1 current challenges for the s.a. textile industry presented to: portfolio committee on trade &...
TRANSCRIPT
1
Current Challenges for theS.A. Textile Industry
Presented to:Portfolio Committee on Trade & Industry
19 Oct 2005By The Textile Federation
2
Outline of Presentation
Macroeconomic Environment Chronology of Countering Import Surge State of the Textile industry Changed global environment Challenges Plan of action Conclusions
3
Macroeconomic Environment(1)
“Fiscal & Monetary Policy out of step with Industrial Policy” (Prof Ha-Joon Chang)
High interest rates & low inflation do not: Encourage investment & growth Do not create jobs
East Asian Experience Active industrial policy key to economic
development Growth not deregulation attracts foreign
investment
4
Macroeconomic Environment(2)
WTO still permits “activist trade policy” Tariff reduction does not equal abolition Infant industry protection is still permitted Emergency import sucharges permitted for
• Sectoral import surges• BoP problems
Not all subsidies are illegal• LDC’s can use export subsidies• Agricultural subsidies allowed• Regional Development, R&D & environmental subsidies
allowed
5
Countering the Import Surge(1)
Late 2003 – Submission to Govt Volatility & strengthening of the Rand Disruption of textile & clothing market by China Action required
Feb 2004 Safeguard option probed Mar 2004 Min Erwin forms Tech Task Team Istanbul Declaration seeks Govt support May 2004 Task Team meets
Official notification to the PRC Schedule for VRA on China by Aug 2004
6
Countering the Import Surge(2)
Jun 2004 Task Team Meeting VRA option discarded Sector strategies were requested
Aug 2004 Safeguard Regulations introduced Oct 2004 DG advises Industry
“Pursue Safeguards under Accession Protocol” Feb 2005 Task Team Reconvenes
China no longer on Agenda Apr 2005 Task Team
Restructuring strategies presented
7
Countering the Import Surge(3)
May 2005 Final Task Team Meeting DCC compromise proposals agreed Advised to apply for safeguards Sectors to be excluded from China & India FTA’s
Period of 18 months lost Safeguard Application by SACTWU 5 JUL
Clothing Items (25 categories) Fabric & Household Items (10 categories) Footwear Items (2 categories)
Safeguard Applications by Texfed Bed linen 21 Sep 2005 Curtains 5 Oct 2005
8
State of the Textile Industry
Current State Employment history Imports/Exports Sales/Production Import Penetration
9
Current State of Industry 2004
TurnoverFibre
ConsumptionFabric ProductionSpindlesLoomsKnitting MachinesEmploymentImportsExports
R 11.0 billion*
251 000 tons
508 million m2
420 0003 0002 000
51 400R6.5 billionR3.2 billion
* Estimate excluding CFL
10
Textile Industry Employment
40
50
60
70
80
90
100
110
120
Th
ou
san
ds
1980 1984 1988 1992 1996 2000 2004
11
Turnover per Employee
Textile Industry - Turnover per Employee
0
50000
100000
150000
200000
250000
300000
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Tu
rno
ver
/ Em
plo
yee
0
20
40
60
80
100
120
140
Nu
mb
er o
f Em
plo
yees
(000
's)
Turnover per Employee Employees
12
Total Textile Imports
0
1000
2000
3000
4000
5000
6000
7000
R'm
illio
n
1980 1983 1986 1989 1992 1995 1998 2001 2004
13
Fabric Imports
0
20
40
60
80
100
120
millio
n k
g
14
Clothing Imports
0
50
100
150
200
250
300
millio
ns
KnittedWoven
15
Made up Textile Imports
0
5
10
15
20
25
millio
n k
g
16
Total Textile Exports
0500
100015002000250030003500400045005000
R'm
illion
1980 1984 1988 1992 1996 2000 2004
17
Textile Sales
0
2
4
6
8
10
12
14
R'b
illio
n
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
•Only combined TCFL stats produced in 2004
18
Yarn Production
40000
60000
80000
100000
120000
140000
160000
tons
1980 1984 1988 1992 1996 2000 2004*
•Only combined TCFL stats produced in 2004
19
Woven Fabric Production
150
200
250
300
350
400
450
500
millio
n m
2
1980 1985 1990 1995 2000
•Only combined TCFL stats produced in 2004
20
Knitted Fabric Production
0
5
10
15
20
25
30
35
millio
n k
g
1980 1985 1990 1995 2000
•Only combined TCFL stats produced in 2004
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Import penetration
1999 2000 2001 2002 2003 2004
Yarns 11% 12% 16% 18% 23% 25%
Fabrics 39% 46% 48% 49% 55% 58%
Blankets 17% 22% 26% 24% 34% 34%
Imports I/(I+(T-E))=P
22
Changed Global Environment
Currency (R,$,Yuan) Accession of China to WTO Termination of the ATC & MFA Quotas Trade agreements (Agoa/FTA’s/PTA’s,
Mercosur, USA, India, China, Other??) Massive growth in undervalued/”illegal”
imports of clothing & textiles
23
Currency Exchange Rate
0
2
4
6
8
10
12
14
16
18
1998 1999 2000 2001 2002 2003 2004
Ran
d/
Fo
reig
n C
urr
en
cy
DollarPoundEuro
24
Accession of China to WTO
China acceded to the WTO in Mar 2003 MFN status Accession Protocol Growth strategy Phenomenal growth domestically & in
exports
25
Termination of ATC & MFA Quotas
ATC provided for phase out of quotas MFA finally eliminated 31 Dec 2004
26
Trade Agreements(1)
SA/EU TDCA Tariff preferences finally reached
SADC FTA Preferences not yet reciprocal
EFTA FTA Preferences to be phased in
SACU/Mercosur PTA As yet no prefernces for SA textile exports Textile preferences were given to Mercosur
27
Trade Agreements(2)
AGOA Textiles excluded AGOA IV amendment
SACU/USA FTA Delays in initiating negotiations
SACU/China FTA SA persists in exporting unbeneficiated
product And sacrificing its manufacturing sector
SACU/India PTA
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Undervaluation of Imports
R/kg
Cotton fibre 7.10
Synthetic fibre 11.70
Yarns 13.55
Fabrics 34.31
Blankets 15.40
Bed linen 16.04
Curtains 10.28
Import prices Jul 2005
29
Undervaluation of Imports
R/kg
Curtains knitted 2.30
Curtains woven 6.11
Bed linen knitted 5.41
Bed linen woven 14.94
Table linen knitted 1.58
Table linen woven 5.71
Socks & pantyhose 9.36
Import Prices from China Jul 2005
30
Undervaluation of Imports
0
5
10
15
20
25
30
35
40
'98 '99 '00 '01 '02 '03 '04 '05
TotalChinaTurkey
Imported Fabric Prices (R/kg)
31
Undervaluation of Imports
Imported Made up Textile Prices (R/kg)
0
5
10
15
20
25
30
'01 '02 '03 '04 '05
TotalChina
32
Plan of Action
Short term (immediate) SARS engagement
• WTO Valuation Code• Illegal imports
ITAC• Safeguards• Anti-dumping• Cotton fibre duty free
DTI• Interim Clothing & Textile Dev Program (DCC’s)• Country of Origin Labelling • Sector Strategy(CSP) Finalisation/Implementation
33
Plan of Action
Medium term (6 months) Upgrading investment support Labour Market flexibility Innovation
34
Plan of Action
Longer term (6-12 months) World class manufacturing standards Access to Technology Higher skills development Workforce empowerment BBBEE Charter
35
Conclusion
Critical Stage for textiles No simple solution Immediate Actions:
Undervaluation of imports Safeguards/Antidumping