The Department of Trade, Industry and Competition (DTIC) on May 20 issued a Trade Policy Statement that reflects its policy objectives for international trade in the wake of the Covid-19 pandemic.

The policy objectives also address emerging opportunities which stem from the signing of the African Continental Free Trade Area (AfCFTA). 

The South African government is pursuing trade policy that builds industrial capacity, supports workers, women and communities, unlocks development across the continent, drives manufacturing exports, opens markets for local goods and supports a domestic digital economy.

Additional pursuits of government’s trade policy include enhancing environmental sustainability and enhancing South Africa’s role in world trade relations.

Trade, Industry and Competition Minister Ebrahim Patel notes, in a statement issued by the department, that trade policy needs to be a source of new jobs and expansion of the industrial economy in South Africa, lamenting that it must support industrial development.

“Increased exports can drive sustainable growth, generate decent well-paying jobs and widen economic inclusion, including for women and youth,” he says.

Before Covid-19 hit local shores, manufactured exports topped R500-billion for the first time in 2019, driven by growth in the export of vehicles, catalytic converters, mining equipment and cosmetics.

Coinciding with a pandemic-related recovery, the AfCFTA presents an opportunity for industrialisation in South Africa, as well as for the rest of the African continent.

The DTIC reports that African countries imported more than R7-trillion worth of goods from outside the continent in 2019.

This while South Africa recorded a R270-billion trade surplus in 2020, the fifth straight surplus in a row and the highest on record. This has been followed by a R96-billion trade surplus in the first three months of this year, again the highest for the first quarter of any year on record.  

Last year’s trade surplus was largely the result of an increase in the export of agricultural produce and platinum-group metals, and a reduction in imports of crude oil and machinery.

While the trade surplus supported South Africa's first current account surplus in nearly 20 years, more work is required to drive the export of manufactured goods, which can support greater levels of job creation.

With 17% of the world’s population but just 3% of world manufacturing, Africa’s path to prosperity lies in increased levels of industrial production and there is some evidence showing that, since 1990, manufacturing employment's share has grown in a number of African countries, but with modest value-added growth.

The Trade Policy Statement commits to promote industrial capacity.

Economic development requires the expansion and diversification of the industrial sector, which is still the main catalyst of productivity growth, rising wages, innovation and a key driver for service sector expansion, the DTIC states.  

The department adds that South Africa is a comparatively small and open economy, accounting for 0.53% of world merchandise trade and about 0.28% of world services trade.

High levels of manufactured imports and a comparatively high import-propensity underscore not only the lack of diversified domestic production but also, if given appropriate focus and support, the possibilities for domestic industrial expansion.

Patel further acknowledges that government policy and actions on the trade front should increase employment and promote decent work opportunities. “For the first time, South Africa is taking the deliberate and necessary step of pursuing a gender-sensitive and gender responsive trade policy.”

On climate change, the DTIC statement notes that South Africa is committed to environmental sustainability as part of the overall United Nations (UN) Sustainable Development Goals.

Meeting these objectives will require significant transformation in patterns of global production, consumption and distribution. While there are considerable opportunities for a range of green industrialisation initiatives, forging greater coherence, the statement says, calls for greater coherence between UN goals and World Trade Organisation (WTO) rules.

Unilateral trade measures, such as border adjustment taxes on the carbon content on imports, could undermine coherence in multilateral climate policymaking, the DTIC states.

To avoid such outcomes, the “contours of such trade measures” – how they are calculated and how they would comply with WTO rules – need to part of the multilateral dialogue, it added.