51吃瓜

Operating a spinning machine at an Eritrean textile factory: In face of stiff competition, it is not easy for African manufacturers to modernize their operations.

Photograph: Panos / Stephen Boness

All across Africa, textile producers and exporters are reeling from the impact of new trade rules that took effect in January 2005. The rules, negotiated at the World Trade Organization (WTO), opened up to market forces a sector that had been protected for more than 30 years. It did so by ending a quota system in industrial nations which as a side effect had provided a ready market for textiles and apparel from poor African and other developing countries.

The phasing out of the old system has already cost Africa more than 250,000 jobs over the last few years, reports the International Textile, Garment and Leather Workers鈥� Federation (ITGLWF), leaving more than a million family members without stable incomes. Most jobs have been lost in Lesotho, South Africa, Swaziland, Nigeria, Ghana, Mauritius, Zambia, Madagascar, Tanzania, Malawi, Namibia and Kenya.

At a recent meeting of the Africa branch of the ITGLWF in Cape Town, South Africa, union members called on African governments to convene an urgent continental conference on the future of the clothing, textile and footwear industries. Its purpose would be to enable governments, trade unions and investors to develop plans to respond to the current crisis by increasing efficiency in the sector, attracting investment and improving workers鈥� welfare.

The old quota system, known as the Multi-Fibre Arrangement (MFA), had limited textile and clothing exports by producing countries to the world鈥檚 biggest markets, in the US, Canada and European Union (EU). Its primary aim had been to protect those countries鈥� domestic textile industries from more efficient producers emerging in Asia. However, by doing so, the system also gave advantages to many smaller textile-exporting countries that were less constrained by quotas or enjoyed preferential market access into the EU and the US. As a result, their textile exports to the industrial world thrived.

But with the end of the old system, these same countries are now finding themselves squeezed out of the market by unfettered competition with giant, highly efficient producers in countries such as China and India.

African producers can aim for high-end niche markets abroad, such as those that emphasize African designs.

Photograph: iAfrica Photos / Edward Ruiz

Demise of a side effect

European countries, Canada and the US originally set up the MFA in 1974 to protect their indigenous clothing and textile industries by capping the amount any country could export to them. The World Bank says that those quotas served to protect jobs in industrial nations and resulted in the loss of 19 million jobs in developing countries, mostly in Asia. The MFA, however, had an unanticipated side effect. Because rich country markets were growing much faster than domestic producers could satisfy, a major opening in the clothing market was created 鈥� and smaller textile-producing countries found a ready market.

But as trade liberalization policies began to spread across the globe, the old Asian producers began arguing that quotas were an unfair restraint on trade. Large retailers in industrialized nations added to the pressure, saying the system forced them to buy from too many different sources 鈥� in some cases from up to 50 different countries. This mounting pressure coincided with international negotiations for a new trade regime, known as the Uruguay Round, which took place from 1986 to 1994.

The large Asian textile producers and the Northern retailers ultimately won the day. In 1994, the WTO set up the Agreement on Textiles and Clothing, providing for a phased removal of all quotas in the sector within 10 years.

At first, many developing countries celebrated the liberalization of the textile sector, seeing it as an opportunity to improve trade. It was estimated that opening up the sector would generate an additional $175 bn worth of textile and clothing exports. But as the deadline drew nearer, smaller textile-producing countries began to realize that most benefits would not come to them, but to countries with large and highly developed textile industries.

Lesotho: from gains to losses

Lesotho provides a telling example of the grave impact of the expiration of the MFA. The country鈥檚 manufacturing sector is highly dependent on textiles and garments, which account for the most jobs after the public sector and earn more than 75 per cent of all export earnings.

Under the MFA, major Asian textile companies, limited in exporting directly to the EU and the US, set up subsidiaries in less developed countries, including Lesotho. In particular, they took advantage of Lesotho鈥檚 easy access to the US market under the African Growth and Opportunity Act (AGOA) of 2000, which offered duty-free entry to some products from African countries that adopted market-based economic policies, introduced political pluralism and eliminated barriers to US trade and investment. As a result, textiles and clothing became Lesotho鈥檚 economic mainstay, which at one point employed 56,000 workers 鈥� thus accounting for virtually every manufacturing job in the country.

