The trade and economic implications
of the South African restrictions
regime on imports of clothing from
China
by
Ron Sandrey
tralac Working Paper
No 16/2006
October 2006
Copyright © tralac, 2006.
Readers are encouraged to quote and reproduce this material for educational, non-profit
purposes, provided the source is acknowledged. All views and opinions expressed remain
solely those of the authors and do not purport to reflect the views of tralac
This publication should be cited as: Sandrey, R. 2006. The trade and economic implications
of the South African restrictions regime on imports of clothing from China.
tralac Working Paper No 16. Stellenbosch: US Printers.
Introduction and key points
After some deliberation but not consultation, the South Africa Government
announced its Memorandum of Understanding relating to restrictions on the
importation of clothing from China with the Chinese Government in late August 2006.
This agreement sparked much controversy (to say nothing of ill-informed comment),
and the objective of this note is to put the restrictions in perspective. There are 31
tariff lines (although ‘lines’ is not a strictly accurate definition as some are at HS 4
level while most are at the HS 6 level and even some at HS 8). Not all are in the HS
2 Chapters 61 and 62, the generally recognised clothing categories, as some are in
fabrics and one even denotes curtains (HS 6303). The introduction of fabrics opens
up some fascinating and complex value-chain questions where we will eschew
analysis, and rather concentrate upon the clothing sector.
The objective of this paper is to examine the trade background to this restrictive
action by South Africa. In particular, we are interested in the trade profile of these
imports at the detailed level and why they were selected; how this relates to South
Africa and the Southern African Customs Union’s (SACU) export profile of the same
trade lines; what the economic consequences such as negating the benefits of the
contribution that these cheaper imports have made to inflation reduction and income
redistribution in the form of cheaper clothing to the poor; and what the impacts on the
tariff revenues may be. The latter point is crucial as the so-called BLNS countries
(Botswana, Lesotho, Namibia and Swaziland) rely on this revenue source for up to
and indeed over half of their total government revenues in the cases of Lesotho and
Swaziland. We note that neither these countries nor the South African Revenue
Service (SARS) that would have to monitor the restrictions regime seems to have
been consulted. The former runs against the law and the spirit of the new SACU
Agreement, while the latter seems an interesting oversight at best1. And keep in
mind that these imports face a 40 per cent tariff into South Africa, so they are already
at a strong disadvantage and not competing on a level playing field against local
production when facing duties of this nature.
1
These restrictions will be monitored by the Import and Export Control unit of the International Trade
Administration Commission (ITAC), which has inspection rights under the ITA Act. ITAC will issue
permits (although who gets what is open to debate) and imports can only be made against permits.
SARS will then allow the importation against the permits, while the Import and Export Control unit can
then verify any imports to determine that no additional imports were made. Given the nature of border
controls within SACU, this raises the interesting question of how trans-shipments from China through
BLNS countries (which are not party to the restrictions) will be monitored,
1
Key points
The Chinese market share of South African global clothing imports has risen steadily
from around 20 per cent ten years ago to the current level of just under 75 per cent.
This level is similar to the Chinese market share in rich OECD countries such as
Australia, New Zealand and Japan that have not applied restrictions on Chinese
imports, and it is also very similar to China’s share of South Africa footwear imports.
Examining Chinese trade data shows that around one per cent of Chinese exports of
both clothing and footwear were destined for South Africa from 1995 to 2002, but
from that year both exports shares increased, with clothing to South Africa doubling
to some two per cent in the last two years.
The South African response has been to apply quantitative restrictions to individual
lines that account for around 70 per cent of clothing imports by value. Note that the
average growth for these selected lines has been 36.8 per cent (in US $) since 1996,
while overall clothing import increased at a similar 35.5 per cent. Thus, growth does
not seem to have been the selection criterion.
Most of the selected lines show annual price decreases of up to 15.6 per cent in US$
values, highlighting both the contribution to a stable inflation rate in South Africa and
the distributional effects of cheaper clothing to poorer persons. This data is shown in
both US$ values and rand, as US dollars are generally used to avoid currency
complications in the paper. The same general patterns are consistent.
An examination of the restrictions shows that quantities for 2006 are anchored to
between 10 and 15 per cent above the 2003 imports in almost all cases, suggesting
that these were the criteria used to base the regime upon rather than any more
detailed approach. This then, in turn, translates to levels of only 40 to 90 per cent of
the 2005 levels in most cases.
Assessing the tariff revenue implications shows a potential reduction for the SACU
tariff pool of some R420 million for 2006. This, in turn, means a loss to Lesotho, for
example, of some R51 million, and highlights the (bypassed?) necessity to consult
with SACU partners on trade policy.
2
South African exports of clothing were trending upwards to just over R300 million in
2003 before declining to R160 million in 2005. For the targeted lines, exports in HS
62 have been minimal, but for HS 61 they were consistently around 50 per cent of the
total here until declining over the last four years to a lower 15 per cent (and thus
accounting for much of the overall reduction). The US and the EU dominate these
exports. For the EU tariffs are now at or close to zero (from around 14%) under the
Trade, Development and Cooperation Agreement (TDCA). Exports to the US
declined to only around one per cent of their former levels in 2005, but indications are
for a strong recovery in 2006 under the Africa Growth and Opportunity Act (AGOA)
access conditions.
Taking a wider view of SACU’s exports of the restricted clothing lines to the US, the
destination of most of these exports to ‘outside of SACU’ destinations, we find that
there is a very close relationship in aggregate between the value of these exports
and the associated value of Chinese imports into South Africa for 2005 even after the
big increases in imports for that year. In earlier years, the exports were greater than
the values of Chinese imports. We note, however, and indeed analyse, the degree of
product differentiation, which suggests that higher valued articles are being exported.
Most of these exports are sourced from Lesotho, with some from Swaziland. This
introduces the feasibility of the BLNS countries taking advantage of the South Africa
unilateral actions to replace some of the shortfall in imports. Limits to Lesotho’s
abilities to increase capacity are noted, along with the possible dilemma that this
small country may face in opting to switch export destinations.
Finally, detailed analysis of both the South African SARS import data and the
Chinese Ministry of Customs export data highlights the disconcerting feature that the
value of imports from China into South Africa is only at 80 per cent of the value of the
exports from China to South Africa in recent years, and that this discrepancy was
worse in earlier years. Probing deeper, we find that this discrepancy is worse for
volume data, while for average prices it generally reports imports at a lower unit
value than exports.
Such a situation is somewhat worrying, and may have
implications for any regime set up to monitor the new restrictions into South Africa.
3
Background
During 2005 South African data shows imports from China to the value of some
US$4,926 million, a figure up by 37 per cent over the previous year (well above the
global increase of 15.5 per cent). These imports represented 9.0 per cent of total
South African imports, a figure that has climbed steadily for the past ten years in an
almost straight-line manner. This information is displayed in Fig 1, with the dramatic
(almost exponential) climb in South African imports from China clearly evident2.
Expressing these imports in rand would alter the line for the value of imports but not
the market share.
Fig 1: Chinese Imports into RSA $m & % Share
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
6,000
5,000
4,000
$m
3,000
2,000
1,000
0
1997
1999
2001
2003
China $m
China %
2005
Source: World Trade Atlas (WTA)
The objective of this section is to examine the contribution of the clothing sector
imports (as defined by HS 61 and 62) to this growth and place that contribution in
perspective with respect to the recently imposed restrictions on Chinese clothing
imports.
Fig 2 puts clothing in an historical perspective and shows (a) the percentage that
clothing represents of the imports from China on the left hand scale, and (b) the
percentage of total clothing imports as defined that are from China on the right
hand scale. Possibly the more interesting result is the right hand axis that shows the
Chinese share of South African clothing imports climbing to (and stabilising at) just
under 75 per cent of the total. This is a significant market domination, but consistent
2
Sandrey (2006) provides a fuller discussion of the bilateral trade between South Africa and China.
4
with China’s market share into Australia, Japan and New Zealand (three OECD
countries that have never imposed quota restrictions on clothing imports), for
example.
