SOUTH AFRICA AND CHINA DISCUSS VOLUNTARY

UNCLAS SECTION 01 OF 02 PRETORIA 000678

SIPDIS

DEPT FOR EB/TPP/ABT/EHEARTNEY, AF/EPS, AF/S
COMMERCE FOR ITA/OTEXA/MD'ANDREA
COMMERCE ALSO FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND
DEPT PASS USTR FOR PCOLEMAN AND AHEYLIGER

E.O. 12958: N/A
TAGS: ETRD ECON KTEX SF CH
SUBJECT: SOUTH AFRICA AND CHINA DISCUSS VOLUNTARY
RESTRAINTS ON APPAREL AND TEXTILE TRADE

REF: 05 PRETORIA 4752


1. (U) Summary. The South African Government has
raised the problem of inexpensive textile and apparel
imports with China. On January 19, the Chinese
Ambassador to South Africa announced that China would
limit the export of apparel and some textile items to
South Africa. On February 3, President Mbeki stated
in his State of the Nation address to Parliament that
an agreement with China had already been reached.
Later in a media briefing, however, the Minister of
Trade and Industry admitted that there was no formal
agreement because the details still needed to be
worked out. The South African clothing and textile
industry has not been included in the negotiations.
End summary.

Chinese Imports
--------------


2. (U) Imports currently account for 27% of the
clothing market and 32% of the textiles market in
South Africa. Of this, China supplies more than
three-fourths of the clothing but less than one-
fourth of the textiles. The following table shows
China's share of the South African import market for
apparel and textiles.

Chinese Import Market Share
of the South African Market

% of total
imports
Apparel:
Volume: 367 million units 87%
Value: $531 million* 75%

Textiles:
Volume: 70,351 ton 22%
Value: $231 million* 24%


Source: The Textile Federation of South Africa
(Texfed) for the period January 2005 to November

2005.

*Note: Assuming a rand/dollar exchange rate of 6.35.


3. (U) South African textile and apparel companies
have applied for safeguard protection, but the South
African Government has been sitting on the
applications while it tries to negotiate a solution
directly with China (reftel).

Chinese Announcement
--------------


4. (U) On January 19, the Chinese Ambassador to South
Africa Liu Guijin announced that China would limit
the export of garments and some textile items to
South Africa. He added that China would help retrain
South African clothing and textile workers who lost
their jobs, and that Chinese firms would be
encouraged to form partnerships with local firms to
make South African industry more competitive.

State of the Nation
--------------


5. (U) On February 3, President Mbeki announced in
his State of the Nation address to Parliament that
the South African Government had reached agreement
with China that would protect the South African
clothing and textile sector. Later in a media
briefing at Parliament, however, the Minister of
Trade and Industry Mandisi Mpahlwa admitted that no
formal agreement existed; the details still needed to
be worked out.

Industry's View
--------------


6. (U) The South African clothing and textile
industry is in the dark on negotiations with the
Chinese. Industry representatives have been unable
to get any information on the matter from the
Department of Trade and Industry, but believe talks
on voluntary restraints revolve around quotas on
exports to South Africa and restrictions on export
increases in certain categories.


TEITELBAUM