Page 5 - 18 Cotton SA June 2019

TEXTILE SCENE
OUTLOOK ON

TEXTILES

by Helena Claassens, Cotton SA

POSSIBLE EFFECT OF trade dispute ends, it is expected that China
CHANGES IN CERTAIN TRADE could be an aggressive buyer of USA cotton
AGREEMENTS ON THE LOCAL with prices rising significantly. At the same
COTTON TRADE time China, while looking to India for cotton,
The purpose of trade agreements is to facilitate may continue to buy cotton from countries like
trade between countries. However, the EU Brazil, which could limit any possible price
and the UK talk about splitting, and China advances. The cotton fibre trade between
and the USA are involved in a trade “war”. South Africa and China and between South
Africa and the USA is very limited.
How will it affect the South
African cotton industry? Conclusion
The EU is a small player in South Africa’s
European Union (EU) international textile and yarn trade, and
The EU consists of various European Britain’s exit from the EU would have little
countries. Britain voted to leave the EU, effect on South Africa’s cotton fibre and
which could have an effect on trade between textile industry.
countries. Less than 2% of cotton yarns and With regard to cotton fibres, trade with
fabrics were imported from, and exported both China and the USA is almost non-
to the EU. It could be deduced that the EU is existent and would have negligible effect
one of the smaller players in South Africa’s on South Africa’s cotton fibre industry.
international trade, and that Britain’s exit Imports of manufactured cotton textiles will
from the EU would have little effect on South continue to originate from China at lower-
Africa’s cotton industry. than-local prices.
Local cotton producers could be hit the
China and the USA hardest if the negotiations between the USA
The United States of America plans to and China lead to lower cotton prices. Even
increase tariffs on Chinese goods, and vice though South Africa is a small-producing
versa. The proposed increase in tariffs on country, any fluctuations in global prices
American cotton is one of the reasons why would affect the local price and therefore
Chinese buyers avoid the USA. Once the local production.

Volume 21 No 2 June 2019 | 5