South African quotas on Chinese clothing and textiles: 18 month economic reviewPosted on Thursday, April 23rd, 2009 by Fundira, Taku in Trade Briefs
In late 2006 South Africa imposed quotas on the importation of selected clothing lines from China. In the past 18 months tralac has been monitoring on a periodic basis, the changes in the selected quota imports and making preliminary assessments as to whether they may be indicating that they are meeting their specific goal of slowing the trade flows of clothing imports from China. In our previous version – the “full year analysis of trade flows between SA and China,” amongst the findings, we noted that:
- Chinese imports in these textile/clothing quota lines declined by 50 percent, from rand 4,271 million to rand 2,143 million during 2007 (i.e. the Chinese imports were 50% of the relevant 2006 value);
- The Chinese market share in quota lines consequently declined from 76 percent to 50 percent; and
- Other sources were compensating some rand 849 million for the fall in Chinese imports.
In our updated version of “South African quotas on Chinese clothing and textiles: 18 month economic review”, the following key points are noted:
- Chinese imports in the targeted lines have stabilised at the levels observed after the significant drop in these imports at the start of 2007;
- Other exporting countries have continued to strengthen their position in the South African clothing and textile market, both within and outside those lines targeted by the quotas; and
- South African exports within the quota lines appear to have stabilised in nominal terms since the imposition of the quotas and are only slightly down. In real terms this still implies a reduction in exports over the 18 month period.
Given the fact that despite a reduction in textile and clothing imports from China and that South African importers are finding alternative sources for the quota-line merchandise, is the imminent decision to extend the quota system by the Department of Industry and Trade (DTI), the best measure to promote and develop the textiles and clothing industry in South Africa? Or is it time for a call to consider other alternative measures to achieve the same goal?
Download the Working paper: WP200808VEedenClothingTextile18mnth20081111.pdf
Alan B. Jarvis, Tern Sportswear (Pty) Ltd., 2008-11-18:
‘The original request made by the Industry via Clotrade requested protection against clothing but NOT fabric. The agreement signed by the Gov. included fabric. The effect of this was to deny the clothing manufacturers accsess to Chinese fabrics at world competitive prices and to procure many fabrics not freely available in RSA. It actually caused employment losses as the RSA Textile industry did not have the capacity to make up the difference forcing the retailers to source outside the country. Fabric imports by clothing manufacturers only snowballed in 2006 and DTI based its quota’s on imports made in 2005 and 75% of that figure this left clothing manufacturers with little or no quota. Industry tried to be part of the process but to no avail. Retailers stock piled as much as possible before the start of quotas during the period Sept to Jan and as we do not know the extent of this I think it would be fair to say that the figures in for the first year of quota’s are distorted by this.’