Malawi bids for duty-free on Cotton to US market

Written by  Mercy Tahuna

The Malawi Ambassador to the USA, Mr Necton Mhura testified before the GSP Sub-committee of the Trade Policy Staff Committee (TPSC) of the US Trade Representative (USTR) on Tuesday August 11, 2015.


The TPSC had invited and was doing a public hearing from persons interested in making submissions on the proposal to allow certain cotton products from West African cotton producing countries to enter the US market duty-free.


The US Congress has granted the USTR the executive power to designate certain cotton products from LDCs for duty-free entry into the US. Before the designation takes place the USTR was conducting a public hearing for the purpose.


On cotton, the Ambassador supported the proposed designation of upland cotton products for duty-free entry into the US and called for the inclusion of Malawi as a beneficiary country since cotton is one of the country’s exports. He said this would benefit Malawi’s economy.


He informed the Sub-committee that Malawi is one of the “cotton" African countries that have been seeking duty-free treatment for their cotton at the World Trade Organization.


Ambassador Mhura said that though he could not speak for the other African “cotton” countries, he understood that they support the enhanced access.


He emphasized that his testimony was in support of the proposal for upland cotton.


He further stated that he was making the submission to make a case for leaf tobacco, Malawi’s top foreign exchange earner.


He underscored the fact that Seventy percent of the country’s export earnings come from tobacco as does 30 percent of its gross domestic product.


He also drew the Sub-committee’s attention to the fact that a large percentage of rural farmers in Malawi depend on growing tobacco for their basic livelihoods.


During the testimony the Ambassador mentioned that, Malawi is currently allowed to export 12,000 metric tons of tobacco duty-free into the US market. However, that is not adequate given the importance of tobacco to Malawi’s economy.


The Ambassador said that seeking more access to foreign markets is one way in which the country is trying to move away from dependence on foreign-aid which has historically accounted for 30 percent of the country’s budget, hence increased access to foreign markets for its key products – like tobacco – would help.


He informed the Sub-committee that additional market access for tobacco would have a bigger economic boom for Malawi.


He noted that, the addition of five types of upland cotton products to the list of goods from least developed countries that can enter the US market duty free under the newly-restored Generalized System of Preferences program will be helpful.


He however emphasized that for Malawi the benefit would be bigger if it could export more duty-free tobacco to the US.


Congress approved the power of USTR to designate five cotton products in legislation renewing GSP and other trade preferences programs.


Deputy US Trade Representative for GSP William Jackson pointed out during the interagency hearing to review the additions that Congress did not make a similar provision for tobacco.


In response Ambassador Mhura urged the USTR to find other available legislative mechanisms for designating Malawi leaf tobacco and other agricultural products for increased duty-free entry into the US market, similar to the one being considered for upland cotton.


Alternatively the Ambassador urged that an administrative mechanism be explored.

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