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Cablegate: Eritrea: Textiles and Apparel Sector

VZCZCXYZ0000
RR RUEHWEB

DE RUEHAE #0762 2701437
ZNR UUUUU ZZH
R 271437Z SEP 07
FM AMEMBASSY ASMARA
TO RUEHC/SECSTATE WASHDC 9126
INFO RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ASMARA 000762

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 114799

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. The GSE 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 January 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
Eritrea, 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 is in partnership with 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, bath towels, men's pants,
and pajamas for men and women. Zambiati makes children's clothing as
well. The company imports the raw materials, such as cotton, from
Italy and Turkey to be woven into fabrics. They also import woven
fabric for production. Zambiati produces 21,000 shirts per month,
most exported to Italy, where they retail for EURO 85. Zambiati
also exports woven cotton yarn, about 25,000 kilos per year with
plans to expand production to 45,000 kilos. Zambiati employs 250
individuals, mostly women.

MCINTYRE

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