SA Trade Policy Goes Against Integration Tide

October 17, 2013 — 1 Comment
South African Trade & Industry Minister Rob Davies

South African Trade & Industry Minister Rob Davies

South Africa has adopted a new trade policy approach aimed at looking at its own interest first, despite a drive for more regional integration to sustain Africa’s trade growth with the rest of the world. Importers of several products have been experiencing dramatic increases in tariffs from South Africa, as well as an increase in anti dumping and safeguard measures aimed at protecting South African industries.

Trade and Industry Minister Rob Davies this week approved the increase of tariffs on frozen poultry following an application by the local poultry industry. George Geringer, a senior manager at PwC, said regional trade relations had been put on the back burner in favour of measures to protect South African manufacturing industries against cheaper imports.

“Government realised that manufacturing as a percentage of gross domestic product has declined from about 40% to about 12% in the past 20 years,” Mr Geringer said at the 16th Africa Tax and Business Symposium hosted by PwC in Mauritius.

Trade between Africa and the rest of the world has increased by more than 200% in the past 13 years, with optimism from the World Bank that Africa could be on the brink of an economic takeoff, similar to that of China and India two decades ago.

A key element for Africa to sustain the trade growth is regional integration to build economies of scale and size, in order to compete with other emerging markets – but limited resources, internal conflict and the lack of a mechanism to monitor the integration process is blocking it, says trade analyst from PwC.

South Africa has been regarded as the “champion” of the Southern African Development Community (Sadc). Sadc member countries eliminate tariffs, quotas and preferences on most goods and services traded between them. The member countries include Mauritius, Mozambique, Namibia, Swaziland, Botswana and the Democratic Republic of Congo.

The assistant manager at PwC’s international trade division, Marijke Smit, said less than 10% of African nations’ trade was with each other, compared with 70% between member states of the European Union. Benefits of regional integration include increased trade flows, reduced transaction costs, and a regulatory environment for cross-border networks to flourish. Ms Smit said an unsupportive business environment and cumbersome regulatory framework, weak productive capacity, inadequate regional infrastructure, poor institutional and human capacity, and countries’ prioritising their own interests stood in the way of integration.

Mr Geringer referred to the new action plan endorsed by leaders from the African Union in January last year. The plan will see the creation of a continental free-trade area by 2017. The enlarged free-trade area will include Sadc, the East Africa Community and the Common Market for South and East Africa (Comesa). The trade bloc will include 26 nations in three sub-regions. Source: BDLive.com

About these ads

One response to SA Trade Policy Goes Against Integration Tide

  1. 

    Goodness, could PwC or BDLive have gotten some their “facts” anymore twisted around? The AU’s Continental FTA involves ALL of Africa, not just 26 countries. What they are referring is the Tripartite FTA. And the T-FTA is to be on of the building blocks of the C-FTAS.

    Also, the 66% (not 70%) intra-European trade is NOT the result of regional integration. The already high levels of trade between European economies was actually one of the driving factors for the integration process. That process did, presumably, lead to a further increase in intra-European trade (the EU trade with itself alone accounts for about 1/3 of global trade), but you can’t claim that that integration process was responsible for all 66% (or 70% if you really want to round up that much).

    When looking at existing intra-Africa and intra-REC levels, a more useful and academically honest approach would be to look at progress in intra-trade from an initial base to the present. If a region managed to boost intra-trade from 10%, that’s already excellent. Over here we’ve been integrating to grow trade linkages, over there they integrated because of and to build on their existing trade linkages.

    Come on guys, people pay big bucks to listen to you, so get it right…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s