A Closer Look

Where is the Dynamism in South African Trade Policy?

Paul Matthew is CEO of the Association of Meat Importers & Exporters (AMIE)

South Africa 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 that there is little sustained change to the South African economy as a result.

One thing that South Africans can all agree on is the importance of growing our economy so that 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 South Africa’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 and Strategy Framework and the statement given by Minister of Trade, Industry and Competition Ebrahim Patel to Parliament on 21 May 2021. 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 and Competition is continuing to actively 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, for example, 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 anti-dumping duties and safeguard measures. The results show that increasing tariffs and restricting imports can be blunt tool with little impact if the underlying conditions for industry to thrive do not exist. By addressing sectoral concerns without removing cross-cutting constraints, there will continue to be unsatisfactory progress.

Minister Patel has continued to voice South Africa’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), South Africa aligns itself closely with India to fight for recognition of the needs of developing countries. It does this, however, to the point where there is a failure to contribute to the reform and modernisation of the organisation. Despite calls from the business community, the government has not joined the plurilateral discussions on issues related to electronic commerce, empowering women in trade, and supporting small and medium-sized enterprises. 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. The negotiations, however, 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 South

African 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 South Africa 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 European Union, Japan and the United States, 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 South Africa 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, then there is a stronger chance that South Africa’s trade policy will emerge as a robust framework that will serve us all well.

*Paul Matthew is CEO of the Association of Meat Importers & Exporters (AMIE). This piece is based on a conversation with Catherine Grant Makokera, Director of Tutwa Consulting Group.*

Leave a Reply