Department of Trade & Industry. The Blockade: Potential Driver of SA Trade. Analysis of GCC Trade with Qatar and opportunities for South African substitution Prepared by Export Promotion: Middle East Directorate Trade and Investment SA the dti   Mr Abdul G Dangor August 2017

Department of Trade & Industry. Bilateral trade between South Africa and Qatar.   2012 2013 2014 2015 2016 Exports R 339 585 945 R 510 366 949 R 548 294 207 R 585 451 963 R 1 140 494 668 Imports R 3 753 329 943 R 2 488 348 642 R 4 316 966 497 R 6 554 297 868 R 5 518 258 892 Total trade R 4 092 915 888 R 2 998 715 591 R 4 865 260 704 R 7 139 749 831 R 6 658 753 560 Trade balance -R 3 413 743 998 -R 1 977 981 693 -R 3 768 672 290 -R 5 968 845 905 -R 4 377 764 224 Table 1: South Africa – Qatar Bilateral Trade 2012-2016 ZAR (R) South Africa’s exports to Qatar have maintained a consistent increase from 2010 to 2015, reflected by a positive 11 % annual growth in 2015 and 45 % average annual growth from 2010 to 2015. Exports between 2015 to 2016 saw a phenomenal increase in exports from South Africa to Qatar with a 116% increase in exports from R 585 000 000 to R 1 140 494 000. This increase is spread across a number of sectors including Automotive, Chemicals, Iron & Steel, Fruit & Nuts etc. (Refer to table below denoting top 10 exports).   South Africa’s imports from Qatar grew by 51 % and recorded an average growth of 24 % in the period 2010-2015 with a decline of R1 billion between 2015 - 2016. SA’s imports from Qatar decreased from R6, 5 billion in 2015 to R5, 5 billion in 2016. This has resulted in the trade balance narrow considerably in 2016 in South Africa’s favour. Based on table 1 above, Qatar continues to enjoy a trade surplus over South Africa in the period 2010 to 2016. South Africa had a trade deficit of R3.8 billion in 2014. Total trade has steadily grown at an average of 22.48% and grew by 47.17% in 2015. *Unless indicated otherwise all data sourced from TradeMap Data Analysis and compilation by: KOTETSO TSOAI

South Africa's exports to Qatar Department of Trade & Industry. Top Ten exports from South Africa to Qatar. (2 digit HS Code) Product code Product label South Africa's exports to Qatar Value in 2012 Value in 2013 Value in 2014 Value in 2015 Value in 2016 'TOTAL All products $42 213.00 $54 141.00 $51 593.00 $36 382.00 $78 435.00 '87 Vehicles other than railway or tramway rolling stock, and parts and accessories thereof $4 007.00 $749.00 $3 957.00 $6 944.00 $24 499.00 '28 Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes $1 568.00 $1 006.00 $2 808.00 $1 203.00 $11 422.00 '73 Articles of iron or steel $1 735.00 $1 726.00 $2 287.00 $2 464.00 $7 410.00 '72 Iron and steel $3 935.00 $6 359.00 $2 273.00 $2 098.00 $6 664.00 '08 Edible fruit and nuts; peel of citrus fruit or melons $6 120.00 $6 211.00 $7 423.00 $5 000.00 $6 378.00 '38 Miscellaneous chemical products $11 336.00 $7 454.00 $2 480.00 $96.00 $3 399.00 '84 Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof $4 729.00 $2 153.00 $3 537.00 $1 434.00 $2 877.00 '01 Live animals $0.00 $457.00 $1 774.00 $2 906.00 $2 590.00 '02 Meat and edible meat offal $245.00 $532.00 $1 686.00 $2 238.00 $2 337.00 '85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles $239.00 $611.00 $642.00 $3 241.00 $1 416.00 Table 2: Top 10 South African Exports to Qatar USD ($) *Unless indicated otherwise all data sourced from TradeMap Data Analysis and compilation by: KOTETSO TSOAI

Department of Trade & Industry. Top 10 Exporters to Qatar vs. South Africa Exporters   Value imported in 2016 (USD thousand) Trade balance 2016 (USD thousand) Share in Qatar's imports (%) Growth in imported value between 2012-2016 (%, p.a.) Growth in imported value between 2015-2016 (%, p.a.) Total $26 397 902.00 $28 409 576.00 100 6 -6 United States of America $4 928 700.00 -$3 739 693.00 18.7 5 17 Germany $2 813 660.00 -$2 393 371.00 10.7 United Kingdom $2 601 277.00 -$985 868.00 9.9 8 -17 France $2 010 297.00 -$1 760 562.00 7.6 29 -34 Saudi Arabia $1 657 750.00 -$1 338 933.00 6.3 4 Japan $1 539 287.00 $9 341 161.00 5.8 2 China $1 515 659.00 $2 496 715.00 5.7 -33 Italy $1 001 928.00 -$63 074.00 3.8 -8 Switzerland $841 713.00 -$548 685.00 3.2 7 -15 India $769 355.00 $6 710 127.00 2.9 -21 South Africa $78 435.00 $298 240.00 0.3 9 116 *Unless indicated otherwise all data sourced from TradeMap Data Analysis and compilation by: KOTETSO TSOAI

