Protectionist concerns over Wal-Mart deal ‘too late’

As the issue of trade protectionism threatens to derail the bid by American cut-price retailer Wal-Mart to secure a controlling stake in Massmart, Brian Brink of the Textile Federation believes it’s too late to be discussing the issue of protectionism. “South African industry has suffered through 10 years of cheap Chinese imports and the prevalence of illegal and under-valued products in the market,” he told FTW. This as the country’s largest workers’ federation, the Congress of South African Trade Unions (Cosatu), has called on the Competition Commission Tribunal to reject the deal. “We have always argued that there should be protection for developing countries because we don’t operate in a fair market. That is why we are opposed to the deal,” said Cosatu’s Patrick Craven. Special conditions should not be attached to Wal-Mart if they don’t apply to other retailers, he added. He called on the Tribunal to ensure that local retailers would benefit if the deal went ahead. If necessary, he said legal measures should also be put in place to ensure that Wal-Mart’s entry into the country would be on the basis of promoting economic development instead of destroying it. Craven said Cosatu and its partners in the Anti-Wal-Mart Coalition would “organise a mother of all boycotts against Massmart” if the deal went ahead without safeguards. Opposition to the deal also came from several government departments concerned about job losses and the protection of local industries. Apart from Cosatu, another four trade unions asked the Tribunal to cancel the deal unless there were conditions attached relating to job protection and protection of local industries. “We have had a tsunami of imports from China, Wal-Mart may aggravate the industry further but it won’t get any worse,” said the Textile Federation’s Brink. He said government could adopt a protectionist stance regarding domestic trade but would then face the consequences of international bodies such as the World Trade Organisation. Wal-Mart, which operates around the world in several countries, including Canada, Brazil, China, Chile, Japan and Mexico, has its eye on entering emerging markets, especially South Africa and the sub- Saharan region. One of its key rivals, Shoprite Checkers, has also opposed the deal, saying it would leave them with no option but to seek cheaper imports if the Wal-Mart deal was approved. Gerhard Ackerman, Shoprite’s director of food buying and imports, said for the retailer to protect its image in South Africa, where it is known for cheaper prices, there would be no choice but to import. Coca-Cola SA president, Bill Egbe, believes that Wal-Mart’s investment in South Africa will create opportunities in the retail sector. “I don’t foresee anything changing if the merger is approved. Wal-Mart is a big global partner and we have a strong business relationship with them; we are used to doing business with them.”