Identifier
Created
Classification
Origin
07MASERU400
2007-07-09 14:59:00
UNCLASSIFIED
Embassy Maseru
Cable title:
LESOTHO: FOCUS SECTORS FOR AGOA DIVERSIFICATION EFFORTS
how-toVZCZCXRO6880 RR RUEHBZ RUEHDU RUEHJO RUEHRN DE RUEHMR #0400/01 1901459 ZNR UUUUU ZZH R 091459Z JUL 07 FM AMEMBASSY MASERU TO RUEHC/SECSTATE WASHDC 3136 RUCNSAD/SADC COLLECTIVE INFO RUEHMR/AMEMBASSY MASERU 3520
UNCLAS SECTION 01 OF 02 MASERU 000400
SIPDIS
SIPDIS
DEPT ALSO FOR AF/S, AF/EPS
GABARONE FOR USAID TRADE HUB
E.O. 12958: N/A
TAGS: ECON ECIN ETRD PREL LT
SUBJECT: LESOTHO: FOCUS SECTORS FOR AGOA DIVERSIFICATION EFFORTS
MASERU 00000400 001.2 OF 002
UNCLAS SECTION 01 OF 02 MASERU 000400
SIPDIS
SIPDIS
DEPT ALSO FOR AF/S, AF/EPS
GABARONE FOR USAID TRADE HUB
E.O. 12958: N/A
TAGS: ECON ECIN ETRD PREL LT
SUBJECT: LESOTHO: FOCUS SECTORS FOR AGOA DIVERSIFICATION EFFORTS
MASERU 00000400 001.2 OF 002
1. SUMMARY: In order to better focus Embassy Maseru's efforts
to assist Lesotho in diversifying its exports to the United
States under AGOA, the Economic Section (ES) conducted an
informed study of the nation's promising export growth sectors.
Three products lines were identified: blue-agave aloe cosmetics,
canned foods, and handicrafts. As we move forward to encourage
increasing non-textile AGOA exports from the Mountain Kingdom,
Embassy Maseru's ES will focus on these three products in our
short to medium term efforts. END SUMMARY.
--------------
AGOA Diversification: Where
Should We Focus Our Efforts?
--------------
2. In order to better support Lesotho's efforts to diversify
its exports to the United States under AGOA, over the last
several months Embassy Maseru's Economic Section (ES) endeavored
to identify the nation's most promising sectors for export
growth. To this end, Embassy officers held meetings with
officials from the Ministry of Trade, the Lesotho National
Development Corporation, the "Smart Partnership" office,
Lesotho's Business Council, and various small- to medium-sized
enterprises. Information from these meetings was compared to
data from industrial diversification studies conducted by the
regional USAID Trade Hub, and three top products for potential
AGOA diversification efforts were identified: blue-agave aloe
cosmetics, canned foods, and handicrafts. A brief explanation
of these sectors is provided below.
--------------
Blue-Agave Aloe Cream and Jelly
--------------
3. Blue-agave aloe is a naturally occurring plant in Lesotho
which can be used to produce aloe cosmetic products popular in
the United States. Currently, three companies manufacture aloe
cream and jelly: EV, Lamart, and Makhaleng. These companies are
now in advanced negotiations to join under an umbrella company
so that they can take advantage of greater economies of scale
necessary for success in large export markets such as the United
States. These companies currently produce aloe cosmetics which
meet both American FDA and South African Bureau of Standards
requirements. At the present time, Lesotho's aloe products are
sold exclusively in the local and South African markets.
4. While USG trade experts have not yet reviewed these
products' AGOA eligibility, Embassy Maseru's believes that these
items are eligible skin care products classifiable under HTS
codes 3304 and 3304.99.10. While the aloe products are produced
to FDA standards, capacity building is needed in this industry
to ensure that branding and packaging meet U.S. requirements and
standards.
--------------
Canned Foods
--------------
5. Lesotho currently operates one cannery which began
operations in December 2004. Its products include canned
apricots, peaches, asparagus, and beans. The cannery currently
exports its products mostly to the SACU region, with a small
proportion exported to the European Union. The Ministry of
Agriculture is intensifying its efforts to enlarge the
production base for these products and modernize cultivation
methods. Many observers emphasize the promise of canned
asparagus, as it is a drought resistant crop suited to Lesotho's
arid climate which commands a premium over other canned fruits
and vegetables.