Department of Trade & Industry. The Blockade: Regional Impact and for South Africa. The blockade imposed on Qatar by UAE, Saudi Arabia, and Bahrain has had a “transitioning” effect on Qatar. Immediately after the June 2017 blockade transit of goods lingered on Saudi borders, UAE ports, and offshore. This led to temporary shortages in products. However, a rebound in delivery of goods through the securing of alternative sources from Turkey, Iran and other countries is being implemented. Shipping is being rerouted through Oman and with lower handling fees the higher cost of sourcing new suppliers may be offset. Qatar has shown tenacity in bringing its transit lines back online and is opening its market to new suppliers substituting imports from Saudi, UAE and Bahrain. In the near term we may see delays in delivery of South African goods shipped including Auto and Machinery, Chemicals and Metals but resume with new routes. Some of the key regional trade and investment repercussions from the blockade include: Reduction of investment in Saudi, UAE and Bahrain Qatar may develop trade relations with new regional countries e.g. Turkey and Iran shifting both political and economic landscape Qatar’s trade with neighbors amount to $10Billion will experience shift on both sides For South Africa: Disruption in delivery of goods in the near term especially sea freight (Auto & Capital Equipment, Metals and Chemicals) It opens potential for a new market for SA products (Partner Substitution) A disruption in infrastructure and building projects will further disrupt import of products servicing this sector South Africa stand a good chance of increasing its consumer products especially Agro Processed products as substitutes for Saudi, UAE and Bahrain originating products. With an extremely high GDP per Capita, Qatari consumers may overlook pricing of SA products . A speedy introduction during the blockade could sway consumer tastes allowing SA to retain its market post Blockade. In summary, the blockade will disrupt the flow of goods to Qatar in the short term, but, South Africa should start exploring the promotion of substitute products previously imported from Saudi, UAE and Bahrain. The next page details some of these opportunity Sectors.

Gulf Cooperation Council (GCC)'s exports to Qatar Department of Trade & Industry. The Blockade: GCC Exports to Qatar. Product code Product label Gulf Cooperation Council (GCC)'s exports to Qatar   Value in 2014 Value in 2015 Value in 2016 'TOTAL All products 82171837 72818766 39384700 '26 Ores, slag and ash 772951 1663277 5220737 '04 Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere ... 2029565 2692160 2958337 '73 Articles of iron or steel 2424811 2667719 2953471 '84 Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof 11560976 6839166 2653998 '85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television ... 10500959 5200140 2210901 '39 Plastics and articles thereof 2085356 2285264 2031985 '89 Ships, boats and floating structures 580368 703633 1973143 '87 Vehicles other than railway or tramway rolling stock, and parts and accessories thereof 4947191 4338352 1329864 '72 Iron and steel 4155673 2417303 1311735 '27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral ... 7392669 3474942 1188174 '19 Preparations of cereals, flour, starch or milk; pastrycooks' products 665053 908883 982262 '29 Organic chemicals 908055 642827 915990 '76 Aluminium and articles thereof 652690 766977 853850 '34 Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial ... 822883 862611 840455 '71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad ... 5687942 13895034 817768 '02 Meat and edible meat offal 469731 674790 744520 '22 Beverages, spirits and vinegar 701690 721112 741574 '68 Articles of stone, plaster, cement, asbestos, mica or similar materials 910588 1179200 733630 '94 Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; ... 1073171 874700 668940 '48 Paper and paperboard; articles of paper pulp, of paper or of paperboard 500186 654597 547212 '30 Pharmaceutical products 882374 423308 507422 *Unless indicated otherwise all data sourced from TradeMap Data Analysis and compilation by: KOTETSO TSOAI

Department of Trade & Industry. The Blockade: A potential driver of trade for 2017/2018. Note: Export potential map does not take the blockade into consideration but guides in looking for export potential based on available supply from South Africa matched with demand from Qatar *Unless indicated otherwise all data sourced from TradeMap Data Analysis and compilation by: KOTETSO TSOAI

Department of Trade & Industry. The Blockade: A potential driver of trade for 2017/2018. Export substitution potential for South African products into Qatar based on current South African world exports and current GCC exports into Qatar 1 . Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad … 2 . Ores, slag and ash 3. Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral … 4. Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof 5. Aluminium and articles thereof 6. Beverages, spirits and vinegar 7. Articles of iron or steel 8. Organic chemicals 9. Paper and paperboard; articles of paper pulp, of paper or of paperboard *Unless indicated otherwise all data sourced from TradeMap Data Analysis and compilation by: KOTETSO TSOAI

THANK YOU *Unless indicated otherwise all data sourced from TradeMap