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Egypt: QIZ & FTA will place the textile industry
in the forefront within the region with US |
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2004-11-30
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Global textile industry will be keenly watching the fall of the textile regime sending developed and underdeveloped countries scurrying to pick market share from the USA and European Union.
For Egypt and its textile industry the battle for survival hinges on securing the QIZ and FTA agreements with the US.
Egyptian apparel exports and in particular, woven trousers will be threatened by the Chinese juggernaut as the challenges of the implementation of the ATC agreement on the 1st of January 2005, will cause dire situation. Ut all is not lost as the American Textile manufacturers have filed several petitions on exports from China in 7 different categories to the CITA to impose restrictions on China exports to the US after January 2005 and its implications of disturbing the USA market.
On the part of the governmental efforts recently, Rashid Mohamed Rashid, the Egyptian Minister of Industry and Foreign Trade, Eng. discussed setting up a FTA (free trade agreement) with the USA, besides creating the QIZ agreement which silimar to the one currently existing between the USA, Jordan, Israel.
It is worth mentioning that the Jordanian QIZ agreement helped create new job opportunities (mainly to Asian labor) and attracted new investments from India and China in a very short time frame, establishing several industrial sewing facilities to supply readymade garments and apparels in the US market. The Jordanian apparel exports to the US rose from US$ 52 millions in year 2000, to US$ 583 millions, in year 2003.
Meanwhile, Minister of Economic Affairs at the Israeli Embassy in Washington Boaz Raday said last week that negotiations for the establishment of a joint Israel-Egyptian industrial zone were nearing completion, particularly catering to US markets.
He even refuted a ‘New York Times’ article Thursday that claimed Americans feared that the import of cheap textiles from the Middle East without quotas or customs duties would harm the US textiles industry. Raday stated, "Negotiations between the three countries are in an advanced stage, and we expect the negotiations to reach a successful conclusion within days. To the best of our knowledge, the information reported by The New York Times is incorrect." He said Egypt minister for trade had met US officials in Washington on November 15, adding, "So far as we know, the talks were good."
By 2007, having concluded the QIZ between Egypt, Israel and USA, Egypt exports of woven and knitted apparel to the USA is expected to exceed US$ 2 billion by the end of 2007, due to the existence of an apparel sewing industry unlike the situation of Jordan. The Asian foreign investments in Egypt and in particularly in apparel sewing is expected to increase in parallel to take advantage of the availability of low cost labor, energy and infrastructure.
Having the only vertically integrated textile industry in the Middle East and Northern African countries, Egypt is the only country with the availability of fibers (Egyptian Cotton), spinning industry, dyeing and finishing, apparel and home textile manufacturing industry.
Anticipating the FTA with the USA, fiber consumption of Egyptian Cotton by the country presently at 60percent, is expected to change. FTA with USA will boost the textile export production from Egypt and other countries, which will also accelerate demand for the imports of American Upland cotton, expected to rise dramatically.
Herein lies the proof of the pudding for Egypt having a vertically integrated structure to turn in to a major textile hub for the region, as a major textiles supplier.
Among the different categories of textiles to benefit from the FAT & QIZ agreements, home textiles manufacturers and exporters will prove to be the quintessential beneficiaries due to the reputation they have gained through the use of Egyptian cotton by consumers in the US. This has been asserted from the exports of terry towels and bed sheets which exceeded US$115 million, by the end of 2003. |
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