80.0%
60.0%
40.0%
20.0%
Clothing
China
20
05
20
02
20
00
19
98
0.0%
% of Clothing from
China
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
19
96
% of Chinese imports
as Clothing
Fig 2: Clothing imports from China
Source: WTA
Why clothing and not footwear? Fig 3 replicates Fig 2, but this time for footwear as
defined by HS 64. There are two features of the graph: the first (the line for the right
hand side axis) is that China’s dominance of the footwear market is just marginally
below that of the clothing sector, while the second is shown in the bars relating to the
left hand side where footwear as a percentage of Chinese imports is decreasing as a
percentage of the total Chinese imports rather than increasing/stable, as was the
case for clothing. Perhaps the latter makes footwear a less visible target.
60.0%
40.0%
20.0%
20
05
20
02
20
00
19
98
0.0%
Source: WTA
5
% of Footwear from
China
80.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
19
96
% of Chinese imports
as Footwear
Fig 3: Footwear imports from China
Footwear
China
The Chinese perspective: how important is South Africa?
Figures 4 and 5 show the same trading relationship from the perspective of
Chinese exports to South Africa (using Chinese trade data) for both (a) clothing
as defined by HS 61 and 62 combined and (b) footwear as HS 64.
Figure 4 shows that as a percentage of Chinese exports to South Africa (expressed
as their % of the total Chinese exports to South Africa over time), that is in the two
HS classification groups of clothing and footwear. Both products started at the same
12.5 per cent level in 1995 but have diverged since then. Note the clothing spike in
2000 before declining for two years and the subsequent recovery.
Fig 4: Chinese exp to RSA % share
20%
15%
Clothing
Footwear
10%
5%
0%
1995
1999
2001
2003
2005
Source: WTA.
Figure 5 puts the importance of South Africa to China in another perspective, as it
shows the percentage the same clothing and footwear products in China’s total
global exports of these products that are destined for the Republic. Note the
large increase in the importance of South Africa to Chinese exports in both footwear
and (particularly) clothing over the last three years (thus confirming trends in the
South African trade data). As this data is shown as the export share in China’s global
exports of clothing, South Africa’s large increase can be clearly seen in perspective
from the Chinese side. Overall, global clothing exports defined as HS 61 and 62 have
declined as a percentage share of Chinese total global exports over the last three
years: from 10.54 per cent in 2003 to 9.23 per cent in 2004 and 8.65 per cent in
2005.
6
Fig 5: Importance of RSA to China
2.5%
2.0%
1.5%
Clothing
1.0%
Footwear
0.5%
20
05
20
03
20
01
19
99
19
97
19
95
0.0%
Source: WTA
Thus, (i) both clothing and footwear are very important exports from China to South
Africa, and (ii), from Figure 5, these exports have generally increased faster than
China’s global exports of the same products in recent years, after being relatively
stable for the period from 1997 through to 2003. This is confirmed when figure 6
takes figure 5 a stage further and looks at the increases in Chinese exports of
clothing to South Africa expressed as values relative to the 1995 base for
clothing exports both globally and to South Africa specifically. This highlights more
vividly the increasing exports to South Africa relative to China’s global clothing trade
over the last three years, and especially the 2005-year when the WTO clothing
quotas were supposed to end. The data shows the relative level of exports from
China to (i) South Africa and (ii) the world, expressed as their level at 1995. It is the
galloping line of the relative rise in clothing exports to South Africa over these
three years in particular that is causing the current problem, as this shows that
the 2005 levels to South Africa were over eight times their 1995 exports in contrast to
global exports that were a lesser three times their global exports in 1995. Expressed
another way, the average cumulative growth to the world has been 11.3 per cent,
while that growth to South Africa has been 21.4 per cent over the same time. Note,
however, that Chinese exports to the US and the EU, the major global clothing
markets, have been constrained by quotas in recent years (including the WTO
Agreement on Textiles and Clothing through to 1 January 2005).
7
Fig 6: Rise in Chinese clothing exports (1995 base)
9
8
7
6
5
4
3
2
1
0
World
RSA
1995
1997
1999
2001
2003
2005
Source: WTA data
Which sources of imports into South Africa have been displaced?
Table 1 shows the sources of imports of clothing as defined by HS 61 and 62 since
1996. The rise of China is apparent, and the main displaced sources have been
Malawi and the EU over this period. Malawi in particular commanded a considerable
market share in the early period but has now dropped to around three per cent in
both HS 61 and 62. India had a significant market share in HS 62 only in the early
years, and given that India is a major player on the world stage it is likely that this
would be the alternative source that South African importers may exploit. Hong Kong
is also a possible alternative extra substitution source3; however, the EU may not be
in a position to supply the cheaper end of the market4. Similarly, Malawi’s market
share has been decreasing despite generous rules of origin and duty-free access into
South Africa.
3
This raises the issue of the abilities of South African authorities to be able to delineate between
imports from China and imports from Hong Kong.
4
During 2005, EU exports to South Africa of HS 61 were reported to be Euro 10.8 million. Of these,
some 4.0 million were from Italy, 1.9 million from Germany and 1.5 million from France.
8
Table 1: Sources of RSA imports of HS 61 and 62 (clothing) % share
Source/year 1996
1998
2000
2002
2004
HS 61
19
34
51
58
75
China
2
3
4
3
4
India
11
7
7
7
5
Hong Kong
19
12
11
7
4
EU
31
26
12
10
3
Malawi
HS 62
15
16
49
52
74
China
23
21
14
9
6
India
10
6
7
6
4
Hong Kong
14
26
8
15
4
Malawi
21
13
8
7
4
EU
2005
76
5
4
3
3
73
9
4
3
3
The South African response
The first point is shown in Figure 7, whereby the lines selected for restrictions have
comprised a relatively consistent 60 to 70 per cent of the total clothing imports over
the period. The next point relates to growth rates of the selected lines in relation to
growth of the clothing imports from China overall (not shown). Here, the average
growth rates from 1996 to 2005 inclusive have been 35.5 per cent for HS 61 and 62
combined (with HS 61 at 33.6% and HS 62 at 37.1%), while the average for the
selected lines is 36.8 per cent. This suggests that growth alone is not the selection
criterion. Note that to this point in the paper, all calculations have been based upon
analysis of values and not volumes.
Fig 7: Percentage of clothing imports selected
75%
70%
65%
Selected
60%
55%
1996
1998
2000
2002
Source: WTA
9
2004
Average price comparisons
It is generally considered that the increasing clothing imports from China have been a
factor in keeping inflation rates under control in South Africa, and this factor will be
examined here. Note also that there is a major distribution effect in play here as well,
as the vast majority of South African citizens would have benefited from these price
changes despite the protestations of those protecting their jobs, jobs at which they
are increasingly unable to remain internationally competitive, as this particular issue
clearly shows. Table 2 shows the changes in prices over the 1996 to 2005 inclusive
for the import lines as set out in the memorandum where imports during 2005 were at
least $10 million. These imports represent 59 per cent by value of the total imports of
HS 61 and 62 during 2005, so they are probably strongly indicative of the overall
patterns.
Table 2: Average changes in import values for main lines of clothing.
