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SA business perceptions of a Free Trade Agreement with the US

This overview delves into CEOs' responses on a potential FTA with the US, highlighting diverging views, industry impacts, and potential benefits and threats. The generalizations, neutral standpoints, and specific concerns shed light on various aspects of the FTA. From harmonization to technology transfer and non-tariff barriers, this report offers a comprehensive analysis of the perceptions and challenges surrounding the agreement. It emphasizes the cautious optimism within South African businesses and addresses critical considerations for future trade agreements.

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SA business perceptions of a Free Trade Agreement with the US

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  1. SA business perceptions of a Free Trade Agreement with the US Reg Rumney R.W. Rumney & Associates

  2. Overview • Survey intended for CEOs – but few actually responded • A divergence of views on detail • Little unprompted response, suggesting a paucity of knowledge R.W. Rumney & Associates

  3. Generalisations An FTA is: • A ‘good thing’ • Would encourage the working of a free market in SA • Bring in more competition, especially in services R.W. Rumney & Associates

  4. More generalisations • FTA ‘neutral’ for many industries, but • Sectoral approach stressed • No “one size-fits all’ approach R.W. Rumney & Associates

  5. Neutral view • Commodities firms - little effect because of lack of protection • Services firms – Tariffs not what is keeping US competition out • Some sectors will lose and others gain R.W. Rumney & Associates

  6. Benefits • Locking in and extending Agoa benefits • Preserving GSP benefits • Greater access to world’s biggest market R.W. Rumney & Associates

  7. Threats • Automotive industry would contemplate no real free trade in its sector • Highly regulated industries would come under pressure to deregulate • Local regulation for social purposes, such as BEE procurement, could be challenged R.W. Rumney & Associates

  8. Level of ambition for FTA How comprehensive should an FTA be? • Most happy with a Free Trade Agreement as such • Some would only accept another format, such as the EU TDCA R.W. Rumney & Associates

  9. Services • Opening of services markets seen as neutral to positive as long as US firms get national treatment • Competition generally welcomed though new competition is not a given • Services industries do not speak with one voice R.W. Rumney & Associates

  10. Technology transfer Again, views were neutral to positive with some caveats • Technology transfer is seen as flowing fairly well already, supported by SA IP regime • Life-saving pharmaceuticals are one exception • Caution where strings are attached R.W. Rumney & Associates

  11. Non-tariff barriers • Hard to pin down – can be at State or municipal level • Most affected are agricultural products by sanitary and phytosanitary rules • Anti-dumping duties on steel etc from SA also important R.W. Rumney & Associates

  12. Procurement policies • Recognition that transparency and harmonisation may limit BEE procurement and equity transfer … • … but some firms seemed to be happy with this limitation • Again, no special treatment for US firms R.W. Rumney & Associates

  13. Harmonisation • Confusion about degree of compliance – do we have to bring our laws into line with theirs? • General belief is that our legislation matches or outdoes US law • Some feeling that harmonisation would be beneficial R.W. Rumney & Associates

  14. Specifics of harmonisation • Competition policy – few concerns, though caution about differing size of markets • Customs transparency – again, little concern • Labour – except for minimum wage law, firms would prefer US practices to hold sway here R.W. Rumney & Associates

  15. Regional nature of FTA • SACU’s relative lower development status poses serious problems for the FTA • SACU lacks common regulations now – could an FTA encourage these? R.W. Rumney & Associates

  16. Warning signs • How will an FTA affect highly regulated sectors such as the fuel industry? • Environmental flexibility – a competitive advantage • BEE procurement – can this be left out of FTA? R.W. Rumney & Associates

  17. Caveats • Can business speak with one voice on this issue? • Bilateral agreements second best to multilateral ones • US is more aggressive an exporter than EU R.W. Rumney & Associates

  18. Awareness Trade issues are: • Not ‘top of mind’ • Perplexing for some economists • Mostly left to the experts R.W. Rumney & Associates

  19. Conclusion • Business generally favours an FTA … • … but needs to consider and weigh sectoral effects and political implications closely and • … effect on SACU will complicate matters

  20. Thank you regrum@iafrica.com

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