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Features

What they don't tell you about AGOA

Tackling taboos around the African Growth and Opportunity Act

Steve Ouma Akoth

2009-08-06, Issue 445

http://pambazuka.org/en/category/features/58271

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The African Growth and Opportunity Act (AGOA), a US policy to encourage the formation of economic ties with countries in Sub-Saharan Africa, sounds generous on paper, writes Steve Ouma Akoth. But a closer look at the situation on the ground in Kenya raises questions about who will really benefit from AGOA, Akoth tells Pambazuka News.

The last two weeks have seen a flurry of activities and media briefings as a preface to the 8th African Growth and Opportunity Act (AGOA) forum in Nairobi from 4-6 August 2009. For a country struggling to overcome the ugly 2007 post-elections upheavals, nothing less would have been expected than the current zeal from the government, individual companies and their associations. As usual, the trade unions are nowhere to be seen in this prefacing. To facilitate benefitting from AGOA, the Apparel and Textile Manufacturers Association has even gone to the extent of asking for more concessions, like a reduction of the price of electricity for corporations and tax waivers.

WHAT IS AGOA?

The story of AGOA is not new. Its script has been prepared and animated over the years by amongst others, the United States, trade departments, governments of African countries and civil society. The AGOA is a United States (US) trade act that encourages the formation of economic ties between the US and Sub-Saharan Africa (SSA). It should be clarified that AGOA is not a multilateral (between more than two parties) or a bilateral (between two parties) agreement. It is but an American Domestic Trade and Development Act of 2000 toward Sub-Saharan Africa (hereinafter ‘SSA’). With the support of both the Democrats and Republicans, this legislation has been changed thrice ever since its first version in 2000. The function of AGOA is to provide preferential trade treatment for certain products originating from eligible SSA countries for a limited period. The key words that are often bypassed in most readings of AGOA are ‘certain’, ‘originating’, ‘eligible’, and ‘limited’. The legislation authorises the president of the United States to grant unilateral preferential trade benefits to SSA countries, but only if they pursues neo-liberal economic and political reforms, and demonstrate commitment to other criteria that satisfy an array of technical requirements, and only up to a sunset date.

Read in the above form and with the statistics of trade between the US and the various SSA eligible counties, AGOA sounds generous. But its details can best be captured through a nuanced analysis of the ‘lived experiences’ by those who are supposedly the real beneficiaries of AGOA. Kenya is one of the SSA countries eligible for trade under the AGOA provisions. The biggest manifestations of trade in AGOA are the Export Processing Zones (EPZs). In Kenya, workers, investors and suppliers all have their narratives of what AGOA is, yet none of these can give a representative picture, audit or appraisal on its own. They require an adjutant reading alongside the verdict coming from the government of Kenya and that of the USA.

THE ‘TABOO’ SUBJECTS

A nuanced reading of AGOA and how it has been implemented and experienced by workers and many other stakeholders in Kenya attest to other underlying issues that are not receiving adequate prominence in the debate towards the 8th AGOA forum in Nairobi. They are indeed ‘taboo’ subjects that the organisers and the corporate interest would rather not talk about. The hype by the Ministry of Trade is however nothing other than partial truth, unless the details are brought forward as part of a bigger debate on the future of AGOA and other related US trade provisions in the New Partnership for Development Act (NPDA) of 2007. The term ‘taboo’ is used to refer to a prejudice that prohibits the use or mention of something because of its sacred nature. Some of the pertinent concerns about AGOA may be said to have acquired the revered taboo status and are a no-go zone for the two major parties to the pact. Herein, I review three of these ‘taboo’ subjects.

PRECARIOUS AND POVERTY JOBS

One of the consequences of AGOA and many other trade arrangements is that for the first time after the industrial revolution, such huge numbers of unorganised labourers, especially women, are coming under the productive sway of large-scale capital. With no doubt, women employed in production for EPZ companies earn more than they would have in traditional and informal sectors. This has led into improved condition and position within the households. But the ‘taboo’ subjects here have been; in what occupations are women in the EPZs? And what is the security of these jobs?

My observations in the last nine years point to women being employed for their manual dexterity. They are thus engaged in sections that require routine and repetition without necessarily acquiring skills or having forward-backward linkages with other sections in the company. Beyond the occupations, the jobs offered to most EPZ workers are precarious poverty jobs. Although the zones boast of creating 30,000 jobs, mostly for women, many of the women workers interviewed feel that their jobs are failing to help them and their families work their way out of poverty. So they are struggling and campaigning to turn their jobs into the potential they promise – to be a path for poverty reduction for themselves, their households and their communities. With a wage average of Ksh 5,000 per month (which translates to Ksh 20 per hour), most EPZ employees have to work for excessive overtime to meet their mere basic needs. Commonly hired on short-term contracts – or with no contracts at all – workers are working at high speed for low wages, in unhealthy conditions, and forced to put in long hours to earn enough to get by. As the preparations of the AGOA forum get underway, there are about 2,635 employees with pending cases against various EPZ companies that closed overnight and left or dismissed employees without according them any dues.

NATIONAL LABOUR LAWS AND PRACTICE

The second taboo subject is about the effect of the EPZs to the national labour laws and practice. Although AGOA is crafted under the rhetoric of rule of law, the situation in the zones and the national labour law infrastructure after the entry of AGOA, gives a completely different narrative. The corporations, in cohort with ministry of labour bureaucrats whom they have ‘captured’, see the labour laws as shackles whose grasp they struggle to wiggle out of. As trade competition increases amongst SSA countries, protections for workers’ rights in Kenya need to be strengthened. But, instead, there has been enormous pressure on the government of Kenya to trade away workers’ rights, in law and in practice, for a place in the global economy. The pressure comes from local employers and foreign investors, ever ready to find a new sourcing location. The investors in the EPZs in Kenya have been able to impose targets, which if workers do not achieve, they lose out on their daily wages. Workers are forced to sign-out for official records and then remain locked in factories to meet the ‘targets’.

