Clothing industry too sensitive by half

While retail would love to have zero duties on clothing imports, SA must consider the impact on jobs and regional economies, says Textile Federation executive director Brian Brink "Anyway, why should SA's clothing industry have to take it on the chin without commensurate access being granted by developed countries in areas like agriculture?"

A year ago, SA raised import duties on clothing from 40% to 45% - the maximum SA may charge under World Trade Organisation rules. However, if the current Doha guidelines prevail, it will have to slash these to 14.8% over the next eight to 10 years.

SA's New Growth Path earmarks clothing for special support because of its labour intensity, but the sector will be hard hit if the Doha trade round concludes, because the prevailing "Swiss Formula" is designed to have a bigger impact the higher the original duties.

Sensitive list

Countries are allowed to protect vulnerable sectors by placing certain tariff lines on a sensitive list. Clothing on this list would attract duties of 30% in SA.

However, developing countries may place no more than 10% of all their tariff lines on the list. SA's provisional list stands at 23%. Iron and steel articles, machinery, plastics, chemicals and vehicles, parts and accessories are also on the list. At least half the list is made up of clothing and textiles. It exceeds the provisions designed to prevent countries from shielding whole sectors from the full formula cut.

National Clothing Retailers' Federation executive director Michael Lawrence says jamming the list with clothing items prejudices other economic sectors which might otherwise have got protection. But other business negotiators say that SA's provisional list, at 23%, accommodates the legitimate demands of all economic sectors. It's when SA has to cut the tariffs to 18% (the maximum likely to be permitted to Southern African Customs Union countries) that some sectors are going to be hurt.

Department of trade & industry deputy director-general Xavier Carim says SA is arguing against the "extremely unbalanced" trajectory of the negotiations. He feels concern over SA's sensitive list is premature, given that the possibility of a conclusion to the round this year is "quite bleak".

A Nedlac workshop scheduled for last week to whittle SA's provisional sensitive list down further was postponed.

Source: Financial Mail