Trade policy tools can aid textile and apparel sector

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BY BETTY MAINA

The AGOA lifeline was thrown to the textile and apparel industry in 2000 and to date we are still hanging on to it to save jobs and secure production in the textile sector.

That on its own is not sufficient to save the ailing sector. There is need to work on reversing the effects of liberalisation policies and ‘mitumba’ imports so as to grow a domestic market for this sector and put it on solid ground.

There are two provisions in the World Trade Organisation (WTO) framework that Kenya could work on to make the local textile and apparel sector less reliant on exports and trade agreements. Article VI of the WTO agreement governs anti-dumping measures which gives a country the right to take steps against imports of a product below its ‘normal value’ which is usually the price of the product in the exporting country if this causes harm to the importing market.

Article 29 of GATT 1994 provides for safeguard measures which can be adopted by a country whose industry is suffering due to excessive imports.

Kenya’s textile industry was flourishing in the 1980s before the influx of ‘mitumba’ into the country. Companies such as Rivatex offered jobs and clothed Kenyans in new clothes while Cotton farming in Nyanza and Western gave farmers a livelihood and provided cotton for the sector.

In other words, this labour intensive value chain employed many Kenyans and significantly contributed to the fiscal revenue through taxes payable by the companies. Liberalisation policies followed a short while later and killed the sector.

Kenyans are now wear second hand clothes or cheap imports from the Far East. This is a crying shame as we have the capacity to produce good brand clothing at a cheap price for the country. These imports hurt local manufacturers since they are not able to produce at the price of second hand clothing which floods the market. Meanwhile, EPZ textile companies deliver good quality clothing for markets abroad.

Granted, the ‘mitumba’ sector is a source of employment and many people earn their livelihood from the business. Measures that would shut down the flourishing trade at a go would not be very welcome.

But why not streamline activities in the sector in such a way that the local textile industry is able to reap the benefits of providing quality products at an affordable price and at the same time providing thousands of jobs directly and millions more in downstream activities.

The Ministry of Foreign Affairs and International Trade has the power to investigate anti dumping cases and to make safeguard applications and should look into the ‘mitumba’ business using these WTO provisions if the textile sector is to be fully salvaged. Remedies exist such as the imposition of an anti-dumping duty or price undertakings where an exporter raises the price of a product to avoid an anti dumping duty.

So far, Kenya has not made any safeguard application to the WTO as yet which would be an alternative to the application of anti-dumping remedies. This however would require that we set up an independent safeguards authority to look into these sector issues.

For us to apply any of these means, there is need for financial support, extensive data collection of anti-dumping evidence and the expertise and technical know-how to be able to handle such applications. In addition to trade policy tools, firm level interventions would lead to a more vibrant and less export reliant sector with the capacity to employ many more people.

The textile industry has the capacity to employ hundreds of thousands of people in the country and contribute meaningfully to economic growth if well nurtured, developed and supported.

(The writer is the chief executive of the Kenya Association of Manufacturers and can be reached on [email protected])

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