2005
China%
Av. Change period%
HScode $m
Description
RSA imp US$ av. price rand
6103.4
13.4 Men’s knit trousers
77
-4.0
1.0
6104.6 0.8
Women’s knit trousers
2
7.1
-4.4
6105
12.4 Men’s shirts
53
0.7
5.2
6106
17.9 Women’s blouses
69
1.8
5.9
6111
29.9 Babies knit garments
96
-2.6
2.4
6203.3
10.8 Men’s woven jackets
77
4.8
9.5
6203.4
70.2 Men’s woven trousers
83
-1.3
3.1
6204.3
12.6 Women’s woven jackets
80
-2.7
1.3
6204.5
26.1 Women’s woven skirts
67
-7.3
-2.9
6204.6
62.1 Women’s woven trouser
86
-6.5
-1.5
6205
27.8 Men’s woven shirts
61
1.1
5.6
6206
25.1 Women’s woven blouses 60
-15.6
-10.9
6212.1
10.3 Bras
81
-7.5
-3.0
Imports
42.3
53.4
25.7
55.5
29.8
27.0
27.6
53.0
62.0
53.6
34.5
28.4
42.9
The table shows a reduction in average values over the last ten years in most cases
and in some instances a substantial reduction. The changes are expressed in US
dollars on the left hand side and in rand on the right, with the changes in rand
showing a greater overall increase (or a lesser decrease) than the US dollars,
reflecting the currency changes over the last ten years. Note that these average
value changes (and also those for the increases in imports values shown on the right
hand column) are expressed as average annual changes in log form. There is, of
course, a second round issue as to who gains from these price reductions, as
protectionists have run the emotive argument that it is merely a transfer to retailers.
Usually these gains are spread across the full range of actors. Whatever the result of
10
this argument, there is a strong case to say that price reductions of Chinese clothing
imports have (a) resulted in potentially cheaper clothing for consumers and (b) in
doing so, contributed to lowering South Africa’s inflation rate.
Controlling that
inflation rate is rightly seen as a key factor in South African economic policy.
One feature of the debate in South Africa around the restrictions is the justification
given that the large retail chains are making huge profits on these imports. While this
may or may not be true (or even relevant), it ignores the reality that there is an open
and thriving informal and semiformal street market in South Africa selling clothing in
direct competition to the retail chains for lower-income citizens. Restricting imports
may also restrict these retail opportunities and hence accentuate the distributional
impacts of the clothing restraints.
Details of the quantitative restrictions
This data is presented in three tables, as there is a mix of HS lines in the published
memorandum. The first, Table 3a, relates to the lines in the memorandum that are
given as HS 6 codes. Details of the physical descriptions for the respective codes are
given in Annex A, along with the actual data. Columns 2, 3 and 4 show the reported
quantity imports for the respective lines over the last three years. Columns 7, 8 and
9 show the restricted quantities over the 2006, 2007 and 2008 years, with column 10
showing the average increase in these quantities over the period. Of interest are
columns 5 and 6, which show the 2006 quantity changes as they relate to, firstly, the
most recent 2005 year and then, secondly, the 2003 import year. It is apparent that
2003 has been used as a general benchmark, as most restrictions limit the 2006
level to around 10 per cent above the 2003 imports (with increases from there as
indicated in the right hand column).
11
Table 3a: Quantitative restrictions on Chinese imports into South Africa
Changes
Actual quantities (000)
(2006)
Restrictions (000)
Code
2003
2004
2005
2005
2003
2006
2007
2008
61034 3,855
9,371
9,653
4,281
4,667
5,087
44%
111%
61043 738
1,774
1,404
809
882
961
58%
110%
61045 2,886
8,177
7,076
3,147
3,430
3,739
44%
109%
61046 4,736
10,497 11,143 49%
5,464
5,956
6,492
115%
61071 8,360
18,965 23,681 38%
9,112
9,932
10,826
109%
61082 27,710 46,310 37,212 82%
30,384 33,119 36,100
110%
62019 1,746
2,326
2,550
1,021
2,070
2,232
75%
110%
62021 1,290
2,871
2,408
1,450
1,595
1,754
60%
112%
62029 688
1,344
934
781
875
980
84%
114%
62031 220
517
341
255
296
343
75%
116%
62033 2,673
3,022
3,706
2,940
3,205
3,493
79%
110%
62034 21,994 36,865 39,235 63%
24,759 26,690 28,772
113%
62043 2,896
2,822
4,340
3,204
3,525
3,877
74%
111%
62044 930
1,559
2,564
1,059
1,165
1,282
41%
114%
62045 7,505
14,335 18,431 45%
8,304
8,952
9,650
111%
62046 20,092 26,932 32,985 68%
22,527 14,284 26,178
112%
62121 578
932
900
667
747
837
74%
115%
Incr
av %
8.6%
8.6%
8.6%
8.6%
8.6%
8.6%
39.1%
9.5%
11.3%
14.8%
8.6%
7.5%
9.5%
9.5%
7.5%
7.5%
11.3%
Source: tralac analysis from World Trade Atlas
Table 3b shows the same as table 3a but for the pure HS 4 digit level lines only. The
format is the same. A more generous allocation is made to the textile imports (HS
5208, 5209, 5210, 5514, 6005 and 6006), and indeed, in the case of HS 5209
(woven cotton fabric), one is left wondering why the effort is needed given the trade
trends.
Table 3b: Quantitative restrictions on Chinese imports into South Africa
Changes
Actual quantities (000)
(2006)
Restrictions (000)
Code 2003
2004
2005
2005
2003
2006
2007
2008
5208 2,314 3,495 3,951 67% 114%
5209 3,190 1,924 1,714 257% 138%
5210 345
674
717
64% 132%
5514 1,112 1,782 1,502 100% 134%
6005 442
735
75% 124%
6006 912
2,087 2,701 88% 260%
6105 4,500 8,080 7,180 69% 110%
6106 7,948 13,287 13,324 68% 113%
6111 1,405 2,095 3,161 49% 111%
6205 12,088 14,284 19,786 69% 113%
6206 8,883 11,698 17,669 58% 115%
6303 4,106 5,365 4,312 103% 108%
Source: tralac analysis from World Trade Atlas
2,636
4,400
457
1,496
548
2,373
4,941
9,012
1,558
13,716
10,189
4,432
3,005
5,280
539
1,765
635
2,705
5,386
9,823
1,713
14,951
11,412
4,778
3,426
6,337
637
2,083
737
3,084
5,870
10,707
1,885
16,297
12,781
5,151
Incr
Av. %
13.1%
18.2%
16.6%
16.6%
14.8%
13.1%
8.6%
8.6%
9.5%
8.6%
11.3%
7.5%
The third and final table is Table 3c, which looks at the HS 6 lines separately (men’s
and women’s tracksuits).
Here the lines are disaggregated but the restriction is
12
placed in aggregate. The restrictions are more binding on men’s tracksuits at the top
of the table than they are for women’s.
One wonders about the degree of
substitution possible here.
Table 3c: Quantitative restrictions on Chinese imports into South Africa
Actual quantities
Changes
(000)
(2006)
Restrictions (000)
Code
2003 2004 2005 2005 2003
2006 2007 2008
6211.31.90
6211.32.90
6211.33.90
6211.39.90
7
69
702
81
0
425
1,213
1,333
Incr
Av. %
24
163
847
1,035
Sub total
2,862
4,974
4,075
6211.41.90
6211.42.90
6211.43.90
6211.49.90
1
47
107
51
20
111
343
687
2
139
147
1,051
Sub total
206
1,161
1,340
24%
34%
961
1,058
1,163
9.5%
17%
112%
232
260
291
11.3%
Source: tralac analysis from World Trade Atlas
In ‘midstream’ (in mid-September 2006), the Department of Trade and Industry (DTI)
changed the rules and announced that the restrictions would not commence until 1
January 2007. In this case we would presume that the data in the 2007 columns of
Tables 3a, 3b and 3c becomes relevant rather than the 2006 import restrictions. The
column on the far right of tables shows the average increase over the period, and this
is usually but not always a consistent increase over each of the 2006 and 2007 years
from the 2006 original base.
Revenue implications
Note that in this particular section we are working in rand, as earlier tralac analysis of
tariffs at the South African border has been undertaken in this currency rather than
the US dollars used in the current paper to date. We calculate that, ignoring rebates,
tariffs of R1,065,830,402 would have been assessed on the imports subject to
restrictions in 2005. Applying the quantitative restrictions to these tariffs we assess
that, in the absence of any natural increase in imports that would have taken place,
the new tariffs assessed would reduce to R645,798,604 during 2006.
This is a
revenue loss of R420,031,798. Assessed as a percentage of the potential duty take
during 2005 this represents 1.5 per cent of the overall tariff and a greater 10.5 per
cent of the duties assessed on Chinese imports into South Africa.
