There is growing friction from African textile markers towards their Asian counter parts over their growing trade talks with the EU (European Union) .
Kenyan textile producers face stiffer competition in their search for an alternative market as the low-cost Asian producers push for free trade arrangements with the European Union.
Pakistan and India are presently in talks to initiate a free trade area (FTA) with the European Union that would grant their firms easy access to the EU market.
The FTAs with Asian countries are expected to lower the tariffs further, raising the level of Asian exports into the EU market.
“While cheaper textiles from China, India and other Asian countries have squeezed our markets in US, we still prefer the market because of its protective tariffs,” says Mr Jaswinder Bedi, chairman of Textile Manufacturers Association of Kenya.
Statistics from the African Cotton and Textile Industries Federation put the volume of Africa’s textile exports at Sh130.9 billion ($1.7bn), less than one per cent of the global textile sales.
More than 90 per cent of the African textile exports go to the US –a market which has since been opened to low cost Asian textiles following the expiry of the 2005 expiry Multi Fibre Agreement (MFA) –a legal instrument that once spread a blanket of protection against influx of developing countries’ products.
Compared to the American market which maintains higher tariff walls of between 16 and 32 per cent on textile products from countries with which it maintains non preferential trade agreements, EU’s external tariffs on textiles range from 8 to 14 per cent.
“To an African producer, EU is a very expensive market to penetrate because it requires heavy expenditure on promotion while most firms have also complained of its cumbersome entry rules,” Mr Joseph Kosure, the acting CEO of Kenya’s Export Processing Authority told the Business Daily on Thursday.
Taking a cue from the successful enactment of the African Growth and Opportunity Act (Agoa) which opened the American market for African textile in 2000, the EU included in the EPAs apparel and textile in the list of items that would enter its market duty-and-quota-free.
But ten years since EPAs talks were initiated, African textile players maintain that lower external tariffs that EU extends to other regions have let in textile from low-cost countries.
What ones takes away from this is that the “China price” is hard to beat. Efficiency and productivity are what has driven Asian countries like Vietnam, Thailand, Indonesia and of course, China to rapid economic expansion and growth.
The only remedy for Kenya and African exports is to increase the presence-market share in the US and develop niche markets, segments that will enable them to avoid direct competition from Asian exports were there at a price disadvantage, not a quality one.