Cablegate: Eritrea: Textiles and Apparel Sector

VZCZCXYZ0000
RR RUEHWEB

DE RUEHAE #0794 2760419
ZNR UUUUU ZZH
R 030419Z OCT 06
FM AMEMBASSY ASMARA
TO RUEHC/SECSTATE WASHDC 8449
INFO RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ASMARA 000794

SIPDIS

SIPDIS

DEPT FOR EB/TPP/ABT: THOMAS LERSTEN
DEPT ALSO FOR AF/EPS AND AF/E
COMMERCE FOR ITA/OTEXA: MARIA D'ANDREA
STATE PASS TO USTR FOR ABIOLA HEYLIGER

E.O. 12958 DECL: N/A
TAGS: ECON ETRD KTEX ER
SUBJECT: ERITREA: TEXTILES AND APPAREL SECTOR

REF: STATE 138090

1. In response to reftel, post provides the short narrative below.
The Government of the State of Eritrea (GSE) strictly controls the
economy of Eritrea and nearly all of the industries. It shares
almost no information on the textile industry, (or other industries)
publicly. To the best of post's knowledge, Eritrea has no
import/export business in textiles with the U.S. Government
policies do not encourage private sector growth and post is unaware
of government plans to expand production in the textile industry.
Since Jan 2005, the GSE has severely limited imports and most
production in Eritrea is for local consumption. There are a few
exporting industries. The Italian owned shirt factory, Zambiati,
described in para. 4 is one example.

2. Eritrea has limited trade partnerships and does not maintain
formal trade relationships with its immediate neighbors, Sudan and
Ethiopia. Eritrea does engage in trade with regional partners, such
as Djibouti, Yemen, UAE, Saudi Arabia, and Italy. The 2005
International Monetary Fund's Article IV Consultation estimated 2005
exports at a total of USD 12 million, with manufactured goods, such
as textiles, being only an estimated 10 percent of exports. At this
time, post is unaware of Eritrea participating in any free trade
agreements.

3. Presently, three textile factories operate in Eritrea. The
government owns two of the companies and the third is privately
owned. As noted, the government does not make available statistics
and data from the two government-owned factories. Post has no
reliable data on either industrial production value or number of
persons employed by these enterprises. Post did ascertain that one
factory produces T-shirts and military uniforms and the other shirts
for school uniforms.

4. Zambiati Eritrea (ZAER) is a privately held Italian company
producing dress shirts for men and women. The company imports the
raw materials, such as cotton, from Italy to be woven into fabrics
and sewn into shirts. They also import woven fabric for production.
ZAER produces 15,000 shirts per month, most exported to Italy,
where they retail for EURO 85. In October 2006, the company plans
to increase production to 21,000 shirts each month. Zambiati also
exports woven cotton yarn, about 25,000 kilos per year with plans to
expand production to 45,000 kilos. Zambiati employs 250 women.

DeLisi

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