This Oct. 28 story was rewritten to eliminate Gap’s mention in paragraph 19.

Dawit Endeshaw

ADDIS ABABA – Finoteselam Nigussie guides a machine through a gauzy, white cloth in a crowded Addis Ababa factory.

The 40-year-old Ethiopian textile worker stitched shawls in order to send them overseas, paying her rent and school fees.

Finoteselam is now in peril as the United States contemplates suspending Ethiopia’s duty-free status. They cite abuses and an increasing famine within the war-ravaged northern Tigray.

The suspension of benefits from the African Growth and Opportunity Act would jeopardize Ethiopia’s ambitions to be a major light-manufacturing hub and reduce hard-earned economic gains.

Finoteselam’s boss Sammy Abdella stated, “We use AGOA since our start business,” and that 250 employees are employed by the company. The firm was founded nearly twenty years ago.

Since we started, people have worked alongside us. “We have made a family,” said he, his voice crackeding.

While Ethiopia is not an important global supplier of goods, the suspension of U.S. commerce status for it would cause problems for other global brands, such as Tommy Hilfiger (NASDAQ:), Calvin Klein and The Children’s Place.

WAR HORRORS

Washington expressed concerns over numerous reports of sexual violence in Tigray by Ethiopian soldiers and allied Eritrean troops. The Tigray area is where the military has been fighting for over a year.

According to the United Nations, a blockade de facto of humanitarian aid has caused 400,000 people to become hungry. It said that no food convoys entered Tigray in the last 10 days. Numerous reports indicate mass killings of civilians.

According to the government, aid was not blocked and soldiers were tried without providing details. Eritrea denied any wrongdoing.

Washington is already preparing for sanctions. Its chief trade representative has promised to make a decision on Washington’s AGOA status soon.

If they fulfill certain criteria, including the removal of U.S. trade barriers and advancement towards political pluralism, then sub-Saharan African countries are granted duty-free entry to the United States.

Mamo Mihretu was Prime Minister Abiy Ahmed’s chief trade negotiator. He told Reuters AGOA had created 200,000 direct jobs, and indirectly created millions.

“We shouldn’t politicize trade questions,” he said to Reuters.

Ethiopia has invested billions in the construction of a dozen industrial areas and associated infrastructure over the last decade. Some factories manufacture goods for PVH (NYSE :), which owns the Calvin Klein, Speedo, and Tommy Hilfiger brands.

Sammy Ethiopia is Finoteselam’s company. Around 90% of the products exported from Sammy Ethiopia to the United States through retailers like Anthropologie and Eileen Fisher.

Three quarters of the company’s total annual turnover, which is more than $200,000., are exported to America. Sammy stated that if Ethiopia is banned, his company would close.

Under the AGOA, Ethiopia sent goods worth $237million duty-free to America in 2020. U.S. commerce data show that more than 90% of Ethiopia’s textiles and apparel were exported.

Duty-free access is a major draw for companies including Sweden’s H&M. A suspension of foreign investment and Ethiopian exports to the United States may have a significant impact on their businesses. However, it is possible for companies such as H&M to be laid off or cancel orders.

Added Heache

Mamo said that an AGOA suspension could hurt American companies looking to diversify from Asia.

Conlumino was a consultancy and retail research agency. It noted however that Ethiopia’s textile exports were not as significant as those from India, Bangladesh, China and China.

Although Ethiopia will be affected by an AGOA suspension, retailers will still find other options despite COVID-19’s havoc, according to Neil Saunders, Conlumino analyst.

He stated that the suspension of AGOA would not impact clothing retailers. It is a problem because it will be coming at a time where global manufacturing capacity has already been reduced, and retailers are having trouble keeping up with the demand.

An H&M spokesperson said the company was following developments regarding AGOA carefully, but it was too early to comment. In December, H&M said its long-term manufacturing and sourcing strategy involves Ethiopia and it did not plan to change. However, its Ethiopian production is quite small.

American apparel firms The Children’s Place and Gap, as well as PVH were based in the United States, did not respond when asked for comment.

According to Mamo’s 2017 study on PVH in Ethiopia, a senior PVH official stated that the AGOA renewal in 2015 for 10 years was a crucial factor in PVH investing.

PVH stated that Ethiopia was a potential top supplier in 2018 because of its ability to grow cotton and dye fabrics, as well as sew garments. This was the first joint venture formed by PVH in more than 30 years to run a factory in Hawassa.

Raghavendra Patar is the CEO at Nasa Garment in Hawassa Industrial Park. Nasa Exports approximately 95% its garments to U.S. firms. Two years ago, the factory was set up by $7 million and employs about 1,200 employees, most of them women.

However, an AGOA suspension might stop expansion.

“AGOA … is the reason buyers are coming to Ethiopia and sourcing manufacturing here,” he said. If the duty benefit is removed, buyers will travel to another country.