TRALAC - Trade Law Centre

Growing Chinese Exports Menace Africa Textile Firms

Friday, 29 April 2005

Source: Engineering News (South Africa)

Faced with factory closures and job cuts, African textile players said on Wednesday they hoped action to limit China's textile exports would give them time to develop their industry.

Both the United States and European Union are looking into limiting Chinese textile imports that have surged since the end on January 1 of a global quota system that also helped Africa's textile sector grow rapidly thanks to greater access to key US and European Union markets.

Many of the factories were set up by Chinese and other Asian companies to take advantage of those trade breaks, but the end of the Multi-Fiber Arrangement (MFA) eliminated the advantage of setting up in Africa.

"We are dealing with an industry that is in dire straits right now and if solutions are not found quickly the patient might die on the table," said Anthony Carroll, managing director of business advisers Manchester Trade.

Across the sub-Saharan region textile and apparel factories are closing at an alarming rate, sending thousands of employees, mostly women, out of work.

The factories were set up to take advantage of preferential duty- and quota-free access to US markets under the African Growth and Opportunity Act (AGOA), but now that quotas are ending they are relocating back to Asia.

After joining the WTO in 2001, China agreed to let member states restrict imports of clothing and textiles if a sudden surge in shipments threatened to disrupt their markets.

The provision allows countries to limit the rise in Chinese imports to 7,5% above the previous year's quantity, but it has not yet come into force.

Africa hopes the so-called safeguard measures would be activated by calls from the United States and European Union, acting on behalf of powerful clothing manufacturing lobbies who are also threatened by Chinese competition.

"We hope that the safeguard measures will succeed and give us some few more years to organise ourselves and cope with the competition," said a managing director of a leading Kenyan exporter of T-shirts to the United States.

Industry officials say eight factories have closed in Kenya in the last two months, costing 6,000 jobs. Six factories have shut down in Lesotho, four in Swaziland, and the biggest clothes factory in Namibia has said it will soon shut down.

"There is a lot of uncertainty in our textile industry," said Nehemiah Ng'eno, the top official in Kenya's trade ministry.

"Not only are we confronted by the end of the MFA, we are also uncertain about AGOA and the European Union market," Ng'eno told textile business executives and officials attending a regional cotton and textile meeting in Nairobi on Wednesday.

Experts say Africa needs to urgently develop its fragile cotton industry, improve road and rail networks to allow greater cross-border movement of raw material and goods, and improve the quality of its textile products.

"It is really about regional cooperation now," said Jack Kipling, president of South Africa's Clothing Trade Council.