The International Chamber of Commerce (ICC) has released the 2013 edition of its Open Market Index (OMI), a study of 75 countries, including South Africa, that accounted for 90% of global imports of goods and services in 2011, with a near even split between developed and developing countries.

The OMI has been released at a time when only modest growth is expected, with the World Trade Organisation (WTO) having downgraded its 2013 forecast for global trade to 3.3%. This is below its long-term yearly average over the last 20 years of 5.3%.

As for global foreign direct investment (FDI), the United Nations Conference on Trade and Development (Unctad) reported an 18% drop in 2012. This is of great concern, given that, for decades, international trade has been one of the primary engines of increasing global prosperity.

The OMI serves two purposes. Firstly, the ranking of national market performance on openness to trade from most to least open is an effective way to concentrate attention on the need for improvement and to monitor progress year-on-year. Secondly, the evaluation of a country’s performance across four indicators on openness to trade constitutes a tool for policymakers and authorities to identify deficiencies that deserve greater attention, thereby generating a roadmap of sorts for action and improvement.

The index comprises four components, namely observed openness to trade, trade policy, FDI openness and infrastructure for trade.
The indicators of observed openness to trade are the trade to gross domestic product (GDP) ratio (Unctad), merchandise and services imports per capita (WTO/World Bank) and real merchandise import growth (WTO/Unctad).

The indicators of trade policy are average applied tariff levels (WTO/International Trade Centre (ITC)); complexity of tariff profile (WTO); nontariff barriers, that is, the number of antidumping actions (WTO); and the efficiency of import procedures (World Bank/International Finance Centre).

The indictors of FDI openness are FDI inflows to GDP ratio (Unctad), FDI inflows to gross fixed capital formation ratio, FDI inward stock to GDP ratio (Unctad) and the FDI welcome index (World Bank).

The indicators of trade-enabling infrastructure are the logistics performance index (World Bank) and communication infrastructure (International Telecommunication Union).

The report scores range from 1 to 6 and comprises five groups, namely Category 1 – most open, excellent (5 to 6), Category 2 – above average openness (4 to 4.99), Category 3 – average openness (3 to 3.99), Category 4 – below-average openness (2 to 2.99) and Category 5 – very weak (1 to 1.99).

So, how did South Africa fare? It ranked fiftieth, with a score of 3.2, which, in terms of the index, equates to average openness. It ranked twelfth of the G20 countries. In the first survey, published in 2011, South Africa ranked fifty-second, and twelfth of the G20 countries, with a score of 3.1.

The report indicates that South Africa has the best aggregate score (3.2) of the eight Africa countries in this sample, the other seven being Algeria, Egypt, Kenya, Morocco, Nigeria, Tunisia and Uganda. It was the only African country that made it into Category 3, comprising countries with average market openness. With the exception of South Africa, the Bric countries of Brazil, Russia, India and China all ranked below average on most indicators of openness. The report indicates the potential is therefore huge for these developing economies to strengthen their contribution to global growth through increased imports and FDI flows.

What is of immense interest is South Africa’s score on the four components, namely observed openness to trade (3.2 – average openness), trade policy (3.6 – average openness), FDI openness (below average openness) and infrastructure for trade (4.0 – above-average openness).

Antidumping Investigation
On June 21, the International Trade Administration Commission of South Africa initiated an investigation into the alleged dumping of frozen potato chips originating in or imported from Belgium and the Netherlands, classifiable under tariff subheading 2004.10.90. This adds to a safeguard investigation which was ini- tiated on March 8 against the increased imports of frozen potato chips.
Comment is due by July 29.