Working Papers

Lesotho’s clothing exports to the United States: an historical and detailed analysis

Lesotho’s clothing exports to the United States: an historical and detailed analysis

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20 May 2016

Author(s): Ron Sandrey

In recent papers tralac has written extensively on Lesotho and trade related issues. Sandrey (2015) confirmed that manufacturing and in particular the textiles and clothing sector is the main contributor to the growth of Lesotho’s formal Gross Domestic Product (GDP), but this sector is stagnating in the face of competition from low-cost Asian producers and rising labour costs. Access to the US market under the African Growth and Opportunity Act (AGOA) means that Lesotho is vulnerable to increased competitive pressures from Asia and other developing countries. 

The objective for this paper is to extend the review of tralac’s clothing analysis in recent times to concentrate in detail upon Lesotho’s export performance in the US market. The most recent data since 2010 when intra-SACU data became more reliable clearly indicates the importance of the US market to Lesotho. Our analysis will also pay attention to the tariff preferences that Lesotho and several other developing countries and countries with FTA-related preferences into the US enjoy over non-preferential access suppliers.

We have chosen the US market as it is the main global market for the generally middle- to low-end products that Lesotho manufactures, although we recognise that Lesotho is very conscious of trying to move into at least some higher-end products for markets such as the EU. To provide a comprehensive analysis of the US market we examine the leading exports at the more disaggregated HS 4 line level and even the very detailed HS 10 line by line level to assess where Lesotho may be performing better in this US market, and conversely where Lesotho is losing market share to show who is displacing Lesotho.

This paper strongly emphasises the problems associated with the quality of Lesotho’s trade data reporting. These problems are ubiquitous in Africa, but what is surprising in Lesotho’s case is that accurate trade data is essential to clearly establish its claims to a fair share of the SACU (Southern African Customs Union) tariff revenue pool, a revenue pool that is based upon intra-SACU imports and contributes around 50% of Lesotho’s total government revenues. This paper focuses on Lesotho’s export data, and in particular exports of clothing to the United States, and although this export data is not linked to the intra-SACU import data it is nonetheless disconcerting to report on problems in the export data. For this reason we used US importing data from the ITC exclusively for our detailed analysis, and at other more general times we use both direct Lesotho data and partner mirror data, and although there are some major differences between these two sources we make no attempt to reconcile this.


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