Textile industry of Ethiopia at risk if US pulls out of trade agreement over Tigray conflict.

In Tigray, where local forces have fought the military and its allies for a year, Washington has raised worry over frequent claims of sexual abuse by Ethiopian and allied Eritrean soldiers.

According to the United Nations, a de facto assistance blockade has thrown 400,000 people into hunger. It reported on Thursday that no food convoys have entered Tigray in the previous ten days. There have been numerous stories of civilians being killed in large numbers.

The government has denied blocking supplies and stated that individual soldiers have been tried for wrongdoings, but has not provided any other information. Eritrea has denied any wrongdoings.

Washington has already established the groundwork for sanctions, with the administration’s top trade representative pledging a decision on the country’s AGOA status in the near future.

The act grants duty-free entry to the United States to countries in Sub-Saharan Africa that meet certain conditions, such as reducing economic obstacles and progressing toward political pluralism.

Mamo Mihretu, Prime Minister Abiy Ahmed’s main trade negotiator, told Reuters that AGOA had created 200,000 employment directly and millions more indirectly.

Ethiopia has spent billions of dollars building a dozen industrial parks and accompanying infrastructure during the last decade. Some manufacturers make products for PVH, the parent company of the Calvin Klein, Speedo and Tommy Hilfiger brands.

Around 90 percent of the company products of Sammy Ethiopia, are shipped to the United States through retailers like Eileen Fisher and Anthropologie.

Three-quarters of the company’s annual turnover of more than $200,000 comes from exports to the United States. Sammy stated that if Ethiopia is suspended, the company will close.

According to data from the US Commerce Department, Ethiopia exported $237 million in duty-free goods to the US under AGOA in 2020, with more than 90 percent of it being textiles and apparel.

Duty-free shopping is a big draw for brands like GAP and H&M from Sweden. The exact impact of the embargo on foreign investors and Ethiopian enterprises exporting to the US is unknown at this time, although layoffs and order cancellations are possible.