An agreement between China and South Africa to limit Chinese clothing and textile imports has brought mixed reaction with labour welcoming the opportunity to rebuild the industry and opposition party saying it will bring price increases.

New restrictions on Chinese textile and clothing imports will have five major retailers scrambling to make up the stock shortfall ahead of Christmas. As a result, shop shelves are likely to be empty or laden with products that are considerably more expensive than previously.

The opposition party Democratic Alliance said it would ask the Minister of Trade and Industry whether concerns of the clothing and textile retail industry had been considered, as well as the effects for the consumer and for employment.

The restrictions in 31 of the 36 clothing and textile classifications which comprise 200 product types an most apparel items might help salvage an ailing local manufacturing industry.

But it will undoubtedly mean substantially higher costs for consumers and retail job loses, according to some of the major retailers.

Backed by the Congress of SA Trade Unions (Cosatu) of which it is an affiliate, the SA Clothing and Textile Workers' Union (Sactwu) said on Monday that 55,000 new jobs could be created.

"We need to use the space created to ensure we make our factories state-of-the-art and improve training of workers on a scale that will develop South Africa into a world-class producer," said general-secretary Ebrahim Patel.

"Over the past four years, the local fashion manufacturing industry has lost approximately 67,000 jobs, largely as a result of a surge of imports from China," said Patel.

"Over the same period, the five big retailers have recorded 18.1 billion rand (2.52 billion dollars) in pre-tax profits. It is now time for retailers to work with the local manufacturing industry to place the country and employment before profits."

According to Cosatu spokesman Patrick Craven, quotas will raise prices for the consumer if retailers "try to maintain the excessive levels of profits that they have enjoyed through importing cheap Chinese goods and then selling them with a big mark-up".

Sactwu's Patel added that the vast volumes of imports from China have had a devastating impact, with factory closures in the poorest parts of the country such as Dimbaza in the Eastern Cape, which have become industrial ghost towns.

"Even the United States, the European Union and Brazil had quotas imposed on Chinese imports, even though they had not yet been as adversely affected by imports as those in South Africa.

On the other hand, the DA said "firing off trade restriction like buckshot" could lead to price increases of 20 to 25 percent as well as stock shortages over the coming festive season, according to industry analysts.

Trade and Industry spokesman Pierre Rabie suggested a targeted approach that made assertive use of the more positive options provided by the World Trade Organization (WTO) framework.

Recommendations included, firstly, obtaining a commitment from China to assist in supporting South Africa's local textiles and clothing firms through comprehensive adjustment packages.

These packages should facilitate restructuring and reorientation of firms to identify and service niche markets successfully, Rabie said. "This would certainly signify a willingness to encourage the involvement of the Chinese in our economy."

Secondly, the government should clearly assert its willingness to invoke WTO safeguards against dumping if it was necessary.

"It should also explore the possibility with China of setting a minimum value on items of clothing that may be exported here without restraint," he said.

Thirdly, together with China, the government could investigate the WTO-sanctioned option of limiting the extent to which China may increase its annual exports to South Africa to no more than 7.5 percent.

The China-South African agreement follows more than a year's negotiations and was first initialed in June by visiting Chinese Premier Wen Jiabao and President Thabo Mbeki.

It sets quantitative targets on specified clothing and textile products and will be effective from next month to the end of 2008.

Source: Xinhua