IT IS unclear why the Congress of South African Trade Unions (Cosatu) wants local retailers to carry a 75% quota of locally produced goods, other than that this is understood to be a higher percentage than the status quo. There does not seem to be any rational justification for 75% as opposed to, say, 70% or 80%, and no coherent argument has been put forward that might explain where the figure is derived from. Indeed, Cosatu cannot say with any certainty whether the 75% demand refers to the volume of locally procured goods, their rand value or some other measure.

It is a reasonable assumption, then, that the figure of 75% was sucked out of somebody's thumb on the basis of an unshakable belief that the higher the number the better, but that 100% would probably be pushing things too far.

In fact, there is a precedent for the demand for a 75% quota of locally produced goods - the South Africa Clothing and Textile Workers Union, a Cosatu affiliate, also insisted several years ago that retailers buy 75% of stock locally . The retail sector resisted being forced to abide by inflexible quotas, especially since particular types of clothing are simply no longer manufactured locally and there were quality concerns over some locally produced lines, but they voluntarily agreed to maximise local procurement and some have consistently exceeded 75% by volume.

The point of mentioning this is that the attempt to impose an arbitrary local clothing procurement quota on retailers did not stop the industry's slide. Unproductive South African manufacturers continued to close. Those that survived did so because they were able to innovate, improve productivity and compete with imports on the basis of quality, service level, production agility or by consistently identifying lucrative niche markets.

Cosatu doesn't appear to have learned anything from this, and the government's attempt to impose stringent conditions on Walmart's entry into SA's retail sector is equally stupid. Particularly since many of the dire consequences of the US company's presence here of which it warns are already in evidence, all too often due to failures of government policy. Hardships faced by small businesses and new black farmers are cases in point.

The government and Cosatu think they can fix a problem by resisting market forces. But the ultimate cause of the problem is not that retailers are unpatriotic, or that they place shareholder interests above those of employees, but that too many South African producers are not internationally competitive.

There are many reasons for this, only some of which are the fault of domestic producers. Others, such as the rand exchange rate, are to a large extent beyond the control of anyone in SA, while several are due to policy failures on the part of the government and the attitude of the trade unions themselves.

Local procurement quotas and import quotas are two sides of the same coin, and when the government gazetted such quotas on Chinese clothing at Cosatu's insistence, the result was not increased local production but more imports from other low-cost producers in places such as Bangladesh and Sri Lanka. Even where they can be policed properly it is not a win-win situation - higher procurement costs are inevitably passed on to consumers.

This is no small consideration in the current economic climate. Inflation is already on the rise internationally. The rand has weakened considerably against the currencies of our main trading partners. The wages of unionised workers have increased by more than the consumer inflation rate for several years in a row, and administered prices keep climbing. Consumers are already highly indebted and cannot be expected to carry the burden imposed by protectionist import policies too.

The public interest provisions of SA's competition law were intended to mitigate the social effect of mergers and acquisitions, not to impinge on economic freedom.