Kenya’s textile exports to US face stiff competition

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.

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.