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Key issues emerging from the Trade Workshop held on 1 August 2013

Key issues emerging from the Trade Workshop held on 1 August 2013. Presentation to the Portfolio Committee on Trade and Industry – 10 October 2013 Ms Margot Herling – Content Adviser. Key areas covered. Agricultural trade Trade policy Regional integration Trade relations – US and EU

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Key issues emerging from the Trade Workshop held on 1 August 2013

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  1. Key issues emerging from the Trade Workshop held on 1 August 2013 Presentation to the Portfolio Committee on Trade and Industry – 10 October 2013 Ms Margot Herling – Content Adviser

  2. Key areas covered • Agricultural trade • Trade policy • Regional integration • Trade relations – US and EU • New generation issues

  3. Agricultural trade • Agricultural sector’s contribution to employment opportunities • +/- 70% agricultural products = intermediary products • Relatively low support to farmers compared with other countries • Usually trade surplus in agricultural goods, tendency towards trade deficit • Agricultural sector highly liberalised • Agriculture vs manufactured goods at negotiations • Unintended consequences, as cost of packaging of exported agricultural goods ≤ 30% cost of agricultural exports

  4. Agricultural trade (cont) • Although agricultural goods are liberalised in terms of tariffs, the sector faces protectionism • Protectionism = non-tariff measures (unscientifically-based sanitary and phyto-sanitary standards (SPS), regulation) + other forms of red tape • Complex domestic food control regulatory environment (many players – DAFF, DoH, DTI; many regulations) • WTO-compliant support is lacking

  5. Trade policy • Organised business largely support Trade Policy and Strategic Framework • Overemphasis on tariffs with little focus on other trade policy tools • Impact and interplay of the existing trade agreements and those being negotiated on South African exports? • New trade issues: climate-related trade measures, private standards, unfair global value chain practices and internal market structures affecting competition • Slow implementation of new trade agreements (SACU-MERCOSUR • Benefit from shifts in trade and global value chains: technology transfer, skilled labour and efficient and affordable services

  6. Regional integration • Address non-tariff barriers (to lower cost of trade and increase the ease of trade) and rules of origin (to avoid trade deflection) • Mainly affect SMMEs and small-scale traders who contribute between 30 – 60% of regional trade volumes • Enforcement of rules-based regional agreements • Establishment of regional bodies • Lack of regional policy alignment between member states

  7. Trade relations: US (AGOA) • Balanced trade with the United States • Increased exports of advanced manufacturing products to the United States • Threats: • AGOA being terminated OR • Extended without South Africa

  8. Trade relations: EU • EU’s largest market in Africa • Trade balance = negative • Exports to EU: mining products and whole vehicles and automotive components (Germany) • Threats: • EU’s agricultural subsidies • EU’s SPS measures

  9. New generation issues • Investment: • Termination of Bilateral Investment Treaties (BITs) • Protection of outward FDI • Status of BITs in Africa (high risk countries) • Services: • Services sector should receive more attention • Support manufacturing activity • Accessibility and cost • Competition: • Unfair competition practices can nullify/impair gains • Example: private standards

  10. Thank you

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