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South Africa Needs Sober Plan on Textiles

Published date:
Monday, 27 June 2005

South African policy makers must decide on the appropriate approach to take against the surge of cheap Chinese textile and clothing imports, but should steer away from adopting measures that could be detrimental to free trade, Jose Manuel Barroso, the president of the European Commission, said on Friday.

Many local clothing and textile manufacturers are facing extinction due to the proliferation of low-cost products from China, which has resulted in factory closures and massive job losses in the labour intensive sector.

Barroso, who was in the country for a two-day visit, said the situation required a sober approach and South Africans had to seek a suitable solution for them.

"South Africa has to decide what to do ... We [the EU] are in favour of free trade, but at the same time when there is a disruption of the market you need to respond," said Barroso. "The way we dealt with the issue of China was to look at the possibility of using safeguards, but they have voluntarily decided to curb their products into the EU."

Confronted with the massive increase in Chinese imports in its domestic market, the EU responded by putting pressure on the Asian giant to reduce its exports to Europe.

The EU also threatened to use safeguards to curb the growth of Chinese imports. As a result, earlier this month, China and the EU struck a deal to limit imports of Chinese textiles into Europe until the end of 2008.

Since the end of the global textile quotas on January 1 - which shielded world markets from Chinese products - there has been an acceleration of cheap Chinese exports, which have ravaged small scale textile - and clothing - producing countries.

Domestically, manufacturers and unions have been clamouring for the government to apply import safeguards, which the government supports but argues is a short-term solution.

Government officials have stated on a number of occasions that local producers must switch from large - scale production to niche fashion and design products to improve their access to local and global markets.

Highly industrialised countries, on the other hand, have urged China to float its currency, the yuan, in the hope that it would appreciate, making its exports relatively more expensive and therefore less competitive.

But economists believe that a revaluation of the yuan will give little reprieve to local textile and clothing producers as China's competitiveness is firmly rooted in its cheap labour and huge economies of scale.

Barroso also said the free trade deal, known as the trade, development and co - operation agreement, that the EU and South Africa signed in 1999 needed to be extended to include services, investment and government procurement.

"A new agreement between the EU and South Africa, with deeper commitments in areas such as services, investment or government procurement, will not only serve as an institutional building block into southern Africa, but will also provide greater economic and political stability," said Barroso.

“AGOA Latest AGOA Trade Data currently available on

Click here to view a sector profile of South Africa’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.

Other regularly updated trade statistics on include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.

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