PAUL MATTHEW: Where is the dynamism in SA’s trade policy?
Trade policy is a tool that can be used to support economic development, yet ours has been static for at least the past 10 years
SA is good at coming up with plans but far less successful at implementing them. Yet government continues to push ahead with the same model, despite evidence of little sustained change to the SA economy as a result.
One thing South Africans can all agree on is the importance of growing our economy so we can create jobs and uplift our people. The government has set itself targets in the National Development Plan and subsequent policy documents. These are ambitious, but crucial if we are to achieve inclusivity, transformation and a stable future. The challenge is designing and implementing the building blocks that will help us reach these goals.
Trade policy is a tool that can be deployed to support economic development. Firms engaged in the export and import of goods and services have been shown to employ more people, including women, and to benefit from other spin-offs such as exposure to new technologies. These firms tend to be more competitive than those focused only on the local market, but they still need support from government and an environment that encourages growth.
A critical examination of SA’s trade policy shows that it has been static over at least the past 10 years, and that it is lacking the dynamism required to support competitiveness in a fast-changing world. This is reflected in the strong similarity between the 2010 Trade Policy & Strategy Framework and the statement given by trade, industry & competition minister Ebrahim Patel to parliament on May 21. Both locate trade firmly within the policy framework for industrialisation, emphasising a sectoral approach and case-by-case determination of appropriate tariff levels to support employment, industrial capacity and inclusive development.
The department of trade, industry & competition is continuing to pursue sectoral master plans this year. These will support localisation of agricultural and industrial production. Again there is a strong sense of déjà vu for those who recall the Industrial Policy Action Plans of the past. There are targets set that are already slipping away in sectors in which there are challenges in implementing the master plans, such as poultry.
With the poultry industry there has been no shortage of policy interventions to provide opportunities for growth and enhanced competitiveness. This has included the active application of trade measures, including tariff revisions and various trade remedies like antidumping duties and safeguard measures. The results show that increasing tariffs and restricting imports can be blunt tools with little effect if the underlying conditions for the industry to thrive do not exist. There will continue to be unsatisfactory progress if we address sectoral concerns without removing cross-cutting constraints.
Patel has continued to voice SA’s commitment to both the multilateral trading system and regional integration initiatives, with the African Continental Free Trade Area (AfCFTA) a specific priority. That is hard to disagree with, but how is it reflected in actions? At the World Trade Organization (WTO), SA aligns itself closely with India to fight for recognition of the needs of developing countries. However, it does this to the point where there is a failure to contribute to the reform and modernisation of the organisation.
Despite calls from the business community, government has not joined the plurilateral discussions on issues related to electronic commerce, empowering women in trade and supporting SMEs. These may be new areas on the WTO agenda, but they are where policymakers should be engaging if inclusivity in global trade is the objective.
At the continental level the AfCFTA continues to attract attention, with more than 40 countries having ratified the framework. But the negotiations are dragging on. With each missed deadline the ambition decreases and the result is deeper complexity as efforts are made to match political ambition with the reality of trying to finalise the world’s largest free trade area. The likelihood of this process translating into concrete benefits for SA traders in the near future is extremely unlikely. Private sector enthusiasm is waning as little detail has been provided on exactly how the AfCFTA will work in practice.
There is no better time for SA to hit reset on its approach to trade policy following significant shifts as a result of the Covid-19 pandemic. The approach that has been recycled over the past 10 years has not achieved the desired results. It is anchored strongly in ideological rhetoric rather than the lived experience of trading firms and their workers. The time is now to consider reframing our relationships with established trading partners such as the EU, Japan and US, while exploring new markets.
The private sector should not be viewed as a stakeholder group that can be divided along ideological grounds, with local manufacturers as the good guys and importers as the bad guys. Different firms are required to drive an economy like that of SA and provide space for the development of diverse skills. There is value in engaging with actors along the entire supply chain in an inclusive manner that does not pit one group against another. If mutual goals are kept at the forefront, there is a stronger chance that SA’s trade policy will emerge as a robust framework that will serve us all well.
• Matthew is CEO of the Association of Meat Importers & Exporters (AMIE). This article is based on a conversation he had with Tutwa Consulting Group director Catherine Grant Makokera.
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