There is no question on how important cotton is to Egypt’s textile industry: it contributes to around 3% of the country’s GDP, employs 2.25 million- one third of its industrial labour force – to meet its demand of 180 000 tons. But after years
of trade wars between US and China, and now a global pandemic, the cotton
industry in Egypt will need time to recover from its losses. Egypt’s exports in
cotton contributed $471.63m during 2019 to its GDP. But this ‘white gold’
for the country has taken a major hit, reducing production by 30% to 40%.

Even though Cairo has not imposed a full lockdown, as was seen in Nigeria or South Africa, its obligatory curfew and new health measures have affected cotton production and local demand. Egypt produces around 200,000 tons of cotton
yearly and imports another 200,000 that it processes before exporting.

Oval office, as a cotton-picking

The trade war launched in 2018 by US President Donald Trump, set tariffs and trade barriers on China against what was referred to as: “The greatest theft in the world”. Since then, cotton has taken a drop in prices plummeting from 15 to 20% globally. The WSJ reports cotton sold at $0.705 per pound of cotton on 29 January vs $0.6684 on 3 February; a drop of 23%. “The market, after COVID-19, collapsed. The three main cotton consumers – Europe, the US and Japan – were all under lockdown, which means nobody bought clothes.

The International Textile Manufacturers Federation did a survey on 700 companies, and orders for cotton were cancelled from March, April, and May.

European seems to cotton onto it

The European Commission is on track to push through new rules that could transform the cost advantages of nearshoring textiles production. The rollout will be subject to the approval of ministers from EU member states in the coming months.

EU textiles firms could soon be able to make a fabric in Italy and send it to a Mediterranean neighbour such as Egypt or Lebanon for dyeing, while still avoiding the payment of trade duty on the finished product.

The European Commission has this month recommended that the EU
amends its trade agreements with 20 out of 24 of its fellow partners in the
pan-Euro-Med (PEM) trade zone. The countries in the PEM zone include the EFTA states, the Balkan states and other countries in the Mediterranean region such as Algeria, Egypt, Israel, Lebanon, Morocco, Tunisia and Turkey.

Manufacturers have been calling for some of the rule changes for
the best part of a decade, but negotiations were stalled by the objections of
the Tunisian and Moroccan governments. The European Commission has recommended that any countries that agree to the new rules should implement them, with the hope being that others will sign up in future.

The European Commission is on track to push through new rules that could transform the cost advantages of nearshoring textiles production. The rollout will be subject to the approval of ministers from EU member states in the coming months. EU textiles firms could soon be able to make a fabric in Italy and send it to a Mediterranean neighbour such as Egypt or Lebanon for dyeing, while still avoiding the payment of trade duty on the finished product.

The European Commission has this month recommended that the EU amends its trade agreements with 20 out of 24 of its fellow partners in the pan-Euro-Med (PEM) trade zone. The countries in the PEM zone include the EFTA states, the Balkan states and other countries in the Mediterranean region such as Algeria, Egypt, Israel, Lebanon, Morocco, Tunisia and Turkey.

Manufacturers have been calling for some of the rule changes for the best part of a decade, but negotiations were stalled by the objections of the Tunisian and Moroccan governments. The European Commission has recommended that any countries that agree to the new rules should implement them, with the hope being that others will sign up in future.

“The overall objective is to develop this Euro-Med region,” says Dirk Vantyghem,
director general of Euratex, the umbrella body representing textile manufacturers in Europe.

“The overall objective is to develop this Euro-Med region,” says Dirk Vantyghem, director general of Euratex, the umbrella body representing textile manufacturers in Europe.

But quoting Phil Hogan, an Irish politician with a hatred of Brexit, that leaded the department that negotiated a free trade agreement with Britain, “When I think of
the European Union, I always think of an old Irish word: ‘meitheal’. It’s an old tradition where people from the neighbouring farms came together to help each other, to save the crops, to save the hay. The essence of it was to be reciprocal, and it benefited everybody.” Will see what will further happen with the white gold trade

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