Tunisia's textile industry faces Asian challenge

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 (MFA) 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 the Tunisian population buy its 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.
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.
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.