After some deliberation but not consultation, the South Africa Government announced its Memorandum of Understanding relating to restrictions on the importation of clothing from China with the Chinese Government in late August 2006. This agreement sparked a lot of controversy (to say nothing of ill-informed comment) and, as a result, this Working Paper seeks to put the restrictions in perspective.

The objective of this paper is to examine the trade background to this restrictive action by South Africa. In particular, we are interested in the trade profile of these imports at the detailed level and why they were selected; how this relates to South Africa and the Southern African Customs Union’s (SACU) export profile of the same trade lines; what the economic consequences such as negating the benefits of the contribution that these cheaper imports have made to inflation reduction and income redistribution in the form of cheaper clothing to the poor; and what the impacts on the tariff revenues may be.

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