GENEVA — Poor African apparel exporting nations need to diversify their product mix away from commodity-type items, exploit their duty-free advantages and expand their supply chains if they are to survive in the highly competitive post-quota era,...
GENEVA — Poor African apparel exporting nations need to diversify their product mix away from commodity-type items, exploit their duty-free advantages and expand their supply chains if they are to survive in the highly competitive post-quota era, according to a report by a trade promotion agency.
The Geneva-based International Trade Center's report states that least-developed countries in sub-Saharan Africa "will continue to benefit from preferential treatment from World Trade Organization member countries."
To best take advantage of the duty-free benefits extended to them by wealthy countries, the ITC reasoned that African makers should focus on fabrics and garments made of synthetic fibers, which typically carry higher duty rates than cotton goods.
The study by Matthias Knappe, senior market adviser on textiles and apparel at the ITC, cites as an example that in the U.S., duties on imports of cotton-knit shirts average 20 percent, but the average duty for shirts of man-made fiber is 32 percent.
In 2004, sub-Saharan Africa's share of the U.S. apparel market was 2.2 percent, reflecting the duty-free access provided under the African Growth & Opportunity Act coupled with more relaxed rules of origin criteria that allowed poor countries to use cheaper fabric sourced from Asia for their apparel exports.
The president of Rwanda, Paul Kagame, told an April WTO symposium that the capabilities of African countries to take advantage of opportunities provided by AGOA and the European Union's "Everything but Arms" program, which offers trade benefits to the poorest countries of the world for all products except weapons, depends "on our capacity to stimulate the supply side."
Kagame lauded the trade opportunities initiatives by Washington and Brussels, and stressed his desire "to see AGOA renewed beyond 2015."
The ITC report argued that African producers must diversify their product mix if they are to be in a position to compete with Asian suppliers in the post-quota environment. It noted that last year, 77 percent of apparel exports under AGOA were based on two product lines — knit shirts and simple trousers.
It noted that Chinese goods in those categories carried a price premium of as much as 60 percent under the quota regime, which suggests that Chinese prices will drop markedly now that the nations of the WTO have dropped those restrictions.The ITC report suggested that poor African countries could also explore niche markets for ethnic textiles or apparel and urged manufacturers to seek innovative solutions on how to respond to buyers' requirements, from computer-assisted design to electronically managed supply chains.
On the logistics front, the study noted that sourcing materials such as fibers, fabrics and trims from nearby countries can provide shorter delivery times.
Moreover, improving trade facilitation services by modernizing ports and customs clearance procedures could help reduce delivery time to foreign markets.
According to World Bank estimates cited in the report, customs clearance for cargo takes more than 10 days in South Asia and Africa, nine days in Latin America and only two days in advanced industrialized countries.
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