Textile tariffs 'ineffective'

Johannesburg - Higher import tariffs on clothing will do precious little to protect local manufacturing capacity. The emphasis should rather be on combating illegal imports, say role players.

The International Trade Administration Commission (ITAC) is investigating an application by clothing and textile workers union Sactwu to raise import tariffs on 35 clothing products from the current 40% to 45%, the maximum SA may impose, as prescribed by the World Trade Organisation.

The additional costs will simply be passed on to consumers and will not persuade retailers to prefer to buy from local manufacturers, it is argued.

CloTrade director Jack Kipling says there are two things that can help the local industry: combating illegal imports and dispensing with import tariffs on textile and cotton products that are not manufactured on a commercial scale in South Africa.

Customs fraud concerns

"Clothing imports are deemed to be undervalued by at least 51%, which means that a 5% increase to the import tariff will make no difference. All our resources and energy must be applied to fighting customs fraud," Kipling believes.

A special task team for this purpose was planned in 2007, but only really launched in April 2009. It is understood that several large offenders are already under investigation.

Johann Baard, a director of the Cape Clothing Manufacturers' Association, says it is critical for the government to take immediate steps to limit the number of South African ports of entry for clothing.

"We believe that a measure such as this would have a significant impact on the ability and effectiveness of our customs authorities to do inspections and seize containers where importers are not sticking strictly to the rules," said Baard.

"This is somewhat surprisingly not supported by the retailers." An investigation conducted three years ago has shown that most illegal goods enter the country through the ports of Cape Town and Durban, as well as OR Tambo Airport in Johannesburg.

Kipling believes it would be impossible to restrict imports at certain harbours, and that this would also have a negative impact on small, informal dealers in South Africa's neighbouring countries.

"But it won't really make a difference. All our energies must be directed at fighting the problem of undervaluation," he argues.

One also needs to look at dispensing with import tariffs on certain textile goods. Import tariffs on some products were abolished in June, but this needs to be "significantly" opened up.

Kipling said: "The industry must focus on becoming globally competitive. Textiles represent about 50% of the cost of an article of clothing. Imposing a 22% import tariff on material that cannot be manufactured in South Africa makes us uncompetitive."

-Sake24