South Africa: Textile Tariff Plan a Boost for Factories

THE trade and industry department's plan to cut tariffs on key inputs into strategic industrial sectors has got under way in earnest, with its International Trade Administration Commission (Itac) announcing the review of tariffs on textiles, which should help lower costs for SA's embattled clothing manufacturers.

The review was published in Friday's Government Gazette, along with an announcement of a review on aluminium and chemicals tariffs, in line with the industrial policy's aim to reduce the cost of inputs in a bid to bolster downstream beneficiation.

The textile tariff review is of particular importance as it could bring some relief to the beleaguered clothing manufacturers that have been battling to survive an influx of cheap imports.

But as Itac embarks on the review, commentators noted that a long-awaited customised sector programme, intended to provide a comprehensive approach to address the woes of the clothing and textile industry, has yet to be implemented. Proceeding with the tariff review in the absence of the sector programme was opting to "pick the low-hanging fruit", an industry stakeholder said.

Clothing Trade Council of SA president Hassim Randeree said the removal of tariffs on textiles would be a significant step to help the clothing industry become internationally competitive.

"There will be some unhappiness in the textile sector, but you have to weigh up (the textile industry's interests) with the desire to create jobs."

He said the state "for once is giving (clothing manufacturers) a chance". But he said he rued the piecemeal introduction of measures to help the industry while the sector programme was gathering dust in the "archives of the trade and industry department".

B&M Analysts' Justin Barnes, who has been closely involved with programmes to help turn the sector around, agreed. Barnes, however, said the tariff review presented an opportunity to rationalise tariffs.

While local textile mills enjoy an effective protection rate of 22%, manufacturers complain that they are too inflexible, unable to do short runs on product lines or produce the variety required by the clothing industry. Import duties were levied on a wide range of textiles not manufactured in SA -- putting a needless burden on clothing manufacturers who are taxed on fabrics they have no choice but to import.

But the review could be challenged by other members in the Southern African Customs Union with interests in the sector, while union resistance may also be expected. Textile Federation executive director Brian Brink cautioned that the review should be tackled "sensibly and not too narrowly", as it could have sweeping implications for related industries, such as farming, which provide some raw material inputs.

South African Clothing and Textiles Union secretary-general Ebrahim Patel was unavailable for comment yesterday, but the union represents a significant chunk of the 50000-strong workforce in the textiles sector. While tariff elimination could be in the interest of Sactwu's membership , the union is likely to oppose a reduction of tariffs on textiles that are produced in SA.