13
It is important to keep the distributional impacts of this reduction in duties in
perspective. For example, the latest revenue shares from the SACU pool under the
new SACUA Agreement for Lesotho were 12.18 per cent of the total. Thus, given a
reduction of R420,031,798 and holding all other factors constant Lesotho’s revenue
share will be reduced by R51,159,739 when the distribution is made on the 2006
tariffs (and similar reductions will continue through 2007 and 2008). Note however
that ‘all other factors’ may not be held constant, because if exports from Lesotho to
South Africa were to increase, South Africa’s share of the tariff revenue pool would
increase through these increased imports and therefore accentuate the loss to
Lesotho and the other BLNS countries. Thus, citizens of Lesotho are being forced to
shoulder (at least) some R51 million of the cost of protecting a non-competitive South
African clothing sector. This is an interesting and questionable distribution aspect of
the restrictions, and especially as South African trade policy seems to have been
implemented in the absence of the consultations mandated by the SACU Agreement.
Exports of clothing
While attention has been focused on the imports of these clothing items into South
Africa, it is instructive to turn some attention to exports from the Republic over the
last ten years.
These export patterns are shown in Fig 8, where values are
expressed in rand million (the columns or bars) on the left hand axis for HS 61 and
62 respectively, and the percentage share of the targeted import lines are shown on
the right hand axis (the lines in the graph). Exports of both HS 61 and 62 (the
columns on the left axis) in total by value were steadily trending upwards through to
2003, with the last two years showing a strong decline. While the values of exports
for the two HS codes is somewhat similar, expressing the targeted lines as a
percentage of the total value shows two sharply different patterns for HS 61 and 62.
For HS 62, the percentage share (other than a peak in 1997) is consistently
insignificant. For HS 61 the percentage share was consistently around 50 per cent of
the total exports through to 2001 but in dramatic decline since then.
14
Fig 8: Exports of clothing from South Africa
200 million
Rand
60%
50%
40%
30%
20%
10%
0%
150
100
50
0
1996
1998
2000
2003
2005
Clothing products
% of targeted
HS 61 Rm
HS 62 Rm
61%
62%
Source: WTA
For HS 61 in particular, the fact that industry was able to compete globally until 2002
cannot be blamed upon Chinese imports into South Africa. Where are the exports
being sent? Figure 9 below shows that the US is the main market, followed by the
EU and Mozambique in a distant third place after looking promising early on.
Fig 9: Destination of HS 61 exports
80%
70%
60%
50%
40%
30%
20%
10%
0%
USA
EU 25
Mozambique
1996
1998
2000
2003
2005
Source: WTA
Examining the export of HS 61 further we find that HS 6105 and 6106, two product
lines especially targeted for import protection, were a major part of the exports as
recently as 2001 where they accounted for nearly half of the total HS 61 exports
before declining to five per cent in 2005. As is the case in Figure 9 above, almost all
of these exports in HS 6105 and 6106 are destined for the USA and the EU. Why
the decline in Figure 10 below that relates to HS lines specifically targeted for
protection from Chinese imports?
For the EU, tariffs on these two lines have steadily been declining under the TDCA:
from 12.5 and 13.4 per cent for HS 61 and 62 respectively at the implementation of
the TDCA in 2000 through to two per cent in 2005 and duty-free from that point
15
onwards (we would also add that this preference is consistent with most clothing
lines from South Africa to the EU). Analysis of EU trade data shows that imports of
HS 61 from South Africa declined from Euro 38.1 million in 2001, the first year of the
TDCA, to Euro 14.0 million in 2005 despite the tariff preferences.
When one examines the US import data (which, incidentally, does not reconcile well
with South African export data), we find that a recovery in imports in both HS 6105
and 6106 has been reported for the 2006 year through to the end of June (from
$83,000 in 2005 to $2.096 million in the year to date for HS 6105 and from $29,000
in 2005 to $1.4 million in the year to date for HS 6106). Almost all of the imports for
the 2006-year to date have entered the US under AGOA preferences. Thus, an open
question remains as to why these sudden surges in imports into the US have
occurred when the industry is seeking protection on the home front?
Fig 10: HS6105 and 6106 as % of HS 61 exports
30%
25%
20%
15%
10%
5%
0%
6105
6106
1996
1998
2000
2002
2005
Source: WTA
The wider picture
Exports as a measure of regional competitiveness
Usually, in international trade, the ability to export is a measure of the international
competitiveness of a sector. However, in the case of the clothing sector, one has to
adjust for the artificial market distortions created. For imports into South Africa these
distortions currently relate to the 40 per cent tariff on all imports except those from
the EU and SADC (with SACU, a subset of SADC, being a Customs Union). For
exports, the artificiality is created by a combination of tariff preferences into the US in
particular (and an important associated rules of origin waiver for Lesotho), the
16
residual and subsequent aspects of the clothing quotas still being placed on China
into these same EU and US markets, and the subsidies being accorded the SACU
clothing sectors through export incentives.
These combinations complicate the
competitiveness picture for the South African domestic clothing-manufacturing
sector, although the generalisation holds that a sector which can (assumedly) export
profitably should be able to adjust to import competition behind a 40 per cent tariff
wall.
China as a market economy
In little more than 25 years China has evolved from an internationally isolated,
centrally planned communist state into one of the world’s fastest-growing economies,
increasingly outwardly-oriented and market-driven. At issue is the question as to
whether China is a ‘real market economy’ or not. Being a real market economy
means, among other things, that the production costs of all goods and services are
subject to the demands of market forces, without state interventions such as
subsidies or price controls. This is important when a country is accused of exporting
products at a price below their real production costs. Following New Zealand’s initial
recognition in April 2004, some 37 countries now regard China as a full market
economy, and these countries include South Africa which recognised the market
status of China in June 2004. Thus it becomes somewhat less credible for South
Africa to now claim (as inferred by its actions and reactions) unfair trading of clothing
from China. It is also notable that despite many accusations of unfair trade practices
from China, no country has seen fit to challenge these perceived practices in the
WTO.
The concept of a ‘100 per cent real market economy’ is, however, a somewhat
elusive one. For example, China's exchange rate (for ten years pegged at 8.28 RMB
(renminbi) to US dollar) has been a controversial topic.
The claim is that the
currency was artificially undervalued and constituted an unfair export advantage. In
July 2005, China announced changes to the foreign exchange regime, and since
then the Chinese renminbi has revalued by 4.2 per cent. The Chinese argue that
there is no perfect 100 per cent market economy in the world and that China is a 70
to 80 per cent market economy. Moves such as the current regime being placed on
17
China’s clothing imports leaves South Africa open to the question of what percentage
of a market economy South Africa really is.
Regional exports of the targeted clothing
Table 4a begins by showing the regional exports of the South African ‘targeted’
clothing from SACU to the US during 2005 and that export data set in perspective
against the same 2005 imports from China. As effectively all ’outside of SACU’
clothing exports are to the US, this covers mostly all exports. The data is expressed
in US dollar millions.
Read the table as follows: the first column is the HS definitions relating to the
restrictions; the second denotes the values of imports from China into South Africa
during 2005 for the targeted products; columns three to seven inclusive show exports
to the US from South Africa, Lesotho, Botswana, Swaziland and Namibia
respectively during 2005 for the same products; and the final column represents the
sum of the SACU exports to the US as a percentage of the imports into South Africa
from China.
Several points are apparent. The first is that overall the value of these exports to the
US was very similar to that of the value of Chinese imports into South Africa (98%,
bottom right hand corner). This hides a wide variation, however, as the right hand
column shows. It is interesting to note that in the two biggest import lines of 6203.4
and 6204.6 (men’s and women’s woven trousers) that the region and Lesotho in
particular, are extremely competitive in the US.
