Building capacity to help Africa trade better

South Africa’s way ahead: trade policy options


South Africa’s way ahead: trade policy options

South Africa’s way ahead: trade policy options

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This book presents the output of a tralac project focusing on the trade agenda of South Africa and the Southern African Customs Union (SACU) of which South Africa is a member. The proliferation of Free Trade Agreements (FTAs) is very much part of SACU and specifically South Africa’s trade agenda, since FTAs are negotiated collectively by SACU member states.

The aim of the analysis in this book is twofold. First, the implications of different FTAs that are either being negotiated or being considered, are assessed in the context of the current Doha Round of multilateral trade negotiations. Second, the book presents a sober assessment of trade modelling exercises, noting the value as well as the limitations of these exercises in the making of trade policy choices and negotiating trade agreements.

“This book raises many fascinating policy questions. The authors have systematically built a series of policy scenarios for South Africa and its Southern African Customs Union (SACU) trade partners in order to see what the welfare consequences might be of preferential trading arrangements. The simulations are not only limited to situations in which South Africa and SACU enter into variously configured free trade agreements (FTAs), but they also consider what would happen to these countries if third parties from outside the region were to establish FTAs among themselves.

“We have known for a long time that trade liberalisation will throw up winners and losers, both within countries and, in some circumstances, among countries. Where winners and losers are located within the same jurisdiction, it may be argued that governments have a chance to mitigate the adverse effects of trade liberalisation on disadvantaged groups through the use of various adjustment-related and social policies. But what happens when the winners and losers are different countries? These distributional outcomes may often prove more delicate and difficult to deal with. Multilateral trade liberalisation can have these effects, especially through adverse terms of trade effects associated with reductions in subsidies. One of the things that the preferential trade liberalisation scenarios simulated in this book suggest, however, is that such distributional consequences are likely to occur more frequently under discriminatory trade liberalisation. No easy answer exists to this particular policy challenge, but it is not difficult to see that this may be one reason why we observe ‘herd’ behaviour and burgeoning regionalism around the world.

“Overall, this book makes a valuable contribution to increased understanding of the consequences of various trade policy choices in southern Africa. The authors are to be commended. The real contribution of work of this kind is not so much in specifying what governments should do, but rather where to look for their options and what questions to ask before exercising them.”

Patrick Low

Chief Economist, World Trade Organisation

© 2007 Trade Law Centre for Southern Africa and AusAid

Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac) and the Australian High Commission (AusAid). The financial support of AusAid for this project is gratefully acknowledged. The views expressed by the authors are not necessarily the view of any of these institutions.

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