Tiny mountainous Lesotho has high, dry valleys, some sheep, a small number of tourists and some excess hydro power it can sell to South Africa, which completely encloses its borders. Lesotho was deceived by distorted trade regulations into welcoming texile industry investors who were there for the short term. The country’s officials thought that with duty-free access to the highly protected US textile market as an African least developed country, it might have a chance of sustaining a textile industry. So in 2000 it welcomed Taiwanese investors who brought machinery, the yarn, the fabric—the lot—to the tiny kingdom. Why? All they wanted was an African certifiicate of origin, their laissez passer under the MFA quota system to the high-priced US market. But the end of textile quotas in the US, Europe and Canada on 1 January this year, and the start of market competition for trade, has ended the Lesothan dream in a cold (competitive) shower: bq. “Given the end of quotas and the WTO allowing China and India back into the market [unrestricted, except by general rules and disciplines embodied in the multilateral trading system], we believe most of the foreign-owned textile companies in Lesotho will relocate back to their original countries. They were in Lesotho to utilise AGOA and [get around] those ATC quota restrictions,” Lebakae explained. “All these companies come from the East, as does the fabric and the yarn used in Lesotho.” (“Reuters”:http://www.alertnet.org/thenews/newsdesk/IRIN/16458999d4cfb970804b7e812620adce.htm)
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher