TRALAC - Trade Law Centre

Chinese Exports Threaten to Destroy Textile Manufacturing Industries Worldwide

Wednesday, 19 January 2005

Source: Business Report (South AFrica)

When China joined the World Trade Organisation (WTO) in 2003, various safeguards were imposed on Beijing: any member of the WTO is allowed to limit textile shipments from China to 7.5 percent for a year, or 6 percent for wool products. Member countries can apply to renew these measures on an annual basis until 2008, when the China safeguards fall away. Normal safeguards can still be invoked, but the onus of proof will lie on the country that believes its industry and economy are being damaged.

Turkey last week invoked these safeguards against cheap imports from China. However, South Africa appears content to allow Chinese imports to overtake her textiles and woollen goods.

Turkey is one of the world's leading textile countries. Labour rates are half those of South Africa, and plants and technologies are very modern, yet Turkey feels that her industries are suffering. The 42 categories affected by the safeguards cover almost all products, ranging from woven to cotton fabrics, to knit shirts and pants.

Willem van der Spuy, the director for Asia at the Department of Trade and Industry (DTI), explained that in terms of the WTO regulations, a country's industry had to apply to its government for the China safeguards to be invoked before the measures could be introduced. A number of Turkey’s trade and industry associations had applied to their government.

Van der Spuy said that a separate application had to be made for every category in which the industry wanted protection. He added that they had, as yet, not received an application to fulfil the requirements of the DTI's International Trade Administration Commission, but once that had been received, it would be considered.

Brian Brink, the executive director of the Textile Federation in South Africa, said that clothing imports from China had grown by a whopping 53 percent in volume although it did not appear so in value. He explained that this was due to the strengthening of the Rand in 2004.

Brink said that imports from China "have increased at a much faster rate than those of other countries, suggesting that it has been gaining market share at the expense of others". Walter Simeoni, the president of the SA Textile Federation, said the local industry would soon submit an application to the South African government, asking for the China safeguard to be invoked. It hoped to get a favourable response.

Brink is of the opinion that South Africa can survive the 2008 deadline for the China textile safeguards, but only if customs stops accepting under-declared goods. "There is a lot of fraud involved but the matter is under discussion at the SA Revenue Service, which is aware of the problem," he added.

Simeoni said the South African government had great respect for China because of its highly efficient and productive workforce. He suggested that South Africa align its currency with China’s, which is pegged to the dollar so that we “improve the competitiveness of our industry."