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Africa Poised to Pick Up on TPP’s Likely Demise

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One man’s failed Trans-Pacific Partnership may be another’s opportunity for trade.

Now that White House officials have said TPP won’t be taken up in the lame-duck session of Congress and Republican members of Congress have reassured the world that the 12-nation Pacific Rim trade deal won’t happen during Obama’s remaining reign, Africa is looking to pick up what might not be heading Vietnam’s way after all.

Because Africa leans on its trade privileges to keep its costs competitive, the fact that many countries in Sub-Saharan Africa as well as Egypt, benefit from duty free trade deals that aren’t going anywhere anytime soon, the continent is in a prime position to snag market share that might otherwise have gone to Vietnam, which was expected to be TPP’s biggest beneficiary.

“The U.S. has announced that trade is pretty much on hold, so there’s a huge opportunity here now, quite frankly, that TPP and any other trade agreements are pretty much on hold,” said Gail Strickler, president of global trade for Brookfield Associates and former Assistant U.S. Trade Representative for Textiles at USTR, at a Destination Africa panel in Cairo, Egypt on Saturday.

What’s more, climbing costs in China and the rising costs of production are helping pave the way for Africa, too.

“It’s a potential opportunity for us to attract investment back into the sector,” Yusuf Daya, senior manager for research and international cooperation at Afreximbank said in a separate session Saturday.

Now, to move forward and capitalize on that manufacturing market share, it’s going to take increased capacity, improvements in labor skills and upgrades to logistics—and some markets in Africa are doing better at readying themselves than others.

“From what I’m looking at right now, those markets seem to be Egypt, Ethiopia and Kenya,” Waleed El-Zorba, managing director for Egyptian textile firm Nile Holding AG.

As Daya added, these countries have the capacity and the skills, and now it’s the responsibility of each nation’s government to help regenerate their respective textile sectors.

In addition to Egypt, Ethiopia and Kenya, Olsen said Madagascar and Mauritius are also positioned for apparel manufacturing success.

“They have a lot of investment that’s going in now and that’s building for the future,” he said.

Egypt spent some time reeling after its back to back revolutions, but El-Zorba said the country’s impression as having sub par safety and security is starting to roll back and the local industry is looking at how it can better be able to meet brands’ and buyers’ expectations.

What’s really working in Africa’s favor is last year’s 10-year extension of the African Growth and Opportunity Act (AGOA), and Egypt’s duty free trade privileges under the Qualifying Industrial Zone (QIZ) program—both of which won’t be undone by Donald Trump.

“I really can’t underscore enough the importance of the long-term extension of AGOA,” said Finn Holm Olsen, director of trade promotion and AGOA at USAID’s East Africa Trade and Investment Hub. “Investors really have that certainty that they can get a return on their investment.”

A big part of AGOA is to develop the value chain, Olsen said. And that means reducing the continent’s nearly 90 percent dependence on imported inputs.

“We want to bring the supply chain closer to the big producers,” Olsen explained, adding that it will also be key to bring in better training for workers through workforce development programs and focus on social compliance to ensure brands that the factories they’re looking to buy from are safe.

The policy issues that governments make in the region will be important as well, according to Olsen.

But, he said, “It’s not really cliché to say Africa’s time is now.”

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