The objective of this paper is to assess the policy space available to South Africa to raise non-agricultural tariffs in order to provide some protection for the domestic manufacturing sector against import competition (as has recently been done for the clothing sector). We have defined policy space as the ability to raise applied tariffs to the so-called World Trade Organisation (WTO) bound rates that are the highest rates that South Africa can levy without going back to the WTO to seek an increase. The analysis shows that overall there is significant policy space, with 62.5% of total imports potentially offering an opportunity to raise applied tariffs that are below WTO bounds.

This figure, however, is an overestimation, and caution needs to be exercised in interpreting this result. A significant portion of these imports are protected by the European Union (EU) Trade and Development Cooperation Agreement (TDCA) and the Southern African Development Community (SADC) preferential agreement, even though we have not included HS lines where the EU/SADC imports have a dominant market share. The analysis also ignores the question of whether or not it makes economic sense to raise many of these tariffs as they may be on imports that are essential inputs into domestic manufacturing. Another significant portion of the imports are mineral products, including mineral fuels, and this needs to be kept in mind. We have also included BRIC (Brazil, Russia, India and China) and Chinese import data separately in our analysis, and suggest that South Africa needs to be cautious in raising tariffs against fellow members of the BRICS ‘club’.

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