Identifier
Created
Classification
Origin
07MASERU114
2007-03-02 12:39:00
UNCLASSIFIED
Embassy Maseru
Cable title:  

LESOTHO'S INPUT FOR 2007 PRESIDENT'S REPORT ON AGOA

Tags:  ETRD ECIN ECON EINV LT 
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RR RUEHBZ RUEHDU RUEHJO RUEHRN
DE RUEHMR #0114/01 0611239
ZNR UUUUU ZZH
R 021239Z MAR 07
FM AMEMBASSY MASERU
TO RUEHC/SECSTATE WASHDC 2687
INFO RUCNSAD/SADC COLLECTIVE
RUEHMR/AMEMBASSY MASERU 3036
UNCLAS SECTION 01 OF 02 MASERU 000114 

SIPDIS

SIPDIS

DEPT ALSO FOR AF/S, AF/EPS, AND EB/CBA

E.O. 12958: N/A
TAGS: ETRD ECIN ECON EINV LT
SUBJECT: LESOTHO'S INPUT FOR 2007 PRESIDENT'S REPORT ON AGOA

REF: STATE 22438

MASERU 00000114 001.2 OF 002


UNCLAS SECTION 01 OF 02 MASERU 000114

SIPDIS

SIPDIS

DEPT ALSO FOR AF/S, AF/EPS, AND EB/CBA

E.O. 12958: N/A
TAGS: ETRD ECIN ECON EINV LT
SUBJECT: LESOTHO'S INPUT FOR 2007 PRESIDENT'S REPORT ON AGOA

REF: STATE 22438

MASERU 00000114 001.2 OF 002



1. SUMMARY: In response to REFTEL, Embassy Maseru provides the
following input for the 2007 President's Report on AGOA.
Two-thirds of Lesotho's export revenues are dependent on AGOA,
and the textile industry spawned by AGOA is now the largest
formal sector employer in the nation. Lesotho is a democracy
with a free market economy which is struggling to address the
problems of economic diversification, poverty, and HIV/AIDS.
Lesotho stands as an AGOA success story, and is poised to
continue to take advantage of its status under this trade
legislation in the years to come. END SUMMARY.

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Lesotho Under AGOA
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2. The following information was requested REFTEL:

STATUS:
AGOA eligible including apparel and textile benefits

AGOA TRADE AND INVESTMENT:
The United States remained the largest recipient of Lesotho's
exports in 2006, accounting for 67% of total exports. Lesotho's
2006 exports under AGOA and its GSP provisions were valued at
$327 million, representing about 95% of the country's exports to
the United States. Apparel and textile manufacturing is the
largest formal sector employer in Lesotho.

MARKET ECONOMY/ECONOMIC REFORM/ELIMINATION OF TRADE BARRIERS:
Lesotho has a free market economy. Diversifying the economy is
the top goal for economic reform. Financial infrastructure
shortcomings have also been identified as one of the technical
barriers to trade. In 2006, the Central Bank of Lesotho
embarked upon modernization of the country's payment and
settlement system (the "Lesotho Wire System") as a way of
strengthening the nation's financial infrastructure and
maintaining financial stability. The benefits of this system
include improving Lesotho's credit rating, which will in turn
improve the country's international investment position.

RULE OF LAW/POLITICAL PLURALISM/ANTI-CORRUPTION:
Lesotho's ruling party, the Lesotho Congress for Democracy
(LCD),won a controlling majority of seats in the National
Assembly in the February 17, 2007 national election. Eleven
political parties will be represented in the National Assembly
when the Parliament opens for its first session on March 9,

2007. The LCD will have a strong majority in the 120-seat lower
house, holding 61 seats from constituency elections and an
additional 21 seats from proportional representation due to its
alliance with the National Independent Party (NIP). The All-
Basotho Convention (ABC) will be the largest parliamentary
opposition, with 17 constituency seats plus 10 proportional
representation seats due to its alliance with the Lesotho
Workers Party (LWP). The government wages a credible battle
against corruption, including regular prosecutions.

POVERTY REDUCTION STRATEGY:
The country's Poverty Reduction Strategy Paper, approved by the
World Bank in 2004, is currently under review. In 2006, Lesotho
finished implementing free primary school education nationwide.
The Ministry of Education is increasing resources available at
secondary school level to absorb the graduates of the newly free
primary schools. The Ministry of Health and Social Welfare has
completed the second phase of upgrading health care facilities
in the Lesotho's main hospital. The Government has also scaled
up HIV/AIDS care and treatment services to combat new HIV/AIDS
infections and bring those infected with the disease back into
the productive work force.

LABOR/CHILD LABOR/HUMAN RIGHTS:
Lesotho has ratified all core International Labor Organization
(ILO) standards, including the ILO Convention on minimum age and
ILO Convention 182 regarding the worst forms of child labor.
Workers in the private sector have the right to form and join
trade unions. As a result of the impact of HIV/AIDS on the
adult work force, child labor does exist in the informal sector.
Increasing numbers of HIV/AIDS orphans are at risk of informal
sector employment including child prostitution. Lesotho is
participating in two regional USDOL programs to mitigate the
incidence of child labor. The government generally respects the
human rights of its citizens.

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Lesotho Needs AGOA
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3. COMMENT: Over 40,000 Basotho workers in the textile
industry depend on trade conducted under AGOA for their
livelihood. Considering the effects of this economic activity
on a small nation of two million with approximately 50%

MASERU 00000114 002.2 OF 002


unemployment, the true nature of AGOA's huge impact on the
Mountain Kingdom comes into focus. We look forward to
continuing to help Lesotho diversify its export base and to
further expand the benefits of AGOA in this nation. END COMMENT.
PERRY