Textile industry gives interim incentive scheme the nod

ALAN PEAT THE INTERIM scheme – due to replace the export incentives in the duty credit certification scheme (DCCS) at the end of March – appears to fit the bill for the country’s clothing and textile industries, Brian Brink, chief executive of the Textile Federation told FTW. Similar to the sector exclusive motor industry development programme (MIDP), the DCCS allows exporters credit certificates on exports which can be exchanged for duty rebates on imports. It has been a crutch helping the SA industry to stand up to crippling competition from cut-price producers, particularly in Asia, and presently compounded by the end of the quota restrictions on Chinese textile and clothing exports. But it met with objection last year, when the scheme was challenged by the US and the EU on the grounds that it contravened World Trade Organisation (WTO) trade rules. Letters of query were sent from both Washington and Brussels to WTO headquarters in Geneva – but SA was slow to react to the challenge, according to Brink. A major problem was that no notice was given to the WTO that SA intended to drop the DCCS this year. “We were also guilty of not letting them know that a two-year interim scheme was to replace it,” said Brink, “and a longer term programme to be devised for the SA textile and clothing industries.” He now feels that many of the flaws in the DCSS have been corrected in the new scheme. The department of trade and industry (DoT&I) has extended the benefits – and now allows smaller clothing and textile exporters to take full advantage of the programme. From April 1, all exporters will be able to claim back 25% of their earnings for clothing exports, 17.5% for household textiles, 12.5% for fabric and 8% for yarn. For the clothing exporters, the original level when the DCCS first came into vogue was 35%, but - with the agreed downscaling each year, like the MIDP - the ongoing 25% figure is fixed at the same level as for this past year. However, while the level for the bigger exporters (Level 2) comes down, it goes up for smaller Level 1 exporters. Previously, these exporters - whose export sales comprised less than 15% of their total revenue - were limited to claiming back 15% of their export earnings in the form of duty credit certificates. But, from April 1, the 25% is applicable to ALL exporters. Morne Gentle of PricewaterhouseCoopers’ customs and international trade group told FTW that there were other amendments. One, he added, was discontinuing performance assessments, and a second was changes to the training requirements.