South Africa and Japan: towards a new trading relationship?
While not generating the media attention that some of the more prominent emerging markets of China, India and Brazil and, in spite of the prominence of the EU Trade, Development and Cooperation Agreement (TDCA) and Africa Growth and Opportunity Act (AGOA), it is well to remember that Japan is the main single country destination for South African exports and the fourth main source of imports. Despite a period of economic stagnation through most of the 1990s and somewhat subdued growth during this century, by traditional Gross Domestic Product (GDP) measurement, Japan is the second largest country economy in the world, and ranks fourth in both export and import trade when the intra-EU trade is netted out. By and large, Japan is a relatively open market for imports, although there are exceptions to this generalisation in the agricultural and fisheries sectors. In addition, following some very tentative so-called ’Free’ Trade Agreements with selected partners there is a sense that perhaps Japan is ready to take an extra step along the road of liberalisation of some of its previously sacred sectors.
Set against this background we suggest that South Africa is a natural partner for Japan with which to negotiate a more liberal trading agreement. It does not pose the threats of cheaper manufacturing imports disrupting the South African manufacturing base that China in particular is perceived as doing, nor does it present the prospect of the strict template approach to an FTA with many associated downsides in areas such as intellectual property, for example, that the US may present. Importantly, with the end point of the TDCA looming and the associated preferential access into the region for almost all manufactured goods except clothing and vehicles from the EU, it may be opportune to consider providing similar preferences to a similar mature and highly technical economy to lessen the costs to the region of trade diversion from the TDCA imports.
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