Mathabo Le Roux
27 August 2007
Johannesburg — The Southern African Development Community (SADC) is negotiating economic partnership agreements (EPAs) with the European Union (EU). The EPAs are crucial for future trade with the EU when a waiver on the current trade regime with the EU, the Cotonou agreement, expires at the end of the year.
The EPAs are trade deals with a developmental framework - a framework SA does not fit into. However, in March last year, SADC requested the EU that SA be included in the negotiations. The EU's first response was silence but eventually it agreed to include SA in the talks.
The argument that convinced the EU was that including SA would smooth the way for greater trade harmonisation, and ultimately help regional integration.
So SA is part of trade talks that could have considerable upside, despite the fact that as part of the Southern African Customs Union (Sacu) SA already enjoys a trade relationship with the EU .
Commentators see it as ironic that as SA embarks on arguably its biggest drive to boost economic growth , it is not clear at all that the region's powerhouse has the interest of its fellow members of Sacu in mind.
In the national industrial policy framework, the blueprint for industrial development, SA is considering a substantial review of import duties in a bid to lower the input costs of downstream manufacturing - the focus of industrial development.
One commentator estimates that the review affects as much as 75% of the tariff book.
"The plans pay scant attention to a commitment in the Sacu agreement to develop common policies... for industrial development," say observers.
"Trevor Manuel signed off on this (industrial policy) but there is a treaty with Sacu - this is an extremely awkward situation. If I were Manuel I would be very worried," says one commentator.
In fact, regional industrial development is barely mentioned in the policy.
But it is unclear whether SA is considering the effect of its plans on industries in other Sacu countries, and whether it is communicating sufficiently with member countries about the planned changes.
The International Trade Administration Commission (Itac) - which encourages fair trade through customs tariff investigations, trade remedies and import and export control - has begun a review of two large chapters of the tariff book , in a bid to eliminate tariffs on goods needed for government's multibillion-rand infrastructure programme.
The targeted chapters include many inputs for infrastructure development, but many other products are also included, such as washing machines, refrigerators, visual and sound equipment and spark plugs .
Itac has excluded automotive components from the review. SA's automotive industry is set to benefit from government support beyond 2020 and it does not fit with the plan to liberalise tariffs . But fridges, for instance, are not excluded, despite the fact that a fridge manufacturer in Swaziland provides several hundred good jobs in that unemployment-ridden country.
But SA has also shown disregard for its neighbours in the differential treatment of other policy directives, says another observer.
The Motor Industry Development Programme (MIDP) and the trade and industry department's keeping the programme going with attractive, yet costly, incentives to entrench the automotive industry in SA is well known.
Yet a similar scheme, the Duty Credit Certificate Scheme (DCCS), exists for the clothing and textiles industry, and has a far lower profile.
The state began a review of the MIDP two years ago , well ahead of its expiry in 2012 and has almost bungled the policy plan in its willingness to please powerful automotive companies.
But while the DCCS formally expired at the end of April, trade and industry let it lapse without mention of plans to review or extend it.
The oversight may seem curious in view of the clothing and textiles sector's dire need for assistance, but the fact is that few South African clothing and textile manufacturers benefit from the export plan. They are simply too uncompetitive to export and therefore few use it. However, companies in Swaziland and Lesotho, whose economies rely heavily on this industry, benefit greatly from the scheme but have now been left without policy direction.
SA holds out regional integration as a way to achieve an African renaissance but its actions explain why many in the region do not see it as a brother to lean on.
Be the first to Write a Comment!
Copyright © 2007 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