18
Table 4a: SACU exports to US re Chinese imports, 2005 $mill
Exports to USA 2005
Code
CN imp
RSA
Les
Bots
Swaz
61034
13.41
1.69
18.32
0.87
9.16
61043
2.22
0.00
61045
4.56
0.55
1.18
0.11
0.85
61046
10.76
0.85
35.87
2.25
9.57
6105
12.42
0.11
5.81
0.45
2.12
6106
17.90
0.11
8.89
1.59
3.49
61071
4.47
0.16
0.44
61082
6.86
0.01
6111
29.91
1.41
0.02
0.72
62019
8.50
0.03
62021
5.63
0.00
62029
3.72
0.01
1.01
62031
1.02
0.15
0.01
62033
10.77
4.57
62034
70.17
12.25
100.76
6.86
29.44
62043
12.62
0.13
62044
4.98
0.20
62045
26.13
0.09
0.17
0.04
0.40
62046
62.09
3.73
48.44
0.67
29.63
6205
27.72
0.56
0.03
0.48
3.10
6206
25.10
1.54
0.96
1.42
62113
5.84
0.01
0.39
62114
3.75
0.29
0.53
62121
10.26
0.00
0.04
Sub Total
380.81
27.03
222.84
91.29
Nam
3.02
0.02
9.56
1.59
2.72
1.95
18.86
Tot ex %
CN imps
246%
0%
60%
540%
81%
94%
13%
0%
14%
0%
0%
28%
15%
42%
213%
1%
4%
3%
133%
15%
16%
7%
22%
0%
98%
Source: USITC and World Trade Atlas, tralac calculations
To what extent is product differentiation a factor here? An examination of the South
African trade data suggests that the two lines of 6203.4 and 6304.6 discussed above
are greatly differentiated products between Chinese imports and South African
exports. This is shown below in Table 5, where trade data for both imports from
China and exports to the US is shown by value and, in the right hand three columns,
average price data is shown. These averages are measured as the reported unit
value of exports over the reported unit value of imports, and the first three products
lines (HS 6203.4) are men’s trousers while the lower three are the same
classifications for women’s trousers. The data also shows that imports in these lines
(and a couple of smaller ones not relevant to Table 5) increased from 42 million pairs
in 2003 through to 64 million in 2004 and 72 million in 2005.
19
Table 5: Product differentiation indicators and 2005 trade
2005 trade, $m
av price, exports/imports
Codes
Description
from CN to USA
2003
2004
2005
620342
Trousers, etc, cotton
30.98
6.96
3.8
3.2
2.7
620343
Trousers etc, syn fibr
30.16
0.46
3.5
3.4
6.5
620349
Trousers etc, ot text
9.03
0.31
3.9
9.6
0.8
620462
Trousers, etc, cotton
39.88
0.26
4.2
2.5
3.1
620463
Trousers, et, syn fib
12.82
0.08
8.9
8.3
6.1
620469
Trousers etc, oth tex
9.39
1.79
9.7
9.2
10.6
Source: WTA data
Table 4b below reverts back to relate to Table 4a above before we diverted into
examining the issue of product differentiation, but this time looking at 2004 trade
data. The same benchmark of 2005 is used for Chinese imports, but it can be seen
that the exports from the region were greater during 2004, as the regional export over
the Chinese import by value ratio is over one at 123 per cent.
Table 4b: SACU exports to US re Chinese imports, 2004 $mill
Exports to USA 2004
Code
CN imp
RSA
Les
Bots
Swaz
61034
13.41
5.287
28.810
0.468 11.880
61043
2.22
0.182
61045
4.56
0.346
2.337
0.379
61046
10.76
1.667
42.455
1.085 10.937
6105
12.42
0.461
10.535
0.581
3.264
6106
17.90
0.603
9.992
1.167
7.980
61071
4.47
0.109
61082
6.86
0.212
6111
29.91
0.72
1.32
62019
8.50
0.490
0.061
0.036
62021
5.63
0.021
62029
3.72
0.538
0.334
0.041
0.010
62031
1.02
2.361
62033
10.77
9.553
62034
70.17
37.903
95.235
2.302 20.127
62043
12.62
1.069
62044
4.98
0.797
0.190
62045
26.13
1.071
1.081
0.043
0.645
62046
62.09
16.944
65.758
0.996 32.231
6205
27.72
1.238
0.069
0.270
3.690
6206
25.10
1.536
0.716
0.013
0.374
62113
5.84
0.076
0.820
62114
3.75
0.699
0.005
0.423
62121
10.26
0.032
Sub Total
380.81
83.20
258.11
7.19
94.08
Source: USITC and World Trade Atlas, tralac calculations
20
Nam
2.549
0.009
11.613
3.814
8.973
0.37
27.32
Tot ex %
CN imps
365%
8%
67%
630%
150%
160%
2%
3%
8%
7%
0%
25%
231%
89%
222%
8%
20%
11%
187%
19%
11%
15%
30%
0%
123%
Going even further back to 2003, the year that the restrictions seem to be
benchmarked against, regional exports by value were very similar at 126 per cent to
the Chinese imports. This is shown in Table 4c. What is also evident from the three
tables is that exports from Lesotho remained fairly stable, whereas exports from SA
decreased significantly between 2003 and 2004 and again in 2005.
Table 4c: SACU exports to US re Chinese imports, 2003 $million
Exports to USA 2003
Code
CN imp
RSA
Les
Bots
Swaz
61034
13.41
9.231
25.28
4.31
61043
2.22
0.040
0.02
0.02
61045
4.56
0.176
2.34
0.02
0.30
61046
10.76
5.334
32.92
0.05
10.52
6105
12.42
5.734
12.02
0.07
4.84
6106
17.90
4.303
15.75
0.21
6.72
61071
4.47
0.021
61082
6.86
0.492
6111
29.91
0.00
1.65
0.01
1.40
62019
8.50
1.812
62021
5.63
0.057
0.01
62029
3.72
1.321
0.01
0.03
62031
1.02
3.955
62033
10.77
16.338
62034
70.17
52.313
73.38
0.91
14.50
62043
12.62
0.883
0.01
62044
4.98
1.305
0.17
62045
26.13
3.552
2.19
0.01
0.69
62046
62.09
50.548
64.17
1.29
17.96
6205
27.72
2.692
0.85
0.01
3.30
6206
25.10
2.130
0.28
0.43
62113
5.84
0.164
62114
3.75
2.170
0.45
0.05
62121
10.26
0.065
Sub Total
380.81 164.636
231.48
2.60
65.04
Nam
0.59
11.62
1.64
2.61
0.23
0.05
16.73
Tot ex %
CN imps
294%
4%
62%
561%
196%
165%
0%
7%
11%
21%
1%
37%
387%
152%
201%
7%
30%
25%
216%
25%
11%
3%
71%
1%
126%
Source: USITC and World Trade Atlas, tralac calculations
From data in Tables 3a through to 3c we know that the imports from China have
surged over this period, thus for 2003 in particular, the export value ratios would have
been much higher in Tables 4b and 4c, had we related exports to the respective
import years instead of using the 2005 import data as our benchmark to put the
restrictions in perspective. To summarise and update tables 4a through to 4c, table 6
tracks the SACU imports into the US over the last three full years plus an indication
on the right hand column giving the 2006 imports into the US for the year to end of
July (with a comparison set for the 2005-year to date for the same end-of-July
period).
Aggregate imports were stable over 2003 and 2004 before declining in
21
2005. The most recent 2006 data indicates another modest decline for that period.
Exports from Lesotho dominate the table, followed by Swaziland in the most recent
years. South African exports have fallen away.
Table 6: SACU selected clothing exports to USA, $ 000
2003
2004
2005
164,636
83,195
27,029
RSA
2,595
7,192
13,335
Botswana
231,482
258,112
222,835
Lesotho
65,040
94,080
91,289
Swaziland
16,725
27,324
18,863
Namibia
465,756
444,583
356,493
SACU
2005YTD
21,381
4,826
124,076
55,126
11,553
205,409
2006YTD
6,782
8,594
130,695
49,361
9,155
195,432
Source: USITC website
Trade data reconciliation
Trade data for both South Africa and China has been used in this paper. Both sets
are sourced by tralac from the World Trade Atlas (John Brasher), a commercial trade
data supplier in the US. The World Trade Atlas, in turn, sources its data for South
Africa from the South African Revenue Service (SARS) and for China from the China
Customs authorities.
