Rebate for woven and other fabrics used for home textile industry

The Commission considered an application by Sheraton Textiles Holdings (Pty) Ltd (“Sheraton” or “the Applicant”), for the amendment of certain existing rebate items under rebate item 311.42 as well as the creation of rebate provisions on woven fabrics and other fabrics classifiable under tariff subheadings 55.13, 55.14, 5903.20, 5212.1, 5212.2, 53.09, 5512.1, 55.16, 5903.10.90 and 5903.90.90 used in the manufacture of goods classifiable under tariff headings 63.02, 63.03, 63.04 and 94.04.

During its deliberations and in arriving at its recommendation, the Commission considered the information at its disposal, including comments received during the investigation period.

The Commission found that:

a) There may exist local manufacturers of the subject fabrics, namely: Svenmill, Mungo and Finlam Textiles. It should be noted that the subject fabrics have never been utilised by the Applicant or industry players within the home textile sector as the current level of duty makes it unviable to compete with finished imported goods.

b) Industrial policy objectives of, amongst others, job retention and creation across the entire textile value chain and the need to create industrial capacity is crucial and measured these against comments received during the publication period.

c) Comments received from industry and labour, suggest diverse views. On the one hand, Texfed, which represents the textile mills, supports the change in scope and description of existing tariff headings under rebate item 311.42, on the other hand it opposes the inclusion of additional fabric tariff headings.

d) Svenmill submitted that it manufactures the subject fabrics except for fabrics classifiable under tariff heading 59.03, but failed to provide information pertaining to its production capacity and volume of the said fabrics.

e) SACTWU argues that fabrics classifiable under tariff heading 59.03 are manufactured locally by two firms, namely: Mungo and Finlam Textiles. It should be noted that Finlam Textiles make use of rebate item 311.41 to import yarn for the manufacture of fabric classifiable under tariff subheading 5903.90.50 for the automotive industry.

f) Mungo submitted that it weaves 100% linen fabric under tariff heading 53.09, which it uses to manufacture a bedding product range, which is a premium product range manufactured to the highest standards, but failed to provide information pertaining to its production capacity and volume of the said fabrics.

g) Aranda Textiles indicated that this application has no direct effect on them, as their operation is not focussed on manufacturing items listed under the subject application, but only manufactures products for use under tariff heading 63.01, which is not reflected as part of the Sheraton application.

h) Da Gama Textiles submitted their comments in respect of fabrics imported under tariff headings 5212.1, 5212.2 and 55.13, and indicated that it manufactures these fabrics in widths of up to 180cm. It further submitted that it has the production capacity of 3 000 000 meters per annum for these fabrics. However, given that the subject fabrics are wide width in excess of 200cm, it is envisaged that Da Gama Textiles will not be materially impacted by the creation of the subject rebate facilities, given that it serves on Texfed’s board, which would enable them to identify applications, which may have an impact on their business and indicate such.

i) Imraan Textiles submitted its comments of objection through Texfed objecting to the application. Imraan Textiles further submitted that the fabrics mentioned in the application are items that could have negative consequences on the industry, but failed to provide information pertaining to its production capacity and volume of the said fabrics.

j) Should the requested duty relief be granted, the Applicant has committed to increase its production volumes and employment levels.

k) According to information at the Commission’s disposal, the Applicant has made significant investments in establishing a new plant in Pietermaritzburg and is in a process of expanding and upgrading its existing plant in Cape Town.

l) Should the application be successful, the rebate will be subject to existing guidelines, rules and conditions (“guidelines”) that govern rebate item 311.42 and 320.02. It should be noted that these guidelines are strict and require applicants to meet certain requirements such as consultations with industry regarding the availability of subject fabrics, compliance with bargaining council requirements, tax compliance etc., as well as reciprocal commitments, and should domestic manufacturing capacity become available, ITAC can stop issuing permits under the rebate item concerned.

In light of the foregoing, the Commission recommended the creation of certain rebate provisions under rebate item 311.42 and 320.02 as well as the amendment of certain existing rebate items under rebate item 311.42 and 320.02 as set out below, subject to a review in 18 months or such other period as deemed appropriate by the Commission, as follows:

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Report No 672

ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA