1. South Africa’s trade agreements and relations: trade matters for the 21st century?
Trudi Hartzenberg
Portfolio Committee on Trade and Industry
1 August 2013

2. Overview 21st century trade – implications for trade policy
South Africa’s trade policy agenda
Select issues for an RTA agenda: services, non-tariff measures, trade remedies, safeguards and standards

3. Global developments – 20th century
Industrial restructuring (relocation of industry – clusters of excellence in developing countries)
Trade in goods (finished products)
Trade governance: WTO agenda (tariffs matter), much less successful in services liberalisation and the development of a new trade agenda (recall Singapore issues….)

4. 21st century trade
Global value chains: fragmentation of production processes - coordination efficiencies
Trade in intermediates, services (role of services in manufacturing competitiveness, increase in services trade)
Role of consumers – standards, intellectual property…
Trade governance – modern Free Trade Agreements
Mega-trade deals – eg TPP, EU-US, EU-Canada, Japan-EU, Canada-Japan, covering:
- behind the border disciplines/rules, regulation, investment governance, beyond TRIPs, Trade remedies, Customs cooperation, GATS, movement of capital
Quality of government, governance matters

5. South Africa’s trade strategy framework
NOTE: South Africa is a member of the Southern African Customs Union (SACU)
Trade policy development:
Trade Policy Strategy Framework (2010, revised October 2012), New Industrial Policy Framework (and IPAPs)
National Development Plan (November 2011, revised late 2012)
New Growth Path (2010) an ndustrial strategy?
Reference to:
Integration into the global economy
Regional integration (Africa-focus)
South-South relations
How does this translate into a trade policy strategy?

6. In brief: Inward-looking strategy/defensive
i) Import tariff as an instrument of industrial policy
ii) Strategic tariff policy is the cornerstone of South Africa’s trade policy
iii) Predominant focus on manufacturing/trade in goods (what about services? Investment?)
iv) Use tariff policy space (announcement early 2013 by Trade Minister)
v) Export taxes
South Africa’s use of trade remedies (anti-dumping)
Where is the services agenda?
Political economy of trade policy making
Domestic political economy game
Global trade strategy (multilateral/regional/bilateral)
Still strong focus on multilateral, rather than regional trade strategy
Inward-looking strategy/defensive

7. South Africa’s trade relations, agreements
SA’s trade agreements: EU (TDCA) – EPA negotiations, SACU-MERCOSUR (not in force yet)
Trade negotiations (ongoing): SACU-India
RSA-US relations (AGOA – unilateral preferential market access), an FTA?
Japan (they requested SACU to negotiate an FTA)

8. Looking Ahead: Select issues for a modern RTA agenda – where can SA focus?
Services matters
Contribution to GDP (approx 65%)
Producer services – transport, communications, finance, distribution, business are inputs into almost everything, and significant determinants of the productivity of capital and labour
Services in trade (tradeable)
Services in trade facilitation
Linkages among services (communication – education)

9. Non-tariff measures (to Non-tariff barriers?)
Moving beyond the simple policy substitution story between tariffs and quantitative restrictions
Governments employ NTMs to achieve public policy objectives:
Protection of public health, safety, scarce resources, environment
National security
Public policy concerns have increased, leading to more complex (in nature and variety) NTMs used by governments
The expansion of the policy agenda means that NTMs will not reduce in relevance like tariffs have done…
NTMS can become NTBs
How to develop a rules-based system to eliminate NTBs (not legitimate NTMs)?

10. Trade Remedies, Safeguards and Standards
Examples of current issues: Chicken (anti-dumping – Brazil) and Chips (safeguards – Belgium, the Netherlands) Canned peaches (safeguard – Australia) Citrus: black spot (SPS issue)

11. Rules of Origin Determine the national origin of a product
Role: to prevent trade deflection
However, RoO can also be used as an industrial policy instrument (this will negate liberalisation efforts)

12. Defining a new trade-industrial policy agenda
Trade in services agenda
Connectivity: infrastructure, ICT, competitive key services
Enhancing the business environment
Ease of doing business e.g. business registration regulations, contract enforcement, import export documentation, improved transparency + promotion of entrepreneurship
Trade facilitation
Focus on innovation, R&D and science and technology policy.
International rule setting – harmonisation of rules, standards, mutual recognition of standards/qualifications