In a new bid to avert a damaging trade dispute with China over cheap textile imports, the trade and industry department is planning a bilateral trade agreement with Beijing to help SA limit the damage being inflicted on the domestic rag trade.

SA's textile industry has been badly damaged by Chinese imports, which grew 80% in 2001-02, 196% in 2002-03 and 88% in 2003-04, leading to an estimated 36000 job losses over the past two years.

The surge in imports has led to the closure of factories and reduced employment in the industry from 300000 in 1996 to less than 200000 today.

The new moves are likely to spark opposition from trade unions and could scuttle delicate negotiations around a rescue plan for the industry.

The rescue plan is the result of negotiations between senior government ministers and the tripartite alliance and involved strong protectionist measures against China, including the imposition of quotas, which are allowed under World Trade Organisation (WTO) rules, against Chinese imports. The WTO allows imposing safeguards for a maximum of three years when there has been a surge in imports.

The department's new strategy suggests government now wants to go it alone in revitalising the rag trade.

The new approach has been prompted by fears that imposing quotas or import duties against China might incite tit-for-tat sanctions on SA exports such as iron ore and chemicals.

Department officials have been engaged in a flurry of visits to China over the past few weeks in a bid to thrash out a deal.

It is hoped the deal would resemble that reached recently between the European Union and China to unblock stockpiles of Chinese goods warehoused at European ports.

The US and other countries are also trying to avert a clothing and textile trade war with China by negotiating an agreement outside the WTO framework.

Tshediso Mantona, acting director-general for trade and industry, said yesterday that government wanted to protect thousands of jobs in the steel and chemicals sectors.

These export industries would be harmed by Chinese retaliatory action, he said.

"China is determined to protect its hard-won rights against trade harassment. It is likely to react if anyone acts in a way that seems hostile to them.

"It is very clear that anyone who does this will attract the wrath of the People's Republic.

"If we put up barriers which damage China they will hurt us. We could shoot ourselves in the foot in a big way. We are trying to draw the Chinese into a solution. They are fully aware of the crisis we are facing in the (textile) sector, and aware that we are thinking of invoking special safeguards."

Government officials appear to be banking on goodwill that exists from historical ties with China, which supported the liberation struggle. However, it is understood that previous efforts by government to negotiate a bilateral deal with China over textiles have failed.

Unions have argued that any intervention in the industry would be pointless in the absence of a comprehensive industrial strategy. Mantona agreed that a long-term survival strategy would entail the industry's "total transformation".

But government moves to negotiate directly with China are likely to be read by labour as a repudiation of the approach agreed to by the ruling alliance's task team that called for the formulation of an industrial strategy.

Government was committed to supporting the sector, Mantona said. But support strategies such as the duty credit certificate scheme, implemented as a temporary measure to stem job factory closures and job losses, had been corrupted and had created a loophole for imports. He said government, business, and labour had failed to honour agreements made at an industry summit in 2000.

Latest AGOA Trade Data currently available on AGOA.info


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 AGOA.info include: (click each link to view)