Published: 7 September 2006
The issue of the impact of Chinese imports on the local clothing and textile sector has been a matter which has grabbed the attention of the general public for some time now. In an effort to assist this sector, government has been actively working with labour and industry to find sustainable solutions to the woes the sector is facing, including engaging on issues related to competitiveness, skills and technology. In this regard the Customised Sector Programme for this sector has been developed with the participation of labour, manufacturers and retailers as a map for charting the sector’s regeneration.
In line with regeneration initiatives, government acknowledged that short term relief, particularly from the surge in imports from China, would be important in offering a window of opportunity for industry to transform itself. It is therefore in response to an official application launched by labour, and supported by manufacturers, that government initiated import limitation discussions with China. The result has been the Memorandum of Understanding (MoU) with China, which was initialed in June 2006 during the Chinese Premier’s Visit, and signed into force on 28 August 2006. The MoU allows for import restrictions in 31 product categories till 31 December 2008.
It must be stated that government’s trade policies have consistently been geared towards integration with the global economy and it has adopted considered and systematic trade liberalization policies in support of this. These policies have been instrumental in the significant growth seen in our international trade, which has also been reflected in this sector. Aggregate published profits of the top 5 clothing retailers have grown from R1.7 billion in 2002 to R6.6 billion in 2006, partly attributable to increased sourcing from markets such as China. During the same period though our domestic manufacturers have seen substantial decline and experienced severe job-losses.
As a government which is committed to economic transformation and development of our country, as well as growth of this particular sector, we believe that the current situation is not tenable. It would be counter-productive for the country’s development if certain segments of the sector experience record profits, whilst other segments were experiencing severe decline. In this regard government believes in balanced and sustainable growth in the sector, which will require support and sacrifice of government, labour and all segments of industry in order to succeed. It is within this framework that government have pursued import restrictions in the 31 categories of imports from China, and which should inform the current debate on this matter.
Today’s engagement in Cape Town with labour, manufacturers and retailers were aimed at soliciting practical comments on issues relating to the implementation and impact of these quotas. In the meeting, comments of all parties have been taken on board and will be placed before the Minister of Trade and Industry, Mr Mandisi Mpahlwa, for his early assessment on this matter. It must be noted that these restrictions only limit and not completely halt certain imports from China. In light of this, government’s view is that these imports will not be to the detriment of retailers and importers to the degree that is generally being reported, and could contribute to the regeneration of manufacturing in this sector.
This article was extracted (and adapted) from the DTI website