China’s voluntary export restraint fails to materialise

Textile industry gets no answers
ALAN PEAT
THE SUPPOSED offer from China of a voluntary restraint on the growing flood of exports of cheap textiles and clothing to SA seems to have got lost in a political quagmire. The exports are still growing apace at a rate of around 22% a year, and undervaluation of these imports to SA to escape duty appears to be losing the fiscus more than a billion rand a year, according to Brian Brink, executive director of the Textile Federation. And, with the SA government having apparently rejected safeguards as a means of stemming the ‘tsunami’ of Chinese imports, the only protection now for the embattled SA industry is to follow the anti-dumping procedure, he told FTW. “We’ve been trying to get more information on China’s offer of voluntary restraint from minister of trade and industry, Mandisi Mpahlwa,” said Brink. “But we’ve had no reply, and it’s very frustrating.” This after president Thabo Mbeki confirmed a potential inter-governmental deal in his State of the Nation speech. But this has been followed by a lot of verbal ducking and diving around the issue from other government sources, and Brink said there was a suggestion in government circles that Mbeki’s speech writer might have been a trifle pre-emptive when composing that section of the address. “One thing’s sure,” he said, “we’ve given up on safeguards. We applied for safeguards on a range of products last August and September, but have heard nothing. “We believe it was politically stopped.” So the SA textile and clothing sectors are having to change track, and focus on anti-dumping. “Although it’s easier to place safeguards, and initially anti-dumping actions are a lot of work, this route offers much longer-lasting protective measures,” said Brink. But what is happening with the cheap Chinese exports to SA that are causing all this fuss? “Well, for a start, they’re growing at about 22% a year,” Brink told FTW, “with SA customs figures showing a total of R4-billion of imports from China in 2004, and this growing to R4.9-bn in 2005.” But the federation cross-check against the Chinese customs record of exports to SA showed a glaring discrepancy. They had a total of R5.49-bn in 2004 and R6.8-bn last year. “The difference, I suggest, is a matter of undervaluation by SA importers to escape duty and VAT,” Brink said. The federation thinking is that the 13% export incentive from the state government in China could indicate that the Chinese figures are closer to the truth, and the only reason left for any discrepancy is undervaluation at this end. “That’s a massive amount of money the fiscus just isn’t collecting,” said Brink – adding that the undervaluation is illegal “but very difficult to track down”.