/ 22 January 2007

Import quotas backfire

Clothing prices are to soar by 20% with the introduction of import quotas on January 1, retailers warn.

And in response to quotas on Chinese imports, which kicked in on January 1, South African firms are scrambling to source clothes and textiles from other low-wage countries.

The implication is that the trade union campaign for the protection of local industry may have little effect. Cosatu’s calls for protection against Chinese imports last year led to a quota deal between China and South Africa in August.

‘There’s a mad dash for imports from Mauritius, Vietnam, Bangladesh and India,” said an importer who asked not to be named, because he had had to ‘beg, borrow and steal to get my quota”.

Other retailers said they might source from Myanmar, Brazil, Turkey, Botswana and Lesotho.

An Edcon associate who asked to speak anonymously said that the group was looking into sourcing from Myanmar as an alternative to China.

He added that the American owners of Edcon were concerned that Myanmar was still a ‘communist country” and the company would investigate any ethical concern.

The price-hike fears come amid government delays in the establishment of a mechanism to measure the impact of the trade restrictions. The department of trade and industry agreed to set up a joint monitoring committee with business in October, but there has been no movement on the plan.

Business has also voiced concerns that quota implementation has sidelined the ‘customised sector programme” — a critical component of government efforts to build local manufacturing during the two-year quota regime.

Department of trade and industry Deputy Director General Iqbal Sharma acknowledged that companies would make their own supply decisions. Some large retailers had shifted to local suppliers, but the sourcing strategies of smaller firms with higher overheads might differ.

‘We need a balance between imports and local manufactures,” Sharma added. If the domestic industry supplied just 30% of domestic consumption, it might approach the employment highs of the 1980s.

Sharma said the customised sector programme had received local business buy-in, but still required considerable work. The plan was to have the monitoring committee up and running by about March.

Import quotas for Chinese goods were allocated to importers last November, but the process was delayed when retailers and manufacturers argued that they had already ordered stock for December, their busiest period.

The government has adjusted the quota regime to accommodate business, making quotas more flexible. Instead of allocating quotas based on a company’s import record over three and a half years, administrators will look at it over 18 months.

A representative of one of the four main retail groups, who asked not to be identified, said the implementing agency, ITAC, had taken ‘impressive” steps in working with business and preparing the quota system.

But small importers, in particular, have hit snags. One said firms had received permits for ‘ridiculous” amounts, such as 70 garments or 150 metres of cloth.

Some retailers have been denied quotas because of imprecise descriptions of imported clothing in the past, when all imports were subject to a 40% tariff.

A small Western Cape retailer interviewed by the Mail & Guardian was denied a quota because his goods were made in China, but imported via Hong Kong. He is now using Indian suppliers.

Most manufactures said it was too early to evaluate the impact of the quota regime on local producers. Len Smart, of the Natal Clothing Manufacturers Association, said there had been no noticeable change in business, but that a full assessment would only be possible in six months, when retailers began ordering for next summer.

Additional reporting by Jocelyn Newmarch

Retailers snap up boycotted Myanmar goods

South African clothing imports from military junta-controlled Myanmar almost doubled last year to nearly R10-million.

Clothing made up about 80% of South Africa’s imports from Myanmar — despite the fact that the International Labour Organisation has heavily criticised the Myanmar government’s failure to curb forced labour.

The value of clothing imports from Myanmar rose from R5,4-million in the first three quarters of 2005 to R9,7-million for the same period last year, said Owen Willcox of Trade and Industry Policy Strategies. In 2001, clothing imports were worth only R26 000; the big jump in volumes came in 2005.

Low-cost retailer Mr Price is one of several importers that has found a trading partner in this internationally condemned country.

At its peak, the Myanmar clothing industry reportedly comprised about 400 firms employing 300 000 workers and was the country’s lead export industry, according to a research institute attached to the Japanese Export Trade Organisation.

Consumer boycotts against ‘Made-in-Myanmar” goods were exacerbated by United States sanctions against Myanmar, and the industry is reported to have shed jobs.

Last Friday, South Africa voted against a United Nations Security Council resolution that called for an end to forced labour in that country as well as an end to ethnic killings and rape by armed forces. The Myanmar government has kept opposition leader and Nobel laureate Daw Aung San Suu Kyi under house arrest for six years.

Mr Price could not be reached for comment as the relevant spokespersons were still on leave, but a salesperson in one of the group’s Johannesburg stores confirmed reports that they sell stock from Myanmar. — Tumi Makgetla