MASERU 00000400 002.2 OF 002
6. These products are eligible for export under AGOA, and fall
into food and fruit HST codes 2008.03.85 and 2006.00.60. Trade
capacity development would be necessary for these products to
gain FDA certification and be packaged properly for the U.S.
market.
--------------
Handicrafts
--------------
7. Handicrafts, made from local materials, are produced on a
small to medium scale by cooperatives and several small
companies. These products include locally printed garments,
cushions, rugs mats, and baskets. Ethiopia, Tanzania, and
Zambia have successfully exported items of this type under AGOA.
Of products in this category, mohair items are judged to be of
special promise due to the premium which they demand in the U.S.
market as well as abundant local supply.
8. These products fall under "Category Nine" of AGOA, and
therefore approval must be sought prior to export. Trade
capacity development is necessary to draw together the diverse
and scattered producers of these products and market them in the
United States.
--------------
AGOA Diversification: The Next Step
--------------
9. Identifying Lesotho's most promising sectors for export
diversification under AGOA is an important first step in Embassy
Maseru's efforts in this field. The Embassy's ES will continue
to work closely with the "Smart Partnership" office, the
Ministry of Trade and Industry, and Lesotho's Business Council
to promote AGOA-eligible exports from Lesotho. During the month
of July, the Embassy is working cooperatively with Lesotho's
"Smart Partnership" office to conduct outreach workshops to
reach a wide group of stakeholders involved in the above focus
industries. The Embassy is also working closely with the
regional USAID Trade Hub for its assistance in facilitating
these workshops and developing vital trade capacity in these
three focus industries.
--------------
The Necessity of AGOA Diversification
--------------
10. COMMENT: With over 50,000 jobs initially created in
Lesotho's textile and garment industries, AGOA is an undeniable
success in Lesotho. The nation's exports to the United States
have increased by 269% since the inception of the legislation.
However, the fragility of the textile industry was amply
demonstrated by the immediate loss of nearly 15,000 textile jobs
in Lesotho following the 2005 expiration of the Multi-Fibre
Agreement. While the industry has now stabilized, it has become
clear that Lesotho must expand its exports into sectors where it
has a natural advantage and is less vulnerable to changes in the
fickle winds of the international trade environment. Thus,
there is a critical need to diversify away from textiles to
sustain gains already achieved. Embassy Maseru is committed to
encouraging Lesotho to optimize its opportunities under AGOA,
and will work with the USAID Trade Hub to assist the Basotho
people in this regard. We envision the identification of focus
sectors IS the first step in this process. END COMMENT.
MURPHY
SIPDIS
SIPDIS
DEPT ALSO FOR AF/S, AF/EPS
GABARONE FOR USAID TRADE HUB
E.O. 12958: N/A
TAGS: ECON ECIN ETRD PREL LT
SUBJECT: LESOTHO: FOCUS SECTORS FOR AGOA DIVERSIFICATION EFFORTS
MASERU 00000400 001.2 OF 002
1. SUMMARY: In order to better focus Embassy Maseru's efforts
to assist Lesotho in diversifying its exports to the United
States under AGOA, the Economic Section (ES) conducted an
informed study of the nation's promising export growth sectors.
Three products lines were identified: blue-agave aloe cosmetics,
canned foods, and handicrafts. As we move forward to encourage
increasing non-textile AGOA exports from the Mountain Kingdom,
Embassy Maseru's ES will focus on these three products in our
short to medium term efforts. END SUMMARY.
--------------
AGOA Diversification: Where
Should We Focus Our Efforts?
--------------
2. In order to better support Lesotho's efforts to diversify
its exports to the United States under AGOA, over the last
several months Embassy Maseru's Economic Section (ES) endeavored
to identify the nation's most promising sectors for export
growth. To this end, Embassy officers held meetings with
officials from the Ministry of Trade, the Lesotho National
Development Corporation, the "Smart Partnership" office,
Lesotho's Business Council, and various small- to medium-sized
enterprises. Information from these meetings was compared to
data from industrial diversification studies conducted by the
regional USAID Trade Hub, and three top products for potential
AGOA diversification efforts were identified: blue-agave aloe
cosmetics, canned foods, and handicrafts. A brief explanation
of these sectors is provided below.
