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SA trade policy torpedoed


Tuesday, 13 June 2017

SA trade policy torpedoed

South Africa's strategy of pursuing a “developmental trade” policy, in which trade agreements with other countries and regions specifically promote growth, employment and the industrial upgrade of the country, are undermined by unequal global trade rules, markets and power which favours industrial countries. However, South Africa's “developmental trade” policy is often torpedoed by self-destructive compromises to trading partners, wrong strategies and corrupt behaviour by leaders. South Africa's export growth for the past two decades has been at least 11% slower than its peers, India, Brazil and China. Most of South Africa's exports remain raw materials. The country needs to export value-added manufacturing products which create more jobs, more wealth and for more people. Exporting raw materials creates fewer jobs and less wealth for fewer people.The value-added manufacturing exports from South Africa are mostly resource-based, with the total share of resource-based manufacturing exports being 60% of the total manufacturing exports. Most of South Africa's imports are advanced manufactured goods, which are value added, the bulk of them technology and capital-intensive goods, such as vehicles, machinery and equipment, and consumer goods, such as white goods and electronics. The current collapse of the global trade talks in the WTO and a lack of credibility in the post-war Western-dominated trade institutions and rules have given South Africa and other developing countries the policy space to come up with developmental trade strategies more appropriate to their own circumstances. Such policy space was absent in the past. South Africa's “developmental trade” policy, set out in the Trade Policy and Strategy Framework, has several pillars. The first is to secure a more equitable trade dispensation at the global level. In the Doha round of global trade negotiations it had to make more tariff cuts than any other WTO member. This is because during the Uruguay Round of global trade negotiations in the early 1990s, the new ANC government had wrongly accepted South Africa’s designation as a developed country and now, with all its development problems, it has to cut tariff barriers at the same levels as industrial countries.

Source: African indy