Thus, both sources represent the respective official data
sources for both countries. We would caution readers and note that this type of
analysis is usually fraught with difficulty as sources seldom agree or even come close
despite the intuitive feeling that they should.
For South African/Chinese trade going the other way (i.e., not in the direction that the
Chinese clothing is going from), Sandrey (2006) examined trade data reconciliation
between South Africa and China and found that, as expected with South African
imports into China valued at two and a half times the reported exports from South
Africa to China, there is little coherence in reconciling the trade flows to China.
Some of this is accounted for in the transport costs, as China, along with the great
majority of countries, records transport costs as part of the import value of the goods
upon arrival, while another large difference is that there are almost no reported
exports of platinum and diamonds from South Africa but these are major imports into
China. Much remains unexplained. Note that South Africa is one of the few countries
that values imports at effectively the same (in theory) as export values from the
source country, as the cost of insurance and freight are not included in the import
values at the South African border as in the normal international convention.
22
Figure 11 below looks at the reconciliation between South African imports of HS 61
and HS 62 expressed as a percentage of the South African import data over Chinese
export data for the same lines over the last ten years. Ideally, these ratios should be
in the vicinity of 100 per cent given that transport and related insurance costs are not
included in either exports or imports. Fig 1 shows that this is not the case for the
aggregate data, as only in the most recent period has the ratio reached even 80 per
cent. Either (a) the Chinese exports are over-reported, (b) the South African data
under-reported, or (c) some combination of both is taking place. However, what is
taking place in a relatively consistent manner is the move to convergence from
‘below the line’.
Fig 11: Ratio of RSA imports/Chinese exports
100%
80%
60%
40%
HS 61
20%
HS 62
0%
1996
1998
2000
2002
2004
2005
Source: World Trade Atlas, using SARS and Chinese Customs data.
Even if the value data does not reconcile, the volume data should be more accurate.
Table 7 shows the ratios for each of the restricted lines in HS 61 and HS 62 for both
2004 and 2005. Note that the data is for the restricted lines only (although we have
deleted HS 6212.1 – bras – as China measures these exports in numbers while
South Africa records imports in kilograms), while Figure 11 above is for all HS 61 and
62 trade. Columns 3 and 4 in Table 7 show the average value ratio; column 5 and 6
the average volume ratio; and columns 7 and 8 show the average price ratios. There
is more variation than we would like to see in this table, and especially on the
average values where the ‘unders and overs’ of import volumes should be
neutralised. We can offer no explanation for these differences, although given the
overall figures for values under-reporting at the South African border may be one
possible explanation that is consistent with the data in Table 7.
23
Table 7: Ratios Imp/Exp data, 2004 and 2005
Chinese
Value ratio
Volume ratio
1m $m 05
Code
2004
2005
2004
2005
1
2
3
4
5
6
13.41 61034
56%
114%
84%
112%
2.22 61043
16%
28%
17%
41%
4.56 61045
53%
159%
131%
260%
10.76 61046
69%
91%
78%
119%
12.42
6105
583%
242%
833%
263%
17.90
6106
1977%
1039%
3005%
1112%
4.47 61071
66%
64%
122%
96%
3.04 61082
54%
37%
60%
68%
14.77 61112
177%
198%
120%
151%
9.41 61113
190%
89%
143%
77%
5.73 61119
415%
1449%
281%
711%
8.50 62019
30%
41%
49%
49%
5.63 62021
1087%
653%
973%
2212%
3.72 62029
23%
35%
28%
39%
10.77 62033
166%
149%
255%
278%
70.17 62034
91%
86%
152%
132%
12.62 62043
109%
77%
143%
101%
4.98 62044
164%
128%
246%
159%
26.13 62045
70%
76%
131%
128%
62.09 62046
87%
71%
130%
111%
27.72
6205
80%
84%
108%
126%
25.10
6206
154%
141%
283%
216%
5.84 62113
50%
77%
54%
39%
3.75 62114
43%
90%
29%
61%
366.72 Sub tot
86%
93%
103%
113%
Average price ratio
2004
2005
7
8
66%
102%
95%
67%
40%
61%
89%
77%
70%
92%
66%
93%
54%
66%
91%
55%
148%
131%
133%
116%
148%
204%
61%
83%
112%
30%
82%
90%
65%
54%
60%
65%
77%
76%
67%
81%
54%
60%
67%
64%
74%
66%
55%
66%
94%
198%
150%
149%
83%
82%
Source: World Trade Atlas, tralac calculations
To explore this issue of average value of Chinese exports further we have taken two
of the main HS 62 clothing lines that China exports to South Africa. These are (a)
HS 62034290, men’s or boys’ trousers, breeches, not elsewhere specified (nes), of
cotton (where South Africa was China’s 11th main market in 2005) and HS
62045200, skirts and divided skirts of cotton (where South Africa was China’s 7th
major market).
Figure 12 shows (a) on the left hand scale using the bars the
percentage of each line destined for South Africa. These are both increasing from a
low base in 1995 through to around 3.5 per cent for the skirts in 2005 and around
2 per cent for men’s trousers at the same date. The lines, scale on the right hand
side, show the average price to South Africa expressed as a percentage of the
average Chinese export price to all sources. Both these lines are generally declining
and over the last five years have been a figure around 80 per cent of the global
average. While not conclusive, it is interesting that either China is ‘pricing to market’
for South Africa, there is a degree of product differentiation even at this level, or there
is some other explanation.
24
150%
100%
50%
62045200%
62034290%
62045200 av $
62034290 av $
20
05
20
03
20
0
19
99
19
97
0%
Ratio World/RSA av
price unit
200%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
19
95
% Chines exports to
RSA
Fig 12: Chinese export data
Source: World Trade Atlas
Policy questions
This paper will not go into a detailed analysis of the abilities and competitiveness of
the South African clothing sector, but rather we will leave this issue at the point of
noting that these restraints are being placed upon imports of clothing that South
Africa and, more significantly, the region continue to export to the US on a scale that,
in value terms, is somewhat in balance or even above the Chinese imports into South
Africa in the same aggregate value terms. We acknowledge, of course, that there is
a degree of product differentiation here, and fully support moves to lift the South
African industry into higher-valued production for export rather than trying to compete
against Chinese imports at the lower end of the market segment. This, however,
ignores the fact that South Africa itself is not a developed country, and that given a
wage structure that should reflect this and the protection of a 40 per cent tariff, the
Republic should be able to compete much more actively even against China. It is
likely that a comprehensive analysis would confirm that productivity levels are low
and that is destroying initially competitiveness and ultimately the production sector
itself. If that is indeed the case, a reversion to short-term and ad hoc protectionist
measures is unlikely to rectify the situation and South Africa will pay the ultimate
price for eschewing Asian-style competitiveness measures that have rewarded those
Asian ‘tigers’ on their spectacular development pathways, but instead reverting to
protectionism.
Can the rest of SACU easily export to South Africa? Here, the most likely candidate
is Lesotho, as 4a, 4b and 4c show. Not only is Lesotho very dependent upon exports
25
of clothing, but it is essentially dependent upon the export of a very few specialised
and detailed lines of clothing to the United States. These exports to the US are, in
turn, crucially dependent upon the current derogation under AGOA on the rules of
origin and the associated AGOA tariff preferences to Lesotho. Without these
concessions the future is very bleak, as Lesotho would be unable to trade above the
17.9 per cent tariff that it would face into the US in the absence of these preferences.
Eleven of the top 20 trade lines at the HS 6 level are related to clothing exports, with
either or both of the US and South Africa accounting for almost all of the trade, and
the South African restrictions on Chinese imports over an opportunity to Lesotho to
fill some of this demand that will be created.
