A fashion trade group that advocates on behalf of U.S. brands such as Gap, J.Crew and Patagonia is urging the prime minister of Ethiopia to resolve the ongoing humanitarian disaster in the northern region of Tigray, where escalating conflict has plunged the region into the world’s worst hunger crisis in a decade.
For years, Ethiopia was seen as a “stable and progressive” investment partner, wrote Stephen Lamar, president and CEO of the American Apparel & Footwear Association, in a letter to Abiy Ahmed dated Oct. 25. Investments by the U.S. garment sector into Ethiopia’s expanding network of government-built industrial parks created the ability to “lift many out of poverty and supported sustainable economic opportunities for Ethiopian households and communities.” At the same time, the jobs these efforts have created “rest and depend” on “solid and demonstrated human rights” and other shared perspectives.
“The tragedy in Tigray and nearby regions must be stopped,” Lamar wrote. “The humanitarian crisis must be solved and those who can best bring aid and relief need critical access. The ongoing violence and strife urgently need to be replaced by a ceasefire and talks from all sides that can lay the basis for lasting peace. But until that happens, it is absolutely vital that all parties ensure the immediate resumption of humanitarian aid to the people who have been most affected by this crisis.”
Lamar said news reports of the Ethiopian government blocking aid shipments, leaving starving Tigrayans to resort to eating leaves to survive, are “unacceptable and completely inconsistent” with AAFA’s values and expectations. “We urge you to lead by example, making sure your government does everything in its power to see that relief supplies flow unimpeded,” he added. Ethiopia has denied “purposely” hindering aid.
With its young, cheap and plentiful labor force, generous fiscal perks for overseas investors and relative political stability on the African continent, Ethiopia was tapped to be the next global manufacturing frontier. The ramp-up in the 10-month ethnic war between Tigray forces and the Ethiopian government and its allies, however, has derailed these aspirations “for the foreseeable future,” according to Verisk Maplecroft’s 2021 human-rights outlook, which it published earlier this month.
Ethiopia recorded one of the worst possible scores for human-rights violations, the risk-intelligence firm said, meaning that investor backlash and consumer boycotts are likely to emerge if manufacturers are seen to be associating with an “abusive” regime. H&M, which previously worked with three suppliers in Tigray, told Sourcing Journal that it no longer sources from the region “at this point,” though it is “closely following” how the situation unfolds.
The Biden administration has tried to strong-arm Abiy and the Tigrayans into peace talks by threatening to sanction members of the Ethiopian government, the Eritrean government, the Tigray People’s Liberation Front and the Amhara regional government if they continue to “pursue military conflict over meaningful negotiations to the detriment of the Ethiopian people.”
U.S. global trade representative Katherine Tai said earlier this month that Washington will “soon” make a decision on Ethiopia’s status under the African Growth and Opportunity Act (AGOA), which currently grants it duty-free access to the United States. “Reports coming back to us through official channels and civil society are not encouraging,” she said. “What is happening in Ethiopia is a humanitarian crisis.”
More than 5 million people, nearly Tigray‘s entire population, need emergency food and other forms of aid, according to United Nations agencies, and the loss of trade concessions could exacerbate hardships for a population already battered by the Covid-19 pandemic.
“Ethiopia is home to 100,000 [garment workers],” Verisk Maplecroft wrote in its outlook report. “Many face unemployment in the event of a sourcing shift to South Asia—an option already taken by manufacturers directly impacted by the Tigray conflict.”
Ethiopia exported roughly $237 million worth of goods duty-free to the United States under AGOA in 2020, according to U.S. Commerce Department data.
Sofia Nazalya, Asia analyst at Verisk Maplecroft, said that AAFA’s letter sends a “clear signal” that the organization is increasingly unwilling to invest in an environment where workers are at serious risk of human-rights violations.
“The spiraling humanitarian crisis in Ethiopia has shined a light on the broader human-rights situation in the country, but violations of labor rights are systemic and a long-standing issue,” Nazalya told Sourcing Journal. “The human-rights outlook is fast becoming too high a price to pay for low labor and energy costs in the once-emerging garment manufacturing hub.”
Further turmoil not only complicates responsible sourcing, but it also carries “significant disruption risk” that the apparel industry, already burdened with sourcing challenges, is “likely unwilling to bear.”
“However, Prime Minister Abiy Ahmed put the cotton, textile and apparel sector at the heart of his ‘New Horizon of Hope’ economic agenda, and it is likely to offer improved investment incentives to prevent a dash to the door by manufacturers and the much-needed hard currency they bring,” Nazalya added.
Daniela Baron, a risk-intelligence analyst at Everstream Analytics, pointed out, however, that a government representative recently confirmed that the Almeda Textike factory was specifically targeted by airstrikes over the past few weeks due to assumptions that it was manufacturing goods for the Tigray People’s Liberation Front.
“Should manufacturing sites become explicit targets, this will likely speed up the possibility of international companies deciding to leave the region amid security concerns,” Baron said. “It could also damage the sector long term if needed manufacturing sites are destroyed that could take months or longer to rebuild once the conflict is resolved.”
The letter from AAFA is an “indication that international scrutiny of the conflict is intensifying,“ she added. “A continuation of the military clashes could result in wider economic impacts for the country, especially if international companies and trade groups feel like they can no longer maintain business ties with Tigray, and other parts of Ethiopia, due to concerns about human rights abuses from all conflict parties. “
Editor’s note: This story was updated on Oct. 28 to include commentary from Everstream Analytics.