Bizarre+ANC+plan+to+save+SA+rag+trade

Business Day, Johannesburg, 13 July 2005
=Bizarre ANC plan to save SA rag trade=


 * Karima Brown and Vukani Mde**

THE African National Congress (ANC) and its allies have devised a novel plan to save SA’s ailing clothing, textiles and footwear industry from the onslaught of cheap Chinese imports. An alliance task team said yesterday the industry, which employs about 185000 workers — down from about 300000 in 1996 — could be saved to compete against China, India and Brazil.

But it would need to restructure and to adopt “a more effective and sustainable industrial strategy”, it said.

The thrust of the proposal appears to be at odds with earlier calls from senior government figures for industry to beef up its competitiveness in the face of the strong rand and cheaper imports.

A document believed to have been drafted by Public Enterprises Minister Alec Erwin and Ebrahim Patel of the South African Clothing and Textile Workers Union reads: “The first package of proposals is to introduce safeguard measures on specified Chinese imports to help stem the surge of imports and to beef up controls over illegal imports coming into the country.”

In the document the task team proposes the creation of a section 21 company to drive the restructuring and to ensure the implementation of protectionist measures against Chinese imports.

The proposals, however, are short on the details of how the company would operate.

The proposals are likely to be warmly received by the Congress of South African Trade Unions (Cosatu) and the South African Communist Party, which have been calling on government to adopt protectionist measures.

The proposals are a mixture of protectionist and free-trade ideas and represent a compromise between government and its left-leaning allies after a long battle over saving the industry. They are expected to serve as a springboard for state intervention.

Emboldened by the use of protectionism in Turkey and the US to save their clothing industries from Chinese imports, the ANC and its allies want SA to follow a similar path.

But this had to be complemented by a competitive rand, the task team said.

Unions planned to ask the International Trade Administration Commission (ITAC) of SA to invoke a World Trade Organisation rule allowing states to use protectionism “in cases of market disruption”, the document says.

The alliance said SA’s trade with China had grown in the past 10 years but SA “has not derived optimal benefit from this”.

According to the document, the alliance wants the ITAC to slap a quota on Chinese imports, to be “set at the level of imports from China applicable in 2002, but allowing for growth of 7,5% in value per annum since 2002”. The quota should run for three years..

The task team says SA also had to crack down on illegal imports, promote local sourcing by retailers and combat sweatshops.

Erwin and Patel are part of a task team set up after a summit in April to tackle job losses in the industry.

They say in the document that SA’s textile sector is geographically diffuse.

“Three or four major nodes of development should be identified … These nodes will include Cape Town, Durban and Johannesburg.”

While SA could not compete against China, India and Brazil on low wages and economies of scale, “there is an opportunity for SA to position itself to pick up the production and design volume that lies between what the advanced economies are shedding and what developing economies are not yet able to provide”.

The document also says that SA enjoys an ethical competitive edge over China and India specifically.

“The eradication of sweatshop practices would allow the industry to market itself as an ethical supplier. With growing consumer consciousness of sweatshop labour … this would constitute a major competitive advantage,” it says.

The call for increased local sourcing by retailers dovetails with Cosatu’s campaign demanding retailers adopt a 75% local procurement policy.


 * From: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A67882