December 4th, 2007 
Renato Palmi 
A brief Synopsis
South Africa – Renato Palmi of the ReDress Consultancy Reviews the Quotas
During the month of August, numerous fashion events have taken place in South Africa. Has the fashion sector seen any tangible benefits due the quotas system? According to the Trade and Industry Minister the quota system is working. He says, “Since the implementation of the quotas, jobs have been saved and new jobs have been created.” Yet, his department cannot provide specific data on employment figures relating to the quotas on Chinese imports. The government said that the quotas would create 50 000 new jobs. This equates to 2000 new jobs per month in the clothing and textile industries over a two year period.
The economic intent of the quota system is understandable but the process of implementing them became tainted with political appeasement creating an even wider rift between industry, government and the unions. The Chinese government after initially declining the South African government’s suggestions of restricting imports eventually relented because they knew the returns from alternative economic sectors would far exceed the revenue lost from the import restrictions. After all, the quotas are only for two years. The South African government rushed to implement the quotas to appease the unions – COSATU and SACTWU. In turn, SACTWU drove the implementation to conciliate their constituency where jobs were hemorrhaging at an unprecedented rate. According to the latest statistics, Chinese imports into South Africa fell by 34% in this first quarter of 2007. While there was a drop in imports from China, imports from other exporting countries has begun to grow, indicating that the retail-chains are beginning to implement their new procurement procedures. The impositions of the quotas are linked to developments both politically and economically that occurred more than ten years ago.
Going Back in Time
The challenges facing the clothing and textile sectors in the new post 1994 democracy was by extension a result of the previous regime’s protectionist policy towards these industrial sectors. The new African National Congress (ANC) led government began to reduce tariffs faster than was required by the World Trade Organisation (WTO) and the General Agreement of Trade and Tariffs. The recommendations from these organisations said that the new ANC government should reduce the tariffs over a 12 year period but the ANC reclined saying such reductions should be done within eight years as this would integrate the South African industrial sector into the globalised economy quicker. Many clothing and in particular textile companies did not capitalize on this period to invest in technology updates or skills development and the repercussions are being felt now. (more…)
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