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Kenya’s textile exports to US face stiff competition

Published date:
Thursday, 12 August 2010

Kenya’s textile exports to the US face stiff competition as the American government seeks to relax market access rules to low-cost producers from outside Africa.

In one of the proposed reforms, the US Congress is working on a rule that proposes to reform the preferential trade programme and extend the duty-free-quota-free (DFQF) status to apparel products from non-African countries such as Cambodia and Bangladesh.

The US administration is also negotiating a free trade area (FTA) with a group of Pacific countries such as Vietnam under the Trans-Pacific Partnership (TPP).

The proposed reforms come at a time when textile exports from Kenya to the US, under the Africa Growth and Opportunity Act (Agoa), have also dropped from a high of Sh21.7 billion ($ 272 million) in 2003 to a low of Sh14 billion last year.

The reforms follow years of sustained pressure from American businesses and nonprofit groups to replace all existing trade preference programmes with a comprehensive, unified system with two types of benefits — one for advanced developing countries, and a more generous one providing DFQF access to all least-developed countries irrespective of whether they are from Africa.

“The combined effect of the preferential trade reform legislation and the TPP will destroy the African apparel industry that was created under Agoa,” Kenya Association of Manufacturers (KAM) chairman Jas Bedi, said in a paper delivered to the US government at the Agoa 2010 Forum which concluded in Kansas on Friday.

At the forum, exporters argued that even without the preferential status sought, textile products from China, Cambodia, Vietnam and Bangladesh have been squeezing African products out of the US market since the Multi –Fibre Arrangement (MFA) lapsed in January, 2005.

MFA imposed quotas on the amount that developing countries could export in the form of yarn, fabric and clothing to developed countries.

When Agoa was enacted 10 years ago, the US Government relied on MFA to restrict imports from low cost Asian countries, preserving its lucrative market for African textile producers.

Seized power

Trade statistics indicate that by last year, African apparel exports to the US had fallen 48 per cent from the 2004 levels even as Asian exports grew tenfold over the same period with Bangladesh’s growing by 71 per cent, Cambodia by 31 per cent, and Vietnam by 98 per cent.

“It makes no sense from a public policy perspective to extend a duty-free market access status to already competitive developing countries,” said Mr Bedi, who is also the current chairman of the African Cotton and Textile Industries Federation.

Kenya is the second largest textile exporter to the US after Lesotho. Agoa allows sub Saharan African countries to sell 6,400 lines of products to the US quota and duty free.

Products are classified into sectors — agriculture, forestry, textiles and garments, chemicals, energy, footwear, minerals and metals, machinery, transportation equipment, electronics, miscellaneous manufactures, and special provisions.

Apart from textiles, Kenya sells fresh cut roses, sport fishing supplies, nuts, plastic products, jewelry, and essential oils.

The country’s exports to the US under the Agoa programmes dropped by 18.4 per cent, from Sh27.5 billion ($343.5 million) in 2008 to Sh22.4 billion ($280.4 million) last year.

Weak production

“It is time for Kenyan businesses to take advantage of other products that are eligible under Agoa, including tea, coffee and horticultural products instead of focusing only on textiles and apparel,” KAM chief executive Betty Maina said recently.

Figures updated by the US International Trade Commission (USITC) last month indicate that out of the 38 eligible African countries that export goods to the US under the programme, oil producing Nigeria and Angola alone accounted for 51 per cent of annual sales volumes last year.

South Africa, Congo, Chad and Gabon — which are either rich in minerals or oil — contributed 25 per cent of the annual exports meaning the remaining 32 countries contributed only 24 per cent of the Agoa exports for 2009.

The same fate hit Ghana which has established itself as a hub in exporting value-added products like chocolates, jewelry, baskets, and preserved pineapple.

“For value addition, Africa faces low quality standards, high energy and labour costs,” said Miriam Omolo, a researcher at the Institute of Economic Affairs.

Apart from the calls to make Agoa a permanent trade arrangement which also dominated the Nairobi forum last year, Kenyan exporters are hoping to be allowed to cooperate with neighbours in developing value chains to boost trade.

This, for instance, would mean that Kenya which has an advantage in textile manufacturing and weak cotton production is allowed to source raw materials from Uganda and Tanzania which have advantage in cotton growing.

“ Latest AGOA Trade Data currently available on

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 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.

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