Trade Policy and Strategy Framework

SA Trade Reform Experience

• Further tariff liberalisation is likely to intensify this trend.
• SA is to a considerable extent outwardly oriented: the ratio of trade in goods & services to GDP has risen from below 40 % in 1993 to over 60% in 2006.
• SA exports constitute around 0.5% of world merchandise exports: lagging behind China, Brazil and India. Ranked 24th among developing countries; and 47th overall in terms of presence in exports of dynamic products.
• Commodity products continue to dominate SA’s exports: the top 25 export categories are dominated by mineral products. Precious metals; base metals; and other mineral products are dominant.

SA Trade Reform Experience

• SA has undertaken significant tariff reforms since 1994.
• During Uruguay Round, SA undertook tariff commitments as a developed country rather than a developing country.
• Its simple average of the final bound rate is 20.9%, with tariffs on agric products bound at 43.5%, and on non-agric at ceiling rates aver 18.1%.
• Simple averaged MFN applied rate declined from 15% in 1997 to 8.2 % in 2006. Aver tariff for inputs is 5.4%.
• Considerable simplification: 1990, tariff schedule – 13609 lines; by 2006 – 6420. SA has 54% duty free tariff lines.
• SA TDCA and SADC Protocol on Trade set further parameters. SA trade with EU accounts for 40% of total.

Future Directions for Tariff Policy

• We have chosen a development path aimed at achieving accelerated and inclusive growth to address poverty & inequality. Facilitating industrial upgrading and diversification of industrial base will create economy-wide positive spill-over.
• In this context, the role of tariff policy will be to support a growth path oriented towards labour-intensive industrialisation, and a long-term trajectory towards a knowledge-base economy.
• Trade policy will be informed by sector strategies, with focus on reducing input costs for labour-intensive & value adding manufacturing sectors.