鈥淢ost if not all our foreign investors come from Asia, mainly Taiwan and China,鈥� notes Mr. Daniel Maraisane, head of the main clothing workers鈥� union. But with the end of the quota system, he adds, those investors 鈥渟ay it鈥檚 now easier and cheaper to manufacture in China and India. So they are starting to go back home.... There鈥檚 simply no way little Lesotho can compete with such giants.鈥�

By the end of 2004, six of the country鈥檚 50 clothing factories closed, leaving 6,600 workers without jobs or termination benefits. The surviving companies, faced with shortfalls in export orders, placed 10,000 workers on short-term work, using them only when needed. 鈥淚f things go on like this,鈥� says Mr. Maraisane, 鈥渨e are afraid that unemployment, which already stands at 40 per cent, will end up reaching 70 per cent.鈥�

The China effect

For decades, the flow of textiles from the world鈥檚 largest producers, such as China, India, Hong Kong, the Taiwan province of China and the Republic of Korea, had been tightly restricted in the largest markets 鈥� the EU and US 鈥� because those industrialized countries were alarmed at the rapid growth of Asian garment manufacturing industries. These Asian countries were producing textiles so cheaply that they threatened to undercut American and European producers.

But when China, the world鈥檚 biggest textile producer, joined the WTO in 2001, and the MFA restrictions later fell away, the world trade in textiles and garments faced unprecedented competition. The National Council of Textile Organizations (NCTO), grouping the main textile manufacturers in the US, reports that within the first three months of 2005 鈥� immediately after the lifting of the quotas 鈥� imports of cotton trousers from China shot up by 1,500 per cent and of cotton shirts by 1,350 per cent. In Europe, 鈥渢he increases in the import of certain categories of clothes exceeded 2,000 per cent during the first quarter of 2005,鈥� notes ITGLWF General Secretary Neil Kearney.

Behind this surge lies an ambitious plan by China to make its textile and apparel sector the dominant player in world trade. Over the last 15 years, the government poured tens of billions of dollars into the sector 鈥渋n the form of free capital, direct and indirect subsidies and a host of other 鈥榠ncentives鈥� to drive competitors out of the markets and create an environment where no one, including the lowest-cost producing countries in the world, can compete with China in world markets,鈥� NCTO President Cass Johnson told a recent US Congressional hearing on US responses to China鈥檚 dominance.

Analysts expect that with the expiry of the MFA, jobs lost in other developing countries will instead move to more competitive producers such as China and India.

According to the International Labour Organization (ILO), China exported $31 bn worth of textiles between January and April 2005, an 18 per cent increase over the same period the year before. Chinese textile exports to the US and EU, now freed of quotas, increased by 250 per cent and 84 per cent, respectively.

Alarmed by the influx, in May 2005 the US government imposed temporary restrictions on textiles and clothes imported from China, affecting about $2 bn worth of goods. Such restrictions are permitted under 鈥渟afeguard鈥� clauses that China signed when it joined the WTO. Any WTO member can use the clauses to provisionally limit rises in imports from China until 2008. At that point, the full impact of the end of quotas will be felt. When that happens, as many as 27 million people, mainly in the small producing countries, could lose their jobs, notes a submission to the WTO by a group of affected developing countries that includes Madagascar, Mauritius and Uganda.

Most analyses of the impact of the phasing out of quotas 鈥渃onclude that China and India will come to dominate world trade in textiles and clothing,鈥� notes Norwegian researcher Hildegunn Kyvik Nord氓s in a paper prepared for the WTO. China alone could capture 50 per cent of the US market, now worth $90 bn. Overall, international textile and apparel trade currently amounts to about $400 bn annually.

Limited options for Africa

Like the US, African countries could invoke 鈥渁nti-dumping鈥� measures to temporarily restrict Chinese exports until 2008, notes Mr. Mills Soko, a researcher at the South African Institute of International Affairs in Johannesburg. This narrow window of opportunity could provide a little more time for African textile producers to improve efficiency and competitiveness and add more value to their exports by, for example, producing more high-end textile products.

A number of African countries began taking such steps before the end of the quotas. Kenya鈥檚 government, for instance, removed taxes on all cotton ginning and textile manufacturing machinery in 2002, to encourage imports of more modern equipment. The government also dropped taxes on goods and services to cotton ginning factories and improved incentives to lure textile companies into its export processing zones (EPZs). These are specially created industrial areas that offer investors a host of incentives, such as tax exemptions and the ability to move funds freely into and out of Kenya.

By December 2004, clothing enterprises in Kenya鈥檚 EPZ employed 34,614 workers 鈥渋n 30 world-class factories,鈥� says Ms. Margaret Waithaka of the EPZ Authority. Thanks to the improvements in the sector and to growing demand in the US, apparel exports from Kenya to the US increased from $44 mn in 2000 to $226 mn in 2004, she reports, making Kenya the second-largest exporter of clothing to the US from sub-Saharan Africa. But for many countries, including Kenya, such improvements will not be sufficient to enable them to withstand the heavy competition of the post-MFA era.

