SA trade should diversify exports, examine African trade role

Posted on Friday, March 16th, 2012 by Odendaal, Natasha (Engineering News Online, Johannesburg) in News

African trade growth is increasing and South Africa should examine the role it can play in leading Africa in this regard, University of Cape Town school of economics professor Lawrence Edwards said on Thursday.

He said there seemed to be a general consensus that global divergence would continue, with developing economies, which contributed 20% of global gross domestic product (GDP), increasing their GDP contribution to 40% in 2015 and close to 50% in 2020.

Many countries, including South Africa, were currently re-evaluating trade policy approaches on the back of the global economic crisis and developing economies needed to shift their growth to more “domestic consumption”, which would change the pattern of trade and the nature of growth, as well as the way the country dealt with trade and trade policies.

Department of Trade and Industry (DTI) deputy director-general for international trade and economic development Xavier Carim added that South Africa’s export growth was outstripped by import growth, leading to a trade deficit.

“South Africa’s export growth will therefore need to accelerate to address this shortfall and to keep pace with comparable developing countries,” he said.

Further, despite global forecasts and economic trends, the future remained uncertain. Edwards said a multipronged trade strategy was required. This included the diversification of the composition of exports and more diverse sources of demand.

South Africa needed to capitalise on the growth in emerging economies, improve its manufacturing exports, while enhancing mineral exports, and take advantage of Africa’s improved growth prospects, Edwards said.

Carim agreed, adding that a competitive and stable currency to support the domestic manufacturing sector and exports was also essential.

The DTI has developed an integration agenda in Africa based on a “development integration” approach – combining market integration, promoting intra-African trade with cross-border infrastructural development and sectoral policy coordination.


Meanwhile, Carim said that the principles embedded in the Doha mandate no longer existed for emerging economies.

The role of developing economies was under scrutiny, as developed nations were demanding that emerging economies contribute more.

“[They were demanding] that emerging economies should take on greater market access commitments in light of their growth rates and growing role in international trade. In essence, what is demanded is that the differentiation in levels of commitment between emerging economies and rich countries be reduced significantly,” said Carim.

He pointed out that, despite emerging countries’ strong GDP growth and growing trade, they remained developing nations confronted by significant developmental challenges, including poverty and inequality, and could not be expected to make the same commitments as developed countries.

“We have built alliances with other like-minded developing countries to resist an outcome that is unfair, unmandated and antidevelopment,” he said.

The Doha Development Agenda was initiated to deliver trade improvements, in particular, for developing countries, and the negotiations started in 2001. Since then, the 153 World Trade Organisation member States have not been able to reach agreement on the Doha round.

The Doha round was at an impasse and prospects of any kind of resolution appear to be limited, bringing into focus institutional reform for a more inclusive, effective and transparent decision-making process.


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