TRALAC - Trade Law Centre

Kenya: President Moves to Protect EPZ Jobs

Monday, 30 May 2005

Source: The East African (Nairobi)

President Mwai Kibaki last week moved to protect about the jobs in Export Processing Zones (EPZ) as George W. Bush assured textile exporters to the US that all was not lost following the expiry of the Multi-Fibre Agreement in January.

Mr Kibaki asked the Ministries of Finance and Trade and Industry to consult with EPZ operators to stem the "real threat" to 40,000 local jobs in Kenya's garment and apparel industry, due to rising exports to Europe and the US from Asia.

The rise in Asian exports has begun to erode African cloth makers' share of the US market, with textile and apparel exports to the US under the terms of the African Growth and Opportunity Act (Agoa) totalling $270 million for the first three months of 2005 compared with $361 million for the same period in 2004.

A 25 per cent drop, according to new data from the US International Trade Commission, coincides with a 19 per cent increase in China's clothing and textile exports during the first quarter of 2005. Kenya sold $60 million worth of clothing and textiles to US buyers from January to March this year, $9 million or 13 per cent less than in the same quarter last year.

The end of the longstanding Multi-Fibre Agreement, which prescribed quotas of textile products originating from several countries chiefly India and China entering the US and European markets, has enabled low-cost, high-volume Asian producers to sell greater quantities to the US and European countries.

"This development is a big threat to Kenyan exports and poses a serious danger to Kenyan jobs and we must do all in our power to protect a sub-sector that is providing thousands of jobs for our people," said Mr Kibaki in a statement issued by the Presidential Press Service (PPS) last Wednesday.

The fastest growing exports to the US under the Agoa programme from Kenya have been from the garment and apparel sub-sector, with Kenya exporting $261 million worth of products, last year. President Kibaki sought "quick and long term solutions" from the ministers that would ensure the country maintained regional and global competitiveness.

Reduced production costs and enhanced operational efficiency were among his solutions to the threat although the US took the the quick fix of re-imposing quotas on certain types of apparel from China.

The reality on the ground, however, dampens hopes that 7,000 more jobs would be created over the next two years under the five year old Agoa initiative with six EPZ factories already closed, 6,000 jobs lost since November. Some US importers have reduced or eliminated their planned purchases from African factories.

In his latest report to Congress on the Agoa preferential trade initiative, President Bush acknowledges that African producers are facing tough challenges as a result of the elimination of global textile and clothing quotas.

"Many analysts believe that the heightened competition will force some of the marginal Agoa producers out of the market (but) several US retailers, including a growing number of small-and medium-sized companies, have also indicated their continued commitment to sourcing from Africa," the report says.

Mr Kibaki, however, proposes deepening of backward linkages through revival of the local cotton industry as one way of spreading the benefits from the garment and apparel industry. Mr Bush goes further, calling on Agoa beneficiary countries to look beyond the clothing sector and take advantage of the duty-free access that the programme gives to many other products.

Under Agoa, American imports increased by 88 per cent last year to a total of $26.6 billion with petroleum products contributing 87 per cent of the sales. Textile and apparel imports from eligible African countries also increased 35 per cent last year, reaching a total value of $1.6 billion.



“AGOA Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Kenya’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.