Over the course of two days in May, the Department of Trade, Industry and Competition (DTIC) released two policy statements. Now, a policy is “a course or principle of action adopted or proposed by a government”, while a statement is “a definite or clear expression in writing”.
The ‘Competition Policy for Jobs and Industrial Development’ consists of seven pages, while the ‘Trade Policy for Industrial Development and Employment Growth’ consists of nine pages.
As for competition policy, the South African “economy remains characterised by a racially skewed spread of ownership and high levels of economic exclusion”. Consequently, “our competition policy aims to address our high levels of economic concentration and promote effective competition that supports industrialisation, builds dynamic firms, protects and creates jobs and promotes economic inclusion and transformation”.
This leads to the policy statement’s interest in mergers and acquisitions, highlighting ‘seven’ areas that require consideration: i) employment, ii) broad-based ownership, iii) supplier development and localisation, iv) investment, v) downstream beneficiation . . . and there it stops. No vi or vii.
With respect to trade policy, “the South African government, through the DTIC, pursues a strategic approach to trade policy, primarily geared to supporting South African industrial development and employment growth”. Consequently, the trade policy seeks to: (i) build industrial capacity; (ii) support workers, women and communities; (iii) unlock development across the African continent; (iv) drive manufacturing exports and open markets for South African goods; (v) respond to Covid-19 challenges through improved resilience and ‘building back better’; (vi) support a domestic digital economy; (vii) enhance environmental sustainability; and (viii) enhance South Africa’s role at the World Trade Organisation (WTO) and in efforts to build the multilateral trade system.
What is baffling is the manner in which government pursues free trade agreements (FTAs). The columns of October 4, 2019, (‘SA’s Brexit approach: Roll over and play dead’), and February 19, 2021 (‘Reflections on Brexit’), offer detailed insight. The BBC has reported that the UK and Australia have agreed to the “vast majority” of their trade deal”. The UK-Australia FTA will be the first post-Brexit trade agreement negotiated by the UK. It will not be a “roll-over deal”, which, essentially, is a replica of a trade agreement that was earlier negotiated by the European Union (EU) on the UK’s behalf.
“Roll over and play dead” was South Africa’s exact approach – on behalf of the Southern African Customs Union. Why, oh why, did South Africa sign a roll-over deal with the UK?
In case you believe too much is being made of the UK-Australia FTA, think of the Indian Ocean Rim Association, formerly the Indian Ocean Rim Association for Regional Cooperation, which had South Africa, Australia and India as its core members. On May 25, the UK announced it was launching a 14-week consultation on a future FTA with India before its Trade Minister initiates trade talks later this year. So, India too will not simply sign a roll-over deal.
Simply rolling over the initial EU Trade, Development and Cooperation Agreement into the Southern African Customs Union Member States and Mozambique–UK Economic Partnership Agreement was a serious error of judgment.
According to the trade policy statement: “SA’s treatment as a developed country in the Uruguay Round (during the apartheid era) is a source of considerable concern, as the tariff reduction commitments contributed significantly to deindustrialisation. This historical injustice has unduly limited SA’s policy space to use trade to support its industrial development. These considerations inform SA’s approach to ongoing discussions on WTO reform.” There is a snowball’s chance in hell. Happy dreams.