The article is factually flawed and gives a distorted picture of the impact of the Duty Credit Certificate Scheme (DCCS) on the South African textile and clothing industry. It also does not make a distinction between clothing exporters, textile producers or manufacturers that produce only for the domestic market. The journalist failed to canvass the views of those who have expressed concerns with the impact of the DCCS on their operations. While making assertions on the view of government, the journalist did not also solicit government's view on the matter.
As it stands, the article reflects the views of only those companies that export clothing. These are the business constituents the article refers to as if business is undifferentiated. It fails to acknowledge that exports of clothing only account for around six percent of total production in South Africa.
What is undisputable is that the majority of manufacturing companies obtain no benefit from the DCCS as they produce for the domestic market. Many of these companies have expressed deep concern of the impact of the DCCS on their ability to continue to stay in business and serve the local market.
The article does not take into account the fact that 90 percent of DCCS issued in South African Custom Union(SACU) are sold into South Africa to companies who then use the DCCS to offset tariffs on cheap clothing imports into South Africa. These imports, on which tariffs have been offset by the DCCS, undermine domestic firms that produce those items for the local market. When domestic production shrinks, so does employment.
Regional integration will not be served by a programme where the costs are almost entirely borne by one member. The article omits to highlight the negative impact of the system on the local market and its massive abuse due to lack of controls which has resulted in a 900 percent increase of DCCS issued between 2002 and 2007 across SACU without any evidence of proportionate increase in exports from SACU. The impact of the abuse is again borne by South African firms producing for the local market.
The article is factually incorrect in stating that trade ability of DCCS was prohibited in December 2008. We wish to clarify therefore that, the SACU Council agreed to limited trade ability among manufacturers in December 2008. Our objective has been to ensure that the programme supports the development of regional industrial capacity in a manner that does not undermine the capacity of some segments of the value chain.
The SACU Council decision in April 2009 further stated that members should agree to a list of products on which DCCS could be traded. That is the process currently underway.
The article has also not reflected any understanding of the processes undertaken to develop the South African government position on the DCCS. The government position reflected areas of agreement among business and labour stakeholders in National Economic Development and Labour Council (NEDLAC). In the business constituency, clothing exporters were fully represented.
The South African list of products for which DCCS could be utilised to import into SACU is therefore a list agreed by stakeholders represented in Nedlac.
For further information contact:
Sidwell Medupe
Tel: 012 394 1650
Cell: 073 5226801
E-mail: MSmedupe@thedti.gov.za
Issued by: Department of Trade and Industry
19 August 2009
Source: Department of Trade and Industry (http://www.dti.gov.za/)
