US President Joe Biden said Tuesday he was revoking key trade preferences for Ethiopia, ramping up pressure on its historic ally over rights concerns in its military campaign in restive Tigray.
In a notice to Congress, Biden said he was also terminating coup-hit Guinea and Mali from the African Growth and Opportunity Act (Agoa), the landmark 2000 pact that removed US duties on most exports from sub-Saharan Africa if they adhere to good governance and rights standards.
Ethiopia's eligibility will end as of January 1 due to "gross violations of internationally recognised human rights," Biden said.
The United States has been among the most vocal critics of Prime Minister Abiy Ahmed's conduct of a nearly year-long war in northern Ethiopia, which has featured myriad reports of massacres, mass rapes and what US Secretary of State Antony Blinken has described as "acts of ethnic cleansing."
Ethiopian officials in recent weeks have led a pressure campaign against removal from Agoa, warning of the consequences, especially over the country's manufacturing sector.
Mamo Mihretu, an adviser to Abiy, wrote in Foreign Policy magazine in October that Agoa had helped boost Ethiopia's exports to the US from $28 million in 2000 to nearly $300 million in 2020, with almost half of that total falling under Agoa.
"Ethiopia's removal from the Agoa would deal a serious blow to the welfare of millions of low-income workers at a time when Ethiopia's manufacturing industry is registering record monthly output levels," Mamo wrote.
Abiy launched the military campaign in November 2020 after attacks on the federal army by the Tigray People's Liberation Front, the dominant party in the region.
The TPLF in recent days has claimed control of two key cities and has not ruled out marching on Addis Ababa, with authorities ordering residents in the capital to register their firearms and prepare to protect their neighborhoods.
On Tuesday the US special envoy for the Horn of Africa warned against such an advance on the Ethiopian capital.
"We oppose any TPLF move to Addis or any TPLF move to besiege Addis," Jeffrey Feltman said.
Under the TPLF-led governing coalition that preceded Abiy, Ethiopia sought to create a national network of industrial parks, counting on cheap labour to attract investment and spur what some officials pitched as an "industrial revolution."
Agoa's tax benefits give Ethiopia a major advantage over manufacturing hubs outside Africa, Zemedeneh Negatu, chairman of the US-based Fairfax Africa Fund, told a September roundtable of business leaders in Addis Ababa.
But removing those benefits even temporarily would have long-term consequences, Zemedeneh said.
"What we're trying to tell the US government is that it's not like an on-off light switch," he said, stressing that once investors leave they are unlikely to come back.
That means "the young women who work in the industries become permanently unemployed," he said.
Netsanet Sidamo, a supervisor for a garment manufacturer at the industrial park in Hawassa, in southern Ethiopia, told AFP she receives 4,000 Ethiopian birr per month (roughly $85) -- money that has helped her pay rent, support her family and pursue a university degree.
"If the company stops its operations, not only me but thousands of my colleagues will not have anywhere to go," she said.
"People can talk about many issues in this country, but what I can say is this has been beneficial for me and I hope others can be beneficiaries of this opportunity so they can change their lives."
TPLF leaders have said it is hypocritical for Abiy's government to appeal for continued support under AGOA when the war in Tigray has severely damaged industrial infrastructure in the country's northernmost region.
A top manufacturing site that exported under Agoa, Almeda Textile Factory in the Tigray city of Adwa, was looted and destroyed early in the conflict by Ethiopian and Eritrean soldiers, according to investors and witnesses.
On October 24, Ethiopia's air force hit the facility with an airstrike after officials accused the TPLF of using it to produce equipment including fake military uniforms.