October 2009
PRESS RELEASE:
SACTWU WELCOMES INCREASE IN DUTIES ON CLOTHING PRODUCTS
The SA Clothing & Textile Workers' Union (SACTWU) welcomes the increase in import duties on certain clothing products, published in today's Government Gazette. The increase follows an application to the International Trade Administration Commission (ITAC) by SACTWU, submitted in mid-May this year.
In almost all cases, the import duties on these clothing products have been increased from 40% to 45% - the upper level that South Africa has bound with the World Trade Organisation. The increased duties are effective as from today.
SACTWU welcomes the additional protection afforded to local jobs and industrial capacity, especially while the industry is in the midst of an extensive restructuring exercise. Increased duties, like other trade measures, will help to slow down imports and create some space for manufacturers to restructure and ensure the long-term viability of the industry.
While a wholesale increase of all clothing tariffs would have provided the widest assistance to the industry, avoided substitution of products by importers and made the tasks of customs control easier, SACTWU only applied for an increase in the duties of 35 clothing products in an effort to limit the use of trade measures to the absolute minimum.
This increase in duties is part of South Africa's efforts to deal with the impact of the global economic crisis as set out in the Framework for South Africa's Response to the International Economic Crisis, agreed at NEDLAC in February this year. The Framework calls for "... robust use of accepted trade measures to ensure that the crisis does not cause job losses in the real economy..."
This increase in duties is a welcome reverse in government policy, which previously (when Trevor Manual was still Minister of Trade & Industry) reduced tariffs faster and to lower levels than what our WTO obligations required.
International examples have shown South Africa can only successfully grow, create jobs and address alarming levels of inequality and poverty by protecting and growing its manufacturing industry and this increase in duties will assist in this regard.
The union leadership, on behalf of its 85 000 members, would like to extend its appreciation to the Department and Ministry of Trade & Industry, ITAC and the SA Revenue Services for fast-tracking this application, as per the commitment contained in the Framework Response.
Issued by Andre Kriel, SACTWU General Secretary.
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Pricier clothes to hit SA
2009/10/12 05:54:00 PM Jana Marais
Johannesburg - The decision to raise the import duty on certain clothing products by between 5% and 25% will push up consumer prices and encourage more illegal imports rather than protecting the industry, critics have said.
Import duty of 45% as against the original 40% has been levied on clothing items like jackets, trousers, dresses, shirts, blouses, underwear, T-shirts, jerseys, socks, baby clothes and track suits since Friday. On certain socks, the rate has been hiked from 20% to 45%.
Clothing trade union Sactwu, which applied for the increase in May, welcomed the decision by the International Trade Administration Commission (Itac) because it gave the struggling industry greater protection.
Sactwu said this would help lower imports and create room for manufacturers to restructure and ensure the industry's long-term sustainability.
Since January nearly 10 000 jobs have been lost in the clothing, shoe, textile and leather industries and 23 companies have been forced to shut down.
About 58 000 people are employed in the clothing industry at present, considerably fewer than the approximately 150 000 a decade ago, according to the Itac report.
However, retailers say the higher import duty will do nothing to make local manufacturers more competitive. It will merely be another cost in the value chain, part of it presumably being carried over to the consumer, said Michael Lawrence, CEO of the National Clothing Retail Federation of South Africa (NCRF).
"South Africa has some of the highest import duties in the world. The industry enjoys massive protection and we still can't be competitive. What the increase does is to add another 5% incentive to illegal imports," Lawrence said.
According to research by the South Africa Revenue Service (Sars), about half of South Africa's clothing imports are illegal.
Tax evasion occurs through imports not being declared at all, entering excessively low false prices on invoices or by reshipping products' origin from, say, China to Europe because import duties there are lower.
Though "considerably more work" is being done now to try to track down illegal imports, it's still not nearly enough, said Sactwu researcher Etienne Vlok.
A dedicated task team has been appointed by Sars, apparently with funding of about R20m, to track down illegal importing. Several raids have also been carried out recently, and 400 tonnes of illegal imports have been seized in Durban.
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