Diversification

Another option, says Mr. Soko, would be for African countries to move away from overdependence on textiles and clothing, into other goods that are in demand. For example, he notes, African countries should not see China entirely as a threat, but also as an opportunity for developing new export markets by taking advantage of its 鈥渋nsatiable demand for commodities.鈥�

South Africa has been doing just that over the last few years, benefitting from sales of mineral products and metals to China. With one of the world鈥檚 fastest growing economies, China is the world鈥檚 largest consumer of oil and a major importer of cotton 鈥� accounting for 33 per cent of world consumption. Some African countries have begun negotiating duty-free entry of their products into the Chinese market in exchange for reduced obstacles to Chinese investment in Africa. The continent鈥檚 trade with China grew from $10.6 bn in 2000 to $13.5 bn in just the first nine months of 2003.

鈥淭he potential for expanding this bilateral trade and for strengthening Africa鈥檚 economic engagement with other fast-growing developing economies (such as India and Brazil) . . . is enormous,鈥� says Mr. Soko. But to realize that potential, African countries first need to move away from relying on one or two products for most of their export revenue.

The UN Economic Commission for Africa, based in Addis Ababa, Ethiopia, recommends that African states provide cheap credit and other incentives to enterprises that manufacture a wide range of goods for export. As a strategic starting point, they should begin processing local raw materials into finished products for export, the commission reports. Instead of exporting raw cotton or cloth, for example, countries could develop industries that produce high-end clothing products. This could include trying to supply niche markets for garments with African designs.

To diversify their exports, African countries will need significantly improved access into international markets, says Mr. Gobind Nankani, the World Bank鈥檚 regional vice-president for Africa. That would require reducing 鈥減rotectionist practices, such as subsidies, in foreign markets,鈥� under negotiation in the current round of WTO global trade talks.

The continent would also benefit from a reduction of barriers in non-agricultural sectors, especially in other developing-country markets, Mr. Nankani says. For example, 鈥渟ome countries in Latin America heavily protect their own garment manufacturers and other labour-intensive manufactures, reducing the opportunity for African produce and other exports to penetrate those markets.鈥� In many East Asian countries, he adds, tariffs are far more protectionist than in the EU or US.

Adjust or perish

鈥淎frican governments have an obligation to help their private sectors adjust to new conditions to retain their competitiveness,鈥� argues Mr. Soko. They could learn from countries such as Bangladesh, where the government joined forces with domestic companies, trade unions and non-governmental organizations to develop and implement policies to upgrade skills and retrain displaced textile workers.

Small, vulnerable African producers are faced with two choices, he says: 鈥淭hey must either improve their efficiency or switch to higher-tier products.鈥� For example, India increased its cotton-based exports to the US by an estimated 46 per cent by shifting production from basic cloth to higher-value textile products and fully manufactured clothes.

Producers who want to be competitive can only do so if they lower their production costs, Mr. Soko adds. A Chinese firm with a subsidiary in Mauritius notes that the costs of buildings, electricity, fabrics and labour are much higher in Mauritius than in China. Another reports that while wages are lower in Madagascar, other costs, such as transport and electricity, are higher.

The World Bank estimates that the cost of doing business in Africa is 20鈥�40 per cent above that for other developing regions, due to high regulatory costs, unsecured land property rights, ineffective judiciary systems, policy uncertainty and unfair competition from politically connected companies, which results in a few large firms holding very dominant market shares.

Inadequate and high cost infrastructure services are also a hindrance. The World Bank reports that if the Zambian and Kenyan power systems were of the same quality as their Chinese counterparts, for example, the cost savings for Zambian and Kenyan firms would be equivalent to nearly their entire wage bills.

For many African textile and apparel producers, time to upgrade their industries before competition heightens is running out. The US and EU have proposed completely phasing out tariffs on textile and apparel imports by 2015. At that point, the tariff advantages that countries currently enjoy under AGOA will no longer apply, a move that could destroy the remaining textile and apparel industries in Africa, says Mauritius鈥檚 ambassador to the US, Mr. Usha Jeetah.

Both the US and EU 鈥渉ave had hundreds of years to develop their apparel and textile industries, protected by very high tariff barriers and quotas,鈥� notes Mr. Jeetah. 鈥淲hat is being asked of the small and infant industries in Africa is that they will have 10 years in which to develop [their industries] . . . to be competitive with long-established countries.鈥