Advantages Of Preferential Trade Agreement

13In the two years since AGOA was founded, Lesotho and Kenya were the main winners [Emerging Textiles.com, 2003]. DATA [2003] indicated, however, that AGOA`s benefits were best demonstrated in Lesotho, as the country exported $318 million in goods to the United States and more than $370 million in 2003 under AGOA. At that time, in addition to 17 garment factories and the construction of a cotton mill, investments were made in the form of a denim rolling mill. In terms of employment, Lesotho created some 25,000 jobs in 2001 due to its AGOA status and employment increased considerably in subsequent years. Asia`s foreign direct investment in apparel manufacturing was made in response to the non-protectionist policy implemented by the U.S. government under AGOA. Today, Chinese and Taiwanese companies have multiplied in the apparel industry and appear to be the most dynamic segment of the national economy. Companies in this sector act as transnational enterprises and their growth can be seen as the result of an integrated trading and production system between Swaziland, Asian investors and the U.S. market. AGOA has given rise to a kind of specialization in different industrial sectors and even at different stages of production in the apparel industry.

The country has been able to take advantage of new export opportunities offered under AGOA by concluding core investment agreements with Chinese and Taswan partners. Through this process, Swaziland has gradually become part of this new framework, called the Global Commodity Chain (GAC), which connects the country to the global economy. Worldwide, the clothing chain has grown in importance due to the growing demand for textiles and footwear from companies in emerging countries and elsewhere [Geriffi, 1995], which are being strengthened by new technologies. The consequence of Swaziland`s integration into the new division of labour is the emergence of a clothing sector where production is taken over by a considerable number of Chinese investors. 3. Diversification of trade risks – The increasing diversification of commodity basket countries and diversification is helping to ensure adverse effects on global and domestic trade as a result of geopolitical turbulence, for example.B.

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