South Africas trade agreements and relations trade matters

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

Overview • 21 st century trade – implications for trade policy • South Africa’s trade policy agenda • Select issues for an RTA agenda: services, nontariff measures, trade remedies, safeguards and standards

Global developments – 20 th 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…. )

21 st 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

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?

In brief: 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

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)

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)

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)?

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)

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

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