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French Version

Tunisia's textile industry could plunge into recession

Removal of tariff barriers will spark fierce competition

Tunisia's textile industry, a leading force in the country's economy in recent years, could plunge into recession with the dismantling next year of the Multi-Fiber Agreement limiting the access of Asian goods to the European market.

Local manufacturers who currently sell 80 percent of their production to Europe fear that the removal of tariff barriers will expose them to fearsome competition from cheap Asian goods, particularly goods made in China.

Tunisia is ranked fourth among textile exporters to the European Union and until 2002 was the leading supplier to France, according to a recent report by the Tunisian Central Bank. This position is now under threat and Tunisia's textile chiefs have been meeting over the summer to seek ways of safeguarding an industry that is of vital importance to the national economy, accounting for 50 percent of exports and providing 210,000 jobs in more than 2,000 companies.

The Swiss consultancy Gherzi concluded in a report that Tunisia enjoys no comparative advantages compared with leading Asian rivals such as China, Pakistan, Bangladesh or Turkey.

The domestic market is insufficient to sustain the sector on its own as some 45 percent of Tunisians buy their clothes second-hand, Gherzi said.

For three decades the local textile industry, fragmented and largely operating on a sub-contractor basis, has been "little more than a collection of takers of orders, or even just stickers-on of labels," a Tunisian expert said.

Modernization strategies of the past 10 years, partly financed by the European Union, have failed to stem a mounting sense of structural exhaustion. After a period of sustained growth between 1997 and 2001, production has virtually stagnated. After growing at a rate of more than 10 percent per year between 1997 and 2001, the sector saw growth of barely 1 percent per year between 2001 and 2003, with regression most visible in the spinning and weaving branches.

A slump in investment has paralleled the trend in production, showing a 30 percent decline in 2002 followed by a slight increase of 5.4 percent last year, according to Central Bank figures.

The loss of momentum has been particularly perceptible in the industry's traditional export markets, notably its two leading customers, France and Italy, which account respectively for 40.3 percent and 25.6 percent of foreign sales. After a one-off surge of 23.4 percent in 2001, exports grew by only 2.8 percent in 2001 and by 2.7 percent in 2003.

Products exported in bulk, such as workers' overalls and baby clothing, have been hit. Foreign sales of cotton goods fell by 13.7 percent in 2003 and now account for only 1.6 percent of total exports.

The textile employers' association Fenatex has called for measures to boost the industry, notably lower social charges and more flexible working hours.

It also wants unfair trading practices on the local market, such as the production of counterfeit goods or the operation of a parallel market, to be eliminated, along with industry consolidation and the creation of export consortia that would share risk.

Hopes are also being invested in the creation with Turkey of a free-trade zone that would permit the export to Europe of clothes made in Tunisia from Turkish tissues.

Some experts however believe that salvation lies in re conquest of the local market, winning over Tunisian customers inclined to at present to pay more for fashionable foreign goods, and to look to a possible Euro-Mediterranean axis that would contain the competition from South Asia.

Beirut,09 13 2004
Redaction
The Daily Star
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