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

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

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….)

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

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: 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

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, RoO 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