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South African quotas on Chinese clothing and textiles: has there been sufficient economic justification?

Trade Briefs

South African quotas on Chinese clothing and textiles: has there been sufficient economic justification?

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In late 2006 South Africa unilaterally imposed quotas on the importation of selected clothing lines from China. These quotas were to come into force from the last quarter of 2006, but the general confusion surrounding the implementation of the scheme meant that implementation was delayed until 1 January 2007. This inevitably led to a scramble from importers to source clothing from China ahead of the quotas.

The objective of this note is to examine the changes in the selected quota imports and to make a preliminary assessment as to whether they may be indicating that they are meeting their specific goal of slowing the trade flows of clothing imports from China. This is only part of the real reason for implementing the quotas, however, as the fundamental objective is to provide an opportunity for the South African clothing sector to regain competitiveness. This wider analysis of the impacts of the quotas on domestic production is eschewed and the paper will concentrate upon the import data as the ‘front line’ in providing increased protection to a section that already shelters behind 40 percent import tariffs.

We hypothesise that while the imports from China may have reduced in the selected quota lines, imports from other sources and imports from China in non-quota lines may largely compensate for any enforced reduction in the quota lines. We caution that (a) the six-month time period is not sufficient to establish definitive patterns and (b) trade data between South Africa and Lesotho, a likely source of compensatory supply, is not readily available. Thus, the results presented here are preliminary only.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.


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