Impact of Trade Agreements on South African Business

1. Impact of Trade Agreements on South African Business A BUSA submission to the Portfolio Committee on Trade and Industry 26 August 2009 Presenter: Catherine Grant

2. Introduction • BUSA welcomes this call for a presentation to the Trade and Industry PC • We are a business confederation: • expressing the views of SA business on macro-economic & high-level issues • ensuring that business plays a constructive role in the economy • representing the views of business in national organisations such as NEDLAC

3. Impact of Multilateral Agreements • WTO sets overarching rules for trade • Contributes to transparency and certainty in the global economy • Source of information and helps in understanding trade regimes in other countries • Important for South Africa to be an active member of the club

4. Impact of Multilateral Agreements Multilateral discussions are currently only way to address some key trade issues, such as export subsidies WTO dispute settlement system provides unique enforcement mechanism – South African business is keen to explore ways to use to our benefit South African business open to negotiate “emerging” issues

5. Impact of Trade Agreements At both multilateral and bilateral level trade agreements need to move beyond tariffs Non-tariff barriers are key impediments to trade for South African business, including infrastructure, transport, customs, standards Growing concern about barriers imposed by private sectors in importing countries which cannot be addressed at government to government level

6. Impact of Bilateral Agreements Bilateral trade agreements can provide tariff preferences which can enhance competitiveness of South African exports However tariff preferences are eroding as overall tariff levels decrease Exclusion of sensitive products can often limit benefits from bilateral agreements Preferential trade agreements of less value than free trade agreements

7. Impact of Bilateral Agreements Bilateral trade agreements can provide scope to address non-tariff issues through cooperative arrangements Proliferation of bilateral agreements is complicating factor Business needs reliable sources of information about bilateral trade agreements in order to be able to assess the impact

8. Regional Agreements Full implementation of trade agreements in the region are fundamental for South African business Many South African exporters are focused on SADC and therefore strengthened cooperation is needed to maintain competitiveness Discussions to expand the Free Trade Area to include COMESA and the EAC are welcomed by South African business

9. Regional Agreements South African business is concerned to understand recent developments in SACU especially in light of EPA SACU viewed from two perspectives by South African business Some concerns that SACU can limit South Africa’s trade and industrial policy objectives South African business keen to ensure a strong region maintained

10. General Factors Still little understanding in South African business community of impact of trade agreements and trade policy more broadly Limited participation by a small group of business representatives in trade negotiations Need to find new ways of communicating trade policy issues to business Media has key role to play