Presentation to the Parliamentary Portfolio Committee on Trade and Industry

1. Presentation to the Parliamentary Portfolio Committee on Trade and Industry South Africa’s Trade Policy and Strategy Framework: Discussion Document By Xavier Carim, Deputy Director General International Trade and Economic Development (ITED) Division, the dti March 2010

2. National Objectives • SA economic development strategy aims to accelerate growth and industrial development along a path that generates decent jobs • Trade policy must support industrial development and upgrading, employment growth and increased value-added exports • We adopt a developmental approach to tariff reform in support of these objectives • Our trade strategy/international engagement must also support these national objectives • This doc provides overview, parameters and key thrust (not specifics and details)

3. Overview of Document • Reviews the ingredients for growth and success in a changed global economy with intense competition • Reviews recent economic and theoretical literature • Shows that SA has undergone extensive tariff liberalisation since 1994 • Shows that while SA exports have increased significantly since 1994, the basket of export goods, with some notable exceptions, remains the largely unchanged • SA exports continue to be dominated by commodities, except in African markets

4. Approach to Tariff Reform • Tariffs are instruments of industrial policy and have implications for capital accumulation, technology change, productivity growth and employment • We adopt a strategic approach to tariff reform that supports industrial and employment objectives • An evidence-based, case-by-case assessment will inform changes to tariffs (no a priori position) – Vital role for ITAC • Tariffs on mature upstream input industries could be reduced or removed to lower the costs for downstream, labour creating manufacturing • Tariffs on downstream industries with employment or value-addition potential retained or raised to ensure sustainability and job creation (observing international trade obligations)

5. Trade Strategy • Premise: a global economy supportive of development is in the interests of South Africa • Consolidate and extend regional integration in Southern and Eastern Africa (SACU, SADC, SADC-EAC-Comesa FTA) • Build trade and investment relations with key countries in Africa; focus on building production capacities; and cross-border infrastructure (spatial development initiatives) • Consolidate links with key economies in the North, and build industrial complementarities with dynamic growing economies of the South to support our industrial development and shift structure of trade • A developmental outcome in Doha negotiations that addresses imbalances is more important than its early conclusion

6. Future Trade Policy Work • Trade related issues: services, investment, competition, intellectual property, procurement, labour, environment • Elaborate links between trade reform and measures to cushion cost (worker re-training and insurance) • Strengthened institutional arrangements for trade policy making (intra-governmental, Parliament, constituencies, research institutes, academia) • Cabinet instructions of Nov 2009 included in doc • NEDLAC comments of Feb/March 2010 are being accommodated – Cabinet deadline April 2020

7. THANK YOU