The role of applied import duties on intermediate goods in industrial development: the case of South African clothing
The South African clothing sector has been under significant pressure in recent years as it attempts to become internationally competitive. This Trade Brief looks at how import tariffs are affecting access to intermediate inputs in this sector, given the broader context of industrial policy in South Africa where the import tariff is used as an instrument to achieve industrial policy objectives.
Using the UN definition of intermediate goods, the overall average tariff on intermediate goods was found to be 12.1%, while on imports from China – that represent 67% of the total for these input goods – the average tariff was assessed at 15.9% during 2016. Currently, the clothing sector is operating in an environment where the overall tariff rate protection during 2016 was 39.14 %, with a significantly higher 43.66% rate levied against imports from the main import source of China.
While high tariffs on final products may shield the domestic sector in the short to medium term, they will not assist in making it able it to compete internationally. More attention needs to be given to mitigating tariffs on intermediate inputs for a clothing sector that is struggling to remain competitive.
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