This week one of the weirdest documents the Israel Manufacturers' Association has ever issued, landed on my desk. The headline says: "Manufacturers' Association calculation indicates import levies on apparel from Far East will not cause price hikes."
The document is part of the wide-ranging campaign Ramzi Gabai, head of the association's textile division, has been waging for quite some time to convince Industry and Trade Minister Dalia Itzik to raise import levies on clothing from China and India from 12 percent to 32 percent.
The document, drafted with the generous aid of the association's chief economist, Shuki Abromovitch, invents a whole new kind of economics in which raising customs duties doesn't raise prices. But if such a miracle does happen, then the local factories will reap no benefit from the raised levies, so how do they solve the absurd? They don't. They just try to fool the public. An examination conducted by the Trade Ministry indicates that if the levies are raised, employment in the sector will fall. On May 5, Dalia Itzik wrote, "Raising prices on textile imports will cause heavy damage to the Israeli economy and increase unemployment." True words for which she deserves praise.
The explanation is that many factories prepared themselves in recent years for the age of globalization and exposure. Some transferred their manufacturing to neighboring countries with low wages, others moved to 100 percent mechanization, and some sent most of their production to China, leaving only the highest quality production in Israel, allowing them rapid reaction times to ever-changing fashion trends.
We will look, for example, at Castro, Fox, Golf, Honigman, Crazy Line, Matim Li and Lee Cooper. They make 25 percent of their products in Israel and 75 percent are imported from the Far East. As soon as customs tariffs rise, these firms won't bring production back to Israel, but to Turkey, because we have a free-trade agreement with Turkey and wages for a laborer in Turkey's textile industry are $250 a month, as opposed to our $850. Therefore, the real beneficiaries of raised import levies will be two foreign clothing retail chains, Mango and Zara, which manufacture in Portugal and Spain, where the cost of labor is low. They will not be affected by the new levy, so they will sell more at the expense of local manufacturers, so the end result will be more work in Turkey, Spain, and Portugal, as opposed to layoffs in the eight Israeli textile companies that currently employ 7,000 people.
What is really happening here is a battle between the manufacturers of yesteryear who didn't modernize themselves to face the new reality, and the manufacturers of tomorrow who develop and grow and even move into more and more exports. On Monday the Knesset Economics Committee will debate the matter. We must all hope that committee head Avraham Poraz (Shinui) and the rest of the committee members will support the industry of tomorrow and not the narrow, outdated interests of Ramzi Gabai.
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