In the longer term, labour productivity in Lesotho is generally lower than in other lowcost producers like China, Sri Lanka and India, but this productivity has been
gradually increasing. However, the increase has been slower than the increase in
other competitive countries and not intensive enough to remain internationally
competitive. Lesotho labour cost compares favourably with that of most countries,
but the modern economy cannot be based upon a low wage rate alone. In the (very)
short-term Lesotho’s abilities to take advantage of the window of opportunity may be
limited, as the current work force is nearly back to its historical highs of around
53,000 to 54,000 persons. In the medium-term, there is an opportunity for South
African retailers to source the cheaper lower-end garments from Lesotho as a part of
building a more upscale industry in the Republic as seems to be a stated objective of
the restraints, for South Africa has clearly demonstrated that it is unable to compete
at this end of the market even with a 40 per cent tariff wall. Meanwhile, Lesotho may
have to balance maintaining its current exports to the US even in the face of the end
of the rules of origin derogation against short-term opportunities in the South African
market (and keep in mind that the arbitrary nature of South Africa’s policy despite the
SACU Agreement potentially leaves it vulnerable to more changes to protect the
South African domestic sector), and given the dominance of the Asian and
particularly Chinese interests in Lesotho’s clothing sector, these interests will no
doubt also be eyeing opportunities from Lesotho.
Under the SACU Agreement it should just be a matter of paying the import duties on
the fabric unless the rules of origin (ROO) are a problem. Two factors would seem to
suggest that this should not be the case: (a) clothing imports are already taking
26
place, although data is hard to get on this, and (b) these same exports are going into
the US; and if the SACU ROO is more restrictive than the US ROO, SACU needs to
take a long hard look at its own Agreement, albeit an Agreement that South Africa to
date has not looked at in this instance.
In a wider and more sophisticated analysis, Jensen and Sandrey (2006) examined
the potential impact of a Free Trade Agreement (FTA) between SACU and China
using the Global Trade Analysis Project (GTAP) model, the standard model of choice
for international trade analysts.
While the model is too aggregated to enable a
detailed analysis of the implications of the current restrictions on trade, it nonetheless
does point to some potential consequences for South Africa of a Free Trade
Agreement with China. Overall, South African production in the clothing sector as
defined within GTAP would decline by some 20.3 per cent over the implementation
period, and imports would increase by 23.5 per cent.
Global exports from the
Republic would decline by 4.9 per cent, but the market price for consumers would
decline by 2.1 per cent. Note that this model operates off a database that would not
fully reflect the large increases in imports from China over the last two years, so it is
probable that a significant percentage of the adjustment in imports has already taken
place.
Also, any changes in the BLNS clothing sectors do not show up, as, of
course, currently they are based upon external exports outside SACU. In addition,
one scenario model looked at the impact of a WTO Doha Round Agreement that
applied a 30 per cent cut in tariff rates for SACU imports, and this suggested an
outcome for the clothing sector that was almost identical with an FTA with China
reinforcing the need to consider trade policy in a broader context than has been
applied with these current restrictions. In particular, the implementation of an FTA
with China would bring modest but positive benefits to South Africa and the BLNS
countries, highlighting that trade policy is about the trade-offs between a few very
vocal citizens in protected sectors set against the vast majority in the rest of the
economy who pay the price for that protection.
27
References
Jensen, H. and Sandrey, R. 2006. A possible SACU/China Free Trade Agreement
(FTA): Implications for the South African Manufacturing Sector. tralac Working Paper
No 8/2006, July 2006. [Online]. Available: www.tralac.org, under ’Publications’.
Sandrey, R. 2006. South African Merchandise Trade with China. tralac Working
paper No 3/2006, March 2006. [Online]. Available: www.tralac.org, under
’Publications’.
28
Annex: Restrictions as originally posted
ITEM
5208
5209
5210
5514
6005
6006
6303
6103.4
6104.3
6104.5
6104.6
6105
6106.6
6107.1
6108.2
6111
6201.9
6202.1
6202.9
6203.1
6203.3
6203.4
6204.3
6204.4
6204.5
6204.6
6205
6206
6211.3(90)
6211.4(90)
6212.1
DESCRIPTION
Woven cotton fabric,>85 %
cotton,100 or 200g/m2
Woven cotton fabric,>20g/m2
Woven cotton fabric,85%
cotton+manmade fibre
>200g/m2
Woven fabrics of polyester +
cotton >170g /m2
Warp knit fabrics
Other knitted or crocheted
fabrics
Curtains
Men’s knitted trousers
Women’s knitted jacket
Women’s knitted skirts
Women’s knitted trousers
Men’s knitted shirts
Women’s knitted blouses
Men’s knitted underpants
UNIT
Kg
2006 *
2,635,859
2007
3,004,879
2008
3,425,562
Kg
Kg
4,400,371
457,151
5,280,445
539,438
6,336,535
636,537
Kg
1,495,711
1,764,939
2,082,628
Kg
Kg
547,532
2,372,788
635,137
2,704,978
737,759
3,083,675
Kg
No
No
No
No
No
No
No
4,432,298
4,281,423
808,896
3,147,035
5,463,905
4,940,906
9,011,962
9,112,087
4,778,018
4,666,751
881,696
3,430,268
5,955,657
5,385,587
9,823,039
9,932,175
5,150,703
5,086,759
961,049
3,738,992
6,491,666
5,870,290
10,707,112
10,826,071
Women’s knitted panties
Babies’ knitted garments
Men’s woven windbreakers
Women’s woven overcoats
Women’s woven
windbreakers
Men’s woven suits
Men’s woven jackets
Men’s woven trousers
Women’s woven jackets
Women’s woven dresses
Women’s woven skirts
Women’s woven trousers
Men’s woven shirts
Women’s woven blouses
Men’s woven tracksuits
6211.31.90
6211.32.90
6211.33.90
6211.39.90
Women’s woven tracksuits
6211.41.90
6211.43.90
6211.49.90
Bras
No
No
No
No
No
30,384,254
1,557,721
1,920,567
1,449,691
780,900
33,118,836
1713,493
2,070,371
1,594.660
874,608
36,099,532
1,188,842
2,231,860
1,754,126
979,561
No
No
No
No
No
No
No
No
No
Kg
254,855
2,940,367
24,759,141
3,204,244
1,059,326
8,304,100
22,527,103
13,716,497
10,189,257
961,401
295,632
3,205,000
26,690,354
3,524,668
1,165,259
8,951,820
24,284,217
14,950,981
11,411,968
1,057,541
342,934
3,493,450
28,772,201
3,877.135
1,281,785
9,650.062
26,178,386
16,296,570
12,781 404
1,163,295
Kg
232,098
259,949
291,143
Kg
667,184
747,246
836,916
29
Working Papers
2002
US safeguard measures on steel imports: specific implications
by Niel Joubert & Rian Geldenhuys.
WP 1/2002, April
A few reflections on Annex VI to the SADC Trade Protocol
by Jan Bohanes
WP 2/2002, August
Competition policy in a regional context: a SADC perspective on trade investment & competition issues
by Trudi Hartzenberg
WP 3/2002, November
Rules of Origin and Agriculture: some observations
by Hilton Zunckel
WP 4/2002, November
2003
A new anti-dumping regime for South Africa and SACU
by Stuart Clark & Gerhard Erasmus
WP 1/2003, May
Why build capacity in international trade law?
by Gerhard Erasmus
WP 2/2003, May
The regional integration facilitation forum: a simple answer to a complicated issue?
by Henry Mutai
WP 3/2003, July
The WTO GMO dispute
by Maxine Kennett
WP 4/2003, July
WTO accession
by Maxine Kennett
WP 5/2003, July
On the road to Cancun: a development perspective on EU trade policies
by Faizel Ismail
WP 6/2003, August
GATS: an update on the negotiations and developments of trade in services in SADC
by Adeline Tibakweitira
WP 7/2003, August
An evaluation of the capitals control debate: is there a case for controlling capital flows in the SACU-US free trade
agreement?
by Calvin Manduna
WP 8/2003, August
Non-smokers hooked on tobacco
by Calvin Manduna
WP 9/2003, August
Assessing the impact of trade liberalisation: the importance of policy complementarities and policy processes in a
SADC context
by Trudi Hartzenberg
WP 10/2003, October
An examination of regional trade agreements: a case study of the EC and the East African community
by Jeremy Everard John Streatfeild
WP 11/2003, October
30
Reforming the EU sugar regime: will Southern Africa still feature?
by Daniel Malzbender
WP 12/2003, October
2004
Complexities and inadequacies relating to certain provision of the General Agreement on Trade in Services
by Leon Steenkamp
WP 1/2004, March
Challenges posed by electronic commerce to the operation and implementation of the General Agreement on
Trade in Services
by Leon Steenkamp
WP 2/2004, March
Trade liberalisation and regional integration in SADC: policy synergies assessed in an industrial organisation
framework
by Martine Visser and Trudi Hartzenberg
WP 3/2004, March
Tanzania and AGOA: opportunities missed?
by Eckart Naumann and Linda Mtango
WP 4/2004, March
Rationale behind agricultural reform negotiations
by Hilton Zunkel
WP 5/2004, July
The impact of US-SACU FTA negotiations on Public Health in Southern Africa
by Tenu Avafia
WP 6/2004, November
Export Performance of the South African Automotive Industry
by Mareika Meyn
WP 7/2004 December
2005
Textiles and clothing: Reflections on the sector’s integration into the post-quota environment
by Eckart Naumann
WP 1/2005, March
Assessing the Causes of Sub-Saharan Africa's Declining Exports and Addressing Supply-Side Constraints
by Calvin Manduna
WP 2/2005, May
A Few Reflections on Annex VI to the SADC Trade Protocol
by Jan Bohanes
WP 3/2005, June
Tariff liberisation impacts of the EAC Customs Union in perspective
by Heinz - Michael Stahl
WP4/2005, August
Trade facilitation and the WTO: A critical analysis of proposals on trade facilitation and their implications for
African countries
by Gainmore Zanamwe
WP5/2005, September
An evaluation of the alternatives and possibilities for countries in sub-Saharan Africa to meet the sanitary
standards for entry into the international trade in animals and animal products
by Gideon K. Brückner
WP 6/2005, October
Dispute Settlement under COMESA
by Felix Maonera
WP7/2005, October
31
The Challenges Facing Least Developed Countries in the GATS Negotiations: A Case Study of Lesotho
by Calvin Manduna
WP8/2005. November
Rules of Origin under EPAs: Key Issues and New Directions
by Eckart Naumann
WP9/2005, December
Lesotho: Potential Export Diversification Study: July 2005
by Ron Sandrey, Adelaide Matlanyane, David Maleleka and Dirk Ernst van Seventer
WP10/2005, December
African Member States and the Negotiations on Dispute Settlement Reform in the World Trade Organization
by Clement Ng’ong’ola
WP11/2005, December
The ability of select sub-Saharan African countries to utilise TRIPs Flexibilities and Competition Law to ensure a
sustainable supply of essential medicines: A study of producing and importing countries
byTenu Avafia, Jonathan Berger and Trudi Hartzenberg
WP12/2006, August
Intellectual Property, Education and Access to Knowledge in Southern Africa
by Andrew Rens, Achal Prabhala and Dick Kawooya
WP13/2006, August
The Genetic Use Restriction Technologies, Intellectual Property Rights and Sustainable Development in Eastern
and Southern Africa
by Patricia Kameri-Mbote and James Otieno-Odek
WP14/2006, August
2006
Agriculture and the World Trade Organization – 10 Years On
by Ron Sandrey
WP1/2006, January
Trade Liberalisation: What exactly does it mean for South Africa?
by Ron Sandrey
WP2/2006, March
South African merchandise trade with China
by Ron Sandrey
WP3/2006, March
The Multifibre Agreement – WTO Agreement on Textiles and Clothing
by Eckart Naumann
WP4/2006, April
The WTO – ten years on: trade and development
by Catherine Grant
WP5/2006, May
th
A review of the results of the 6 WTO Hong Kong Ministerial Conference – Considerations for African, Caribbean
and Pacific (ACP) Countries
by Calvin Manduna
WP6/2006, June
Trade Liberalisation: What exactly does it mean for Lesotho?
by Ron Sandrey , Adelaide Matlanyane and David Maleleka
WP7/2006, June
A possible SACU/China Free Trade Agreement (FTA): Implications for the South African manufacturing sector
by Hans Grinsted Jensen and Ron Sandrey
WP8/2006, July
Ecolabels and fish trade: Marine Stewardship Council certification and the South African hake industry
by Stefano Ponte
WP9/2006, August
32
South African Merchandise Trade with India
by Ron Sandrey
WP10/2006, August
Trade Creation and Trade Diversion Resulting from SACU trading Agreements
by Ron Sandrey
WP11/2006, August
The ability of select sub-Saharan African countries to utilise TRIPs Flexibilities and Competition Law to ensure a
sustainable supply of essential medicines: A study of producing and importing countries
byTenu Avafia, Jonathan Berger and Trudi Hartzenberg
WP12/2006, August
Intellectual Property, Education and Access to Knowledge in Southern Africa
by Andrew Rens, Achal Prabhala and Dick Kawooya
WP13/2006, August
The Genetic Use Restriction Technologies, Intellectual Property Rights and Sustainable Development in Eastern
and Southern Africa
by Patricia Kameri-Mbote and James Otieno-Odek
WP14/2006, August
Initiation of WTO Trade Disputes by the private sector – need for SADC/COMESA countries to develop national
mechanisms.
by Felix Maonera
WP15/2006, October
Trade Briefs
2002
Cost sharing in international dispute settlement: some reflections in the context of SADC
by Jan Bohanes & Gerhard Erasmus.
TB 1/2002, July
Trade dispute between Zambia & Zimbabwe
by Tapiwa C. Gandidze.
TB 2/2002, August
2003
Non-tariff barriers: the reward of curtailed freedom
by Hilton Zunckel
TB 1/2003, February
The effects of globalization on negotiating tactics
by Gerhard Erasmus & Lee Padayachee
TB 2/2003, May
The US-SACU FTA : implications for wheat trade
by Hilton Zunckel
TB 3/2003, June
Memberships in multiple regional trading arrangements : legal implications for the conduct of trade negotiations
by Henry Mutai
TB 4/2003, August
2004
Apparel Trade and Quotas: Developments since AGOA’s inception and challenges ahead
by Eckart Naumann
TB 1/2004, March
Adequately boxing Africa in the debate on domestic support and export subsidies
by Hilton E Zunckel
TB 2/2004, July
33
Recent changes to the AGOA legislation
by Eckart Naumann
TB 3/2004, August
2005
Trade after Preferences: a New Adjustment Partnership?
by Ron Sandrey
TB1/2005, June
TRIPs and Public Health: The Unresolved Debate
by Tenu Avafia
TB2/2005, June
Daring to Dispute: Are there shifting trends in African participation in WTO dispute settlement?
by Calvin Manduna
TB3/2005, June
South Africa’s Countervailing Regulations
by Gustav Brink
TB4/2005, August
Trade and competitiveness in African fish exports: Impacts of WTO and EU negotiations and regulation
by Stefano Ponte, Jesper Raakjær Nielsen, & Liam Campling
TB5/2005, September
Geographical Indications: Implications for Africa
by Catherine Grant
TB6/November
2006
Southern Africa and the European Union: the TDCA and SADC EPA
by Catherine Grant
TB1/2006, May
Safeguarding South Africa’s clothing, textile and footwear industries
by Gustav Brink
TB2/2006, May
Agricultural Safeguards in South Africa
by Gustav Brink
TB3/2006, May
The WTO Trade Policy Review Mechanism: application and benefit to SACU
by Paul Kruger
TB4/2006, June
Amendment to TRIPs agreement: consensus or dissension?
by Madalitso Mutuwazovu Mmeta
TB5/2006, September
34