Speech

Closing Statement to The Regional Cotton & Textile Executive Summit

Dr. Andrew Sisson, Director of the Regional Economic Development Services Office of USAID

 | Thursday, April 28, 2005

Ladies and Gentlemen:

For many of you here, New Year’s Day 2005 was not the great celebration of years past. On that day, with a single stroke, 30 years of protection for one of the developing world’s most vulnerable industries – cotton fiber and textiles - came to an end. The cessation of the World Trade Organization’s Multi-Fiber Agreement, dealt all of you a rude blow. Now the world’s textile giants – China, India and others – have freer access to the global marketplace. With the MFA gone, only one rule now applies to your short and long-term strategies:  In business, as in the jungle, it is survival of the fittest.  

The initial aim of the MFA was to protect the textile industries of developed nations facing competition from low-cost producers in poorer states. Thanks to the MFA, nations were allowed to impose quotas on textile imports, giving countries in sub-Saharan Africa a proverbial “foot in the door” in markets that might otherwise have been dominated by the global manufacturing behemoths. The removal of these quota restrictions means that you are no longer protected from the stiff competition from the Asian mass producers.

A study by the World Trade Organization released last September showed that China and India would probably come to dominate about 80 % of the global textile market in the post-MFA era, leaving a meager 20% to be shared by the rest of the world. In the first three months of this year, China increased production of men’s cotton trousers for export 1000 per cent. There are worst case predictions that 27 million workers around the world could lose their jobs because with the end of the MFA. With the termination of the MFA, with this sweeping act of global liberalization, potentially devastating consequences are in store for some of the developing world’s most vulnerable workers – many of whom are women.

No one, least of all USAID, wants to see this become a rags - to riches - to rags story. But to avoid it being just such a story, the region must

• Improve integrated supply systems
• Promote investment in the spinning and weaving sector
• Negotiate partnerships and alliances within and outside the region
• Address the high cost of finance and infrastructure constraints such as energy and roads
• Adopt regional harmonization and rationalization on tariffs and trade regulations.

You must streamline your industry, particularly output per worker, in order to survive in the post-MFA world. You must take advantage of this window of opportunity left to you by the current AGOA legislation. Energy and transport concerns need to be addressed in the short term to improve competitiveness.

No, you cannot do it alone. Clearly you will need investment in the region to help you compete. But such investments requires that the region be macroeconomically secure, have good governance and that labor issues impeding investment be promptly addressed.

International support for regional coordination among you is an imperative. It must be cultivated. You’ve just spent two days being told that the future belongs to the organized. Why? Because there is currently no representation for this region in the global marketplace.

However, the formation of a regional trade organization for the cotton/textile sector, like the East African Finest Coffee Association, or the East and Southern Africa Dairy Association, may not be sufficient to address all the key issues and constraints affecting the immediate future of your industry.

Whether formal or informal, the cotton/textile sector will need to form a regional network that is not a “stand alone” entity but one that incorporates all the lead players, so that they may play a key role in revitalizing the sector and carrying it forward.  The private sector must be the driving force for a concerted effort that invites the direct participation of the public sector and the international community.

A key challenge that the cotton/textile sector must meet in the short-term is renewed investment interest in the region especially in the spinning and weaving sub-sector. It is of the utmost importance that COMESA, EAC, SADC and national governments continue their efforts to create an investment climate that is conducive to the industry’s long-term needs. But that may take some time and serious action is required in the short-term to promote the concept of trade alliances and partnerships that lead to improved competitiveness in shortest possible time. A regional body dedicated to your specific concerns will be the answer to these short-term exigencies.

An integrated regional supply chain of cotton and textile products – from fiber to fabric - freely marketed from the Cape to Cairo - within the COMESA/EAC/SADC trading block, is critical to the future of the cotton/textile sector. But this too, is no small challenge and it will require more than just lip-service; more than just harmonized policies, more than just national endorsement.

It requires a dedicated commitment by all the COMESA/EAC/SADC members to participate in a regional trade community for the benefit of a wider audience than just one individual member country. By lobbing SADC or COMESA to improve the business climate, what you are actually saying is “Impel your member governments to boost the competitiveness of the region’s industry in the global textile marketplace.”

USAID is committed to continuing its support for the cotton/textile sector through RATES, the ECA Hub and other initiatives that will augment the role of the international community until they come to the table. And we are committed to getting international support for the region as soon as possible.  

The United States welcomes regional input into the AGOA agenda and this forum well represents the concerns of the industry. In fact, RATES will sponsor a small delegation to attend the AGOA Conference in Senegal this July, to present your views and concerns. The Senegal Conference is of particular importance, given the high percentage of women in working in the cotton/textile industry. The Trade Hub recognizes this and will sponsor several successful women entrepreneurs - women that RATES has supported under its AGOA initiatives – to go to Senegal and represent women workers as they should be represented – by other women.

USAID will do its utmost to encourage other international fora to support the formation of a common regional strategy. We will support RATES to foment a partnership between the public and private sector. And I know that RATES is poised to undertake this urgent endeavor.

I want to leave you today with a quote from the American author Ayn Rand. “We cannot fight against anything, unless we fight for something.” You are not fighting against the removal of MFA quotas. It’s too late for that. You are fighting for your region. And you are fighting for the future of your industry. And USAID, RATES, and the ECA Hub are behind you all the way.