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Textile industry face misty future

The Nation, Malawi

Textile industry face misty future

by Moses Michael-Phiri

8 March 2007

How time flies! It seems like yesterday when Malawi was celebrating the extension of its free market access to the Southern African Customs Union (Sacu) for textiles but now the country only has 25 days before the deal expires.

The current three-month extension expires at the end of this month and the Ministry of Industry, Trade and Private Sector Development said on Tuesday it has not yet clinched the deal with Sacu countries.

Sacu comprises Botswana, Namibia, Lesotho, South Africa and Swaziland (BNLS countries) and four countries-Malawi, Mozambique, Tanzania and Zambia (MMTZ countries)-have since 2000 been exporting textiles and garments to the Sacu duty free.

Secretary for Industry, Trade and Private Sector Development Newby Kumwembe said in an interview on Tuesday government is yet to get a nod from Sacu.

He said negotiations for the new extension are underway and government was still waiting for a reply from Sacu as the proposals for another extension were submitted last year.

“It’s a long process but we are working on another extension. Currently, we are just waiting for an answer from Sacu because we discussed with them on this issue at the last Sadc meeting and, as I indicated earlier this year, Malawi does not just want an interim extension. We want a permanent solution to this issue,” said Kumwembe.

He indicated that government was still not satisfied with the interim extensions of three to six months saying Sacu needed to give Malawi a better arrangement. He said Malawi would be comfortable with five years to enable the industry grow and achieve double transformation.

In an earlier interview, Kumwembe told Business Review that Sacu had agreed with the Malawi Government to extend the deal for the three months and that the deal would expire this month.

Each extension of the deal means a lot to Malawi’s textile industry which reaps from the duty-free export status.

Failure to extend the deal threatens 6,000 jobs in the textile and garment manufacturing, according to Kumwembe.

He said despite Malawi benefiting from the American Government’s Africa Growth and Opportunity Act (Agoa), Sacu remained a strong export market for the country’s textiles.

One of the conditions for the extension is that Sadc exporters must attain capacity for double transformation regime in line with the Sadc Trade Protocol.

Double transformation means that a country should have capacity to produce fabrics and garments for such garments to enjoy preferential market access under regional trade terms.

Malawi’s current quota of textiles and garments stands at 12.5 million tonnes.
In June 2006 Sacu granted Malawi six months extension when the textile deal expired.

Namibia, Botswana, South Africa, Swaziland, Mauritius and Zimbabwe fall in the current category of Sadc member states that are required to meet the double transformation criteria.

Until 2005, Least Developed Countries (LDCs) such as Malawi, Angola, the Democratic Republic of Congo, Lesotho, Mozambique, Tanzania and Zambia were expected to meet a less stringent rule of origin of single transformation to enjoy preferential access to regional markets. These countries are now required to upgrade to double transformation regime.

The MMTZ/SACU agreement is adhoc as Sadc member states await for the trading bloc to become a free trade area next year.