Cablegate: Agoa Third-Country Textile Provisions - Mozambique

VZCZCXRO2067
RR RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #1046 2281536
ZNR UUUUU ZZH
R 161536Z AUG 06
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 5878
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLMC/MILLENNIUM CHALLENGE CORP 0075
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS MAPUTO 001046

SIPDIS

SIPDIS

AF/S FOR HTREGER AND JMALONEY
AF/EPS FOR THASTINGS
USDOC FOR RTELCHIN
MCC FOR SGAULL
USAID FOR AA/AFR AND AFR/SA

E.O. 12958: N/A
TAGS: ECON EAID EINV ETRD MZ
SUBJECT: AGOA Third-Country Textile Provisions - Mozambique
Overview

Ref: State 131825

1. (U) Growth in AGOA Mozambican garment exports depends on
continuation of the third country fabric provisions.
Regional companies have expressed interest in opening
garment factories in Mozambique, and the one company
currently exporting to the U.S. is exploring the possibility
of expansion. The GRM is seeking to revive the country's
once thriving textile and garment industry. One of the
measures it is taking is negotiating with investors to
reopen closed textile plants. In addition, the GRM has
recently launched its "Made in Mozambique" campaign,
focusing on supporting and consuming Mozambican products,
including clothing made in Mozambique. For this reason,
extension of the AGOA third-country fabric provisions is
important to both the private business sector and the
government. It is a critical component of potential AGOA
export success and industry development.

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History
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2. (U) At its peak, the Mozambican textile industry
compromised 45 facilities, including 19 textile and 26
garment factories, that produced a wide range of products
for domestic consumption and export. However, Mozambique's
once thriving textile and garment industry experienced a
rapid decline during the early 1990s, and all its textile
plants were closed. (Note - There are six existing textile
facilities, but none are in operation. End Note.)

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Present Situation
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3. (U) There are currently five garment facilities
operating in Mozambique. Only one, South-African owned
Maputo Clothing Company, consistently exports garments to
the US. Maputo Clothing Company employs over 400
Mozambicans who cut, sew and assemble primarily chef,
maintenance and school uniforms. Maputo Clothing Company is
responsible for nearly all of Mozambique's AGOA apparel
exports, which in 2005 were valued at $2 million dollars.
(Comment: This represents a decrease from previous years and
highlights Mozambique's struggling garment industry and the
closure of factories. End Comment.) Maputo Clothing Company
imports nearly all of the textile inputs for its clothing
products from Asia, and will be negatively impacted should
the third-country fabric provisions end. This is
particularly significant given the company's interest in
expansion.

4. (U) The current market for finished apparel products
imported into the US under AGOA is the chef and other
uniform market. In other countries the target market is
also uniform supply, as well as department stores selling
men's dress shirts and sports clothing. Maputo Clothing
Company's expressed interest in expansion would likely
target department stores in the US for men's sport, leisure
and dress clothing, as well as the school-uniform market.

Dudley

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