Mainstreaming Trade In South Africa

1
Mainstreaming Trade In South Africa

• Rashad Cassim
• Wits University, Johannesburg

2
Key Challenges

• Middle Income Economy
• High Levels of inequality and incidence of
  poverty
• Reform Challenges
• Import liberalisation in goods
• Services and competition
• Producers gains in goods and services

3
Trade Reform in Post Apartheid South Africa

• Moderate Reform Process in the 1990s
• Unweighted Average Tariffs (Nominal Tariffs)
• Early 1990s 20
• Mid 2000s - 10
• ERPs 13
• Several tariff peaks with tariffs above 15

4

• Two FTAs (EU-SA, SA-SADC)
• SACU Revenue Formula
• GATS some reform specifically in finance and
  telecoms - ?
• Limited offers no requests

5
Drivers of Trade Reform

• Domestically Driven remarkable stakeholder
  consensus
• Absence of SAP or IMF Stabilisation
• The WTO a partial agent of reform
• The phase out of WTO incompatible export
  subsidies fortuitous

6
Drivers of Trade Reform Continued

• Policy Package multilateralism through Uruguay
  Commitments and Two FTAs
• FTAs were considered a trade and development
  co-operation agreements.
• From Non Reciprocity to Reciprocity
• Conclusion Who were the drivers of reform?

7
Trade Policy, Coherence and Growth

• Post Apartheid Dilemma induce more efficiency
  in the economy while adressing poverty and income
  distribution
• How does Government articulate its economic
  policy strategy and where and how does trade
  feature?
• Paper focused more in import liberalisation
  aspect of trade policy

8
Pro-Poor Growth Reform Strategy

• Fiscal Prudence
• Conservative Monetary Policy
• Trade Reform
• Privatisation/Deregulation/Competition Policy
• Public Sector Reform

9
Performance of the Economy

• Low growth in the 1990s 2 (ave annual)
• Growth in 2000s 4-5 (ave annual) Growth in
  Exports- 5 (ave annual)
• Economy too diversified?
• More specialisation as a result of trade reform
• Growing manufacturing exports but mineral exports
  still key

10
Impact on Poverty

• Worsening income distribution but reduction in
  absolute poverty
• Trade and employment/poverty
• Introduction of an extension social welfare
  system (old age pension, child and disability
  grants and others)

11
Unfinished Economic Reform

• Extreme high levels of mark-ups in the economy
• Persistence of monopolies in pulp, paper, steel
  etc ( also enjoy tariff protection)
• Persistence of monopolies in telecoms, banking,
  health
• High Transport Costs (Harbours)
• Exchange Rate Misalignment?

12
Industrial Policy

• Has an implicit industrial policy
• E.g Motor Industry Development Programme,
• Very little analysis on technology, R and D and
  state of sectors?
• Is there is a need for more policy space?
• Infant Industry?
• Export Subsidy?

13
Trade Policy Co-ordination and Capacity
Constraints

• How are trade policy priorities set?
• Who determines the agenda?
• Key element of effective process is the role of
  the lead department in South Africa Dept of
  Trade and Industry.
• Skills endowment
• Ability to articulate policy options, dilemmas
• Ability to communicate effectively with civil
  society and other government interests

14
Role of Institutions and Mediation of Trade
Policy

• Strong Ethos of Accountability as expressed in
  the setting up of a tripartite institution -
  NEDLAC
• Highly developed private sector
• Highly organized trade unions
• Business Organizations
• NGOs
• Research Institutions

15
Trade Institutions

• Institutions do not operate optimally
• Initiatives often haphazard owing to capacity
  constraints
• Problems of co-ordination specifically in
  relation to services
• Key challenge how to sustain institutional
  innovations (e.g. Export Councils)

16
Trade Policy Research, Influence and Impact

• Content of research
• Reconciling the mismatch between the producers
  and consumers of policy research
• Execution of research
• Respective roles of government, NGOs, academic
• Governance of research
• Who determined the research agenda
• How was the research process organized.

17
Content of Research

• Vibrant research environment that includes a
  critical mass of local researchers
• Role of World Bank, UNCTAD, Donors
• Role of Domestic institutions

18
Research Agenda and Governance

• Specific interesting case studies of how research
  organized.
• Stakeholder driven research
• Role of academics and policy makers on advisory
  committees that influence research agenda but
  does not compromise on scientific integrity
• Some tensions?