--------------
Blue-Agave Aloe Cream and Jelly
--------------
3. Blue-agave aloe is a naturally occurring plant in Lesotho
which can be used to produce aloe cosmetic products popular in
the United States. Currently, three companies manufacture aloe
cream and jelly: EV, Lamart, and Makhaleng. These companies are
now in advanced negotiations to join under an umbrella company
so that they can take advantage of greater economies of scale
necessary for success in large export markets such as the United
States. These companies currently produce aloe cosmetics which
meet both American FDA and South African Bureau of Standards
requirements. At the present time, Lesotho's aloe products are
sold exclusively in the local and South African markets.
4. While USG trade experts have not yet reviewed these
products' AGOA eligibility, Embassy Maseru's believes that these
items are eligible skin care products classifiable under HTS
codes 3304 and 3304.99.10. While the aloe products are produced
to FDA standards, capacity building is needed in this industry
to ensure that branding and packaging meet U.S. requirements and
standards.
--------------
Canned Foods
--------------
5. Lesotho currently operates one cannery which began
operations in December 2004. Its products include canned
apricots, peaches, asparagus, and beans. The cannery currently
exports its products mostly to the SACU region, with a small
proportion exported to the European Union. The Ministry of
Agriculture is intensifying its efforts to enlarge the
production base for these products and modernize cultivation
methods. Many observers emphasize the promise of canned
asparagus, as it is a drought resistant crop suited to Lesotho's
arid climate which commands a premium over other canned fruits
and vegetables.
MASERU 00000400 002.2 OF 002
6. These products are eligible for export under AGOA, and fall
into food and fruit HST codes 2008.03.85 and 2006.00.60. Trade
capacity development would be necessary for these products to
gain FDA certification and be packaged properly for the U.S.
market.
--------------
Handicrafts
--------------
7. Handicrafts, made from local materials, are produced on a
small to medium scale by cooperatives and several small
companies. These products include locally printed garments,
cushions, rugs mats, and baskets. Ethiopia, Tanzania, and
Zambia have successfully exported items of this type under AGOA.
Of products in this category, mohair items are judged to be of
special promise due to the premium which they demand in the U.S.
market as well as abundant local supply.
8. These products fall under "Category Nine" of AGOA, and
therefore approval must be sought prior to export. Trade
capacity development is necessary to draw together the diverse
and scattered producers of these products and market them in the
United States.
--------------
AGOA Diversification: The Next Step
--------------
9. Identifying Lesotho's most promising sectors for export
diversification under AGOA is an important first step in Embassy
Maseru's efforts in this field. The Embassy's ES will continue
to work closely with the "Smart Partnership" office, the
Ministry of Trade and Industry, and Lesotho's Business Council
to promote AGOA-eligible exports from Lesotho. During the month
of July, the Embassy is working cooperatively with Lesotho's
"Smart Partnership" office to conduct outreach workshops to
reach a wide group of stakeholders involved in the above focus
industries. The Embassy is also working closely with the
regional USAID Trade Hub for its assistance in facilitating
these workshops and developing vital trade capacity in these
three focus industries.
--------------
The Necessity of AGOA Diversification
--------------
10. COMMENT: With over 50,000 jobs initially created in
Lesotho's textile and garment industries, AGOA is an undeniable
success in Lesotho. The nation's exports to the United States
have increased by 269% since the inception of the legislation.
However, the fragility of the textile industry was amply
demonstrated by the immediate loss of nearly 15,000 textile jobs
in Lesotho following the 2005 expiration of the Multi-Fibre
Agreement. While the industry has now stabilized, it has become
clear that Lesotho must expand its exports into sectors where it
has a natural advantage and is less vulnerable to changes in the
fickle winds of the international trade environment. Thus,
there is a critical need to diversify away from textiles to
sustain gains already achieved. Embassy Maseru is committed to
encouraging Lesotho to optimize its opportunities under AGOA,
and will work with the USAID Trade Hub to assist the Basotho
people in this regard. We envision the identification of focus
sectors IS the first step in this process. END COMMENT.
MURPHY