South Africa Trade and Industry Minister Rows back on Chinese Imports
Source: Business Day, South Africa Date: 2007-04-02
Trade and Industry Minister Mandisi Mpahlwa has been forced to ease quota restrictions imposed by government recently to prop up the local clothing and textile sectors and protect them from cheaper Chinese imports.
The quotas have in some cases hurt the very manufacturers whom they were intended to benefit because manufacturers have been prevented from importing fabric not available locally. This has had a dire effect on factories and threatened jobs.
A notice published by the International Trade Administration Commission (Itac), an administrative body responsible for creating an enabling environment for fair trade through customs tariffs, said the commission would consider written requests from importers to increase their quotas under special circum-stances, notably where specific products were manufactured only in China or not manufactured locally.
This included firemen’s gear and specialised sporting gear.
According to Itac acting commissioner Itumeleng Masege, the concession was recommended by the monitoring committee that was appointed to track the import restrictions and identify unintended negative consequences.
The decision to adjust the quotas was reached after extensive consultations with industry and labour.
Independent analyst Justin Barnes welcomed the amendment as a positive step, saying he was very pleased to hear about it.
The allowance to increase quotas comes with a strict quid pro quo, however.
Importers will get the allowance only if they commit to measures that help develop the local industry, including a “significant and demonstrable enhancement of, or contribution to, technology development, skills development, new markets, empowerment, local procurement and building of competitiveness of the local industry”.
If they obtain an additional quota for one product line, they may have to forego it for another. Government last year announced the plan to curb the import of cheap Chinese goods in an effort to cushion clothing manufacturers.
The controversial plan was met with resistance from big business, which said it would hurt consumers, and some retailers even planned to take government to the Constitutional Court over the matter. It is understood that the introduction of the quotas is partially responsible for stalling a government- conceived sector strategy intended to underpin the recovery plan for the beleaguered manufacturing sector.
Several private sector development initiatives under the auspices of the Cape and KwaZulu-Natal clothing and textile clusters have been initiated with great success to help the industry.
Government’s sector strategy was supposed to be the centrepiece of these development programmes and would have seen retailers contribute billions of rands to help nurse the ailing industry back to health.
Ironically, government’s reason for introducing the Chinese quotas over two years was precisely to provide a window in which the clothing manufacturers could recover. The customised sector strategy was intended to provide the blueprint for that recovery.
The ambitious strategic plan is now effectively in limbo, as retailers, alienated by the Chinese quota plan, voted with their feet, unnamed sources said.
“Government bungled it with the quotas,” said one.
The clothing and textiles customised sector programme (CSP) is part of a series of strategic sector strategies that form part of the trade and industry department’s broader industrial policy framework, aimed at boosting downstream manufacturing and growing jobs.
While some sector strategies, notably biofuels and business process outsourcing, were conceived only after the clothing and textiles CSP, these have already been approved by cabinet while the latter is yet to be referred to cabinet. The department’s deputy director-general, Lionel October, admitted this month that the strategy was dependent on retailers’ participation.
