Agoa gains will vanish when Chinese get free rein
October 24, 2004
By Margie Inggs
Durban - The South African clothing and textile industries could lose thousands of jobs and the benefits gained from the US's African Growth and Opportunity Act (Agoa) if World Trade Organisation (WTO) talks on scrapping textile and apparel quotas do not stop China from flooding world markets.
According to Evelyn Iritani, a Los Angeles Times staff reporter, the WTO recently agreed to explore growing concerns that lifting restrictions at the end of the year could cost 30 million jobs worldwide.
An outcry from 96 trade groups in 54 apparel and textile producer countries, many of them least developed nations, has persuaded the trade group to re-examine its position.
Jack Kipling, the president of the Clothing Trade Council of SA, said this week that China's dominance of world markets would affect all countries.
Even a coalition of six US apparel, textile and fibre trade associations has filed an application for urgent relief with the US government, which usually supports the WTO's decision to proceed with the quota phaseout.
While the US has safeguard measures it can apply against China, it must first specifically prove damage or potential damage to its own industries.
Kipling said that if the application was successful, it would put a temporary hold on Chinese imports, which would then be limited to growing at a rate of 7 percent a year. But if the application failed, he warned, no other country would be able to compete with China.
He said that as a result, the free trade agreement being negotiated between Southern African Customs Union (Sacu) countries and the US "would not have significant value".
Sacu is made up of South Africa, Botswana, Lesotho, Namibia and Swaziland.
The free trade agreement is intended to replace Agoa when it expires in 2015. The act was passed in 2000 and in the following two years exports from South Africa to the US grew 151 percent.
"While exports slowed considerably during 2003 due to the strengthening of the rand, they were still up in dollar terms, but by November 2004 they will have dropped by 29 percent year on year," said Kipling.
"The main problem confronting South Africa is the shortage of Agoa-eligible fabrics, which must either be sourced in South Africa or from the US.
"Exports to the US have been limited, and South Africa has lost market share because it has had to rely solely on its own fabric."
Kipling said that had South Africa had access to third-country fabrics, the country would not have felt the downturn.
"On the other hand, Lesotho and Swaziland, which are also rand-denominated countries, have not been affected," he said.
As recently as Friday, Mauritius was awarded lesser developed country status, giving it access to third-country fabrics for a year.
"We must send a clear message that we must either have access to fabrics on demand or forget exports," Kipling said.
South Africa is now the only country that still has to use its own or US fabric. Industry bodies have been urging the government to push for duty-free access if the fabric is from a Sacu country. |
