethiopia’s north of the Tigray region could affect the country’s trade benefits under the African Growth and Opportunity Act (AGOA). An executive order signed by President Joe Biden seeks to slap harsh sanctions on sides that are involved in Ethiopia’s war in the Tigray region.
The US says, sanctions are aimed at curbing actions and policies that continue to threaten the peace, security and stability of Ethiopia which in turn has been obstructing a ceasefire that should have happened long before now and restored normal running of the country. Corruption, humanitarian abuse, obstruction of delivery and distribution of humanitarian aid including attacks on humanitarian aid personnel or humanitarian projects are some of the major concerns that have been pointed since the war begun.
But what’s in AGOA?
The AGOA trade program provides sub-Saharan African nations duty-free access to the United States on the one condition that they meet certain eligibility criteria, such as eliminating barriers to U.S. trade and investment. The program allows 39 sub-Saharan African nations to export goods, which includes textiles and garments, to the United States free of duty but is due to expire in 2025.
Ethiopia exported goods worth $239 million to the U.S. in 2019 under AGOA, which was more than 40% of its total shipments to the U.S, consisting of apparel and leather products.
The country has now become wary after President Joe Biden’s remarks on the sanctions. It has urged the United States to let it retain its duty-free market access under African Growth and Opportunity Acts because disqualification will deprive many people of their livelihoods in the now conflict-torn country.
However President Joe Biden said that there is no military solution to the Tigray crisis and that US is determined to push for a peaceful resolution of the conflict by providing full support to those leading mediation efforts including African Union High Representative for the Horn of Africa Olusegun Obasanjo
The withdrawal of this preferential access would put as many as 85,000 direct jobs at risk and about 1 million across the entire value chain, which in turn will cause a dire situation for the citizens of Ethiopia.
The war is threatening the stability of Ethiopia, Africa’s second most populous country after Nigeria. Conflict started in the region in November of 2020 after TPLF rebels attacked a federal military base and ever since all crimes against humanity have occurred leading to death and despair among the citizens. Prime Minister Abiy ordered a counteroffensive on Tigrayan forces which has brought the country more suffering with tensions in the northern region simmering and heightening to an actual and deadly war. UN agencies have estimated that more than five million people are in need of humanitarian aid a crisis that will further be exacerbated by loss of trade concessions with the US if a ceasefire is not acquired.
Previous U.S. attempts to pressure the warring factions, including visa restrictions against Ethiopian and Eritrean officials in May of 2021 have not been successful since the war is still active in the Northern Tigray Region of Ethiopia.
Mamo Mihretu a trade and economic adviser to President Abiy said that the withdrawal will affect the very same people the U.S. is trying to protect. Adding that close to 85,000 employees in the industrial park will be affected and 80% of those are women who survive with less than two dollars a day. Mamo made the comments after the U.S. Trade Representative, Katharine Tai in August raised concerns over human rights violations during fighting in the northern Tigray region, warning that they could affect Ethiopia’s markets if unaddressed.
The removal of Ethiopia from AGOA would damage Ethiopia’s industrial strategy, particularly in textile industry especially in leather goods. Its removal would potentially harm some of the biggest western brands, such as Calvin Klein and Tommy Hilfiger, that source most of their production in Ethiopia. The access to the US market under AGOA has enabled Ethiopia to attract foreign investment into a manufacturing sector that currently employs tens of thousands of people with more than 80 per cent of them being young women. This planned suspension of Ethiopia from AGOA has some of the netizens worried with some taking on twitter.
Ethiopia will not be the first country that has undergone suspension from AGOA, Washington has previously suspended DRC from trade partnership due to alleged human rights violation during Joseph Kabila’s rule some 10 years ago was however reinstated in 2020 when former US president Donald Trump and Phillip Tshisekedi the now ruling president met and made the proclamation.
Ethiopia has the lowest level of income-inequality in Africa and one of the lowest in the world, with a Gini coefficient comparable to that of some Scandinavian countries. In spite of the progress toward eliminating extreme poverty, Ethiopia remains one of the poorest countries in the world, despite the state being heavily engaged in the economy due to both rapid population growth and a low starting base which has now been further worsened by the ongoing crisis