Pressure has also been coming from the International Monetary Fund (IMF) and World Bank. The two institutions, which were major sponsors of the EPZs, have advised the government of Kenya to adjust their labour laws to meet sourcing companies’ demands. This conveys an unspoken message: Labour standards should be defined not by governments, but by market forces. This is the reason behind the amendments in the Finance Act No. 4 of 1994. The Act amended Section 16 of the now repealed Employment Act and the Regulation of Wages and Conditions of Employment Act to circumvent the requirement of union involvement in the redundancy of workers and related safeguards and procedures. It is on the basis of this that IMF and World Bank sponsored changes that EPZ employees are dismissed each day with no involvement of trade unions.

TRADE POLICIES OF THE US GOVERNMENT AND PURCHASING PRACTICES

The third taboo subject relates to trade policies of the US government and their corporate courtiers who are the sourcing companies from Kenya’s EPZs. Take textiles for instance. Under AGOA, Kenya is expected to attain sustained and competitive domestic production of cotton by 2012. 2012 is the sunset date for the exception under the rule of third party origin. Thus for Kenya to continue exporting apparel products to the US, the cotton used from 2012 must originate from Kenya. The idea of producing cotton domestically is a good one. But this assumes that all cotton producing countries or those with the potential for production like Kenya are collectively governed by the World Trade Organization (WTO) rules. This aspiration is silent on America’s trade-distorting domestic subsidies which amount to about US$3.8 billion or 80-90 per cent of total US support for cotton. Domestic subsidies also make up almost all of the European cotton subsidies. The over-subsidy of cotton by the US (held at ransom by big corporations and its domestic farm barons) has been a taboo topic not only in AGOA but also within the WTO circles. During the WTO meeting in 2005, the African Ministers had demanded that 80 per cent of domestic subsidies for cotton be eliminated by the end of 2006, and the rest within a few years. There has been no move on this subject. It is a taboo subject that received not even a mention from the US President Obama during his most recent trip to Ghana.

While the US officialdom double-speak through AGOA, US corporations and leading stores and brands like Wal-Mart, Target Stores, Sears, Hagar, and others, wring workers through exploitative purchasing practices. For these big retailers and brand owners, contracting out to a worldwide network of suppliers has become the most profitable way to source the goods they sell in their shops and under their logos. And as more developing countries like Kenya seek export-led growth, the pool of potential suppliers has increased massively, with thousands of producers on every continent vying for a place in their chains. Their strategy towards labour is simple: Make it flexible and make it cheap. Offered low prices, investors in the EPZs set high production targets and evade paying for employment benefits. And to deal with fluctuating and unreliable orders, EPZ employers hire workers on short-term contracts, or sub-contract to other factories. And to deal with the tight turnaround times, they demand that workers put in long hours to meet shipping deadlines. In maintenance of harmony in these factories, the EPZ employers with tacit support from the US sourcing companies have put in place strategies to minimise resistance and ‘de-teeth’ local trade unions. The companies’ toolkit includes hiring more vulnerable workers who are less likely to organise – women, often immigrants into the urban centres – and intimidate or sack those who do try to create trade unions and stand up for their rights.

People who sell their labour have certain inalienable rights. These rights are premised on the fundamental belief that human beings are entitled to a dignified life. Therefore, working conditions must satisfy the minimum requirements of dignified existence. And this is a fundamental principal in the International Labour Organization (ILO) Conventions. It is on this logic that ILO prohibits any form of slavery, servitude and forced labour. The practices above and sexual harassment that constitute the trademark of EPZs in Kenya are coming under microscopic scrutiny due to the value attached to human dignity.

In fact, the complaints against EPZ companies are all waged on the ground of undignified treatment of workers, unequal trade relationship and scrupulous practices by USA and Europe based brands and stores. America’s new chapter shall be judged on both its zeal for democratisation such as the one expressed by President Obama in his Ghana speech and a genuine move towards ‘economic and social democratisation’.

If the US is genuinely interested in Africa’s ‘growth’, then initiatives such as AGOA should be an impetus for the completion of the pending WTO DOHA rounds of negotiations that have a focus on developing countries. The Nairobi AGOA meeting shall be incomplete unless it opens up the current quarantine on these taboo subjects.

BROUGHT TO YOU BY PAMBAZUKA NEWS

* Steve Ouma Akoth is strategic advisor to Labour Awareness and Resource Centre (LARC) and doctoral fellow at the University of the Western Cape, South Africa.
* Please send comments to editor@pambazuka.org or comment online at Pambazuka News.


Readers' Comments

Let your voice be heard. Comment on this article.

Once again a very pragmatic article that highlights the philosophy and operations of AGOA. It's interesting to see the negative impact of the policies of AGOA and then appalling to learn that these policies are butressed by the IMF and WB. The more I learn the more I'm understanding that the first world's attempt to help Africa have in fact been insidious methods to prey on the ignorant and unsuspecting.
Africa needs to develop Innovative Systems within their borders and focus on building industry that refines raw materials and manufacture them into wholesome products thus producing a multiplier effect within the economy(sustainability). Being used as Plantation economies is not a viable option as this will only keep Africans immiserated and mendicant.

deryck




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