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SOUTH Africa’s trade balance hit a record low in January (a trade deficit of R24 526.70m was recorded).
With trade deficits being recorded regularly, primarily due to a drop in commodities exports and high imports of fuel and high value added goods, businesses have the obligation to expand exports if the situation is to be remedied.
In terms of export growth (and consequently economic growth), there are three proven avenues of success for developing countries – seen in Figure 1 below.
The research indentifies some interesting policy results. Firstly, expanding existing products into existing markets has the greatest weight in export growth.
Secondly, growth into new markets is more important than discovery of new export products. Lastly and importantly, an exporting country must reach more national markets that are already importing the product it makes.
This means that governments should not focus solely or even primarily on discovering new channels – they should seek to identify and address market failures that are constraining exporters in subsequent phases of the export cycle.
South African businesses hoping to reach more national markets that are already importing their products must make use of the World Trade Organisation (WTO) Technical Barriers to Trade (TBT) enquiry point to overcome a major constraint – lack of information about potential (and existing) export markets.
As a requirement under the WTO TBT Agreement, the enquiry point is the contact centre for information on technical regulations for each and every WTO member country.
What this essentially means is that should I, as a business owner, wish to export paint to China, America or Timbuktu, I can find out each country's technical regulations for paint so that I can comply with these and expedite the export process.
The same goes for any other product you may wish to export and for any of the 159 WTO member countries.
If you engage with the enquiry point, not only will you regularly be informed of these technical regulations (and any relevant changes) but you will also be able to comment on draft regulations that might impact your exports or enable you to change your production line to comply with new regulations.
By being well informed, proactive and focusing on the three avenues of export growth, South Africa can make inroads into its trade deficit, despite the lingering economic downturn in many of our export partners.
- Fin24
* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS.
With trade deficits being recorded regularly, primarily due to a drop in commodities exports and high imports of fuel and high value added goods, businesses have the obligation to expand exports if the situation is to be remedied.
In terms of export growth (and consequently economic growth), there are three proven avenues of success for developing countries – seen in Figure 1 below.
The research indentifies some interesting policy results. Firstly, expanding existing products into existing markets has the greatest weight in export growth.
Secondly, growth into new markets is more important than discovery of new export products. Lastly and importantly, an exporting country must reach more national markets that are already importing the product it makes.
This means that governments should not focus solely or even primarily on discovering new channels – they should seek to identify and address market failures that are constraining exporters in subsequent phases of the export cycle.
South African businesses hoping to reach more national markets that are already importing their products must make use of the World Trade Organisation (WTO) Technical Barriers to Trade (TBT) enquiry point to overcome a major constraint – lack of information about potential (and existing) export markets.
As a requirement under the WTO TBT Agreement, the enquiry point is the contact centre for information on technical regulations for each and every WTO member country.
What this essentially means is that should I, as a business owner, wish to export paint to China, America or Timbuktu, I can find out each country's technical regulations for paint so that I can comply with these and expedite the export process.
The same goes for any other product you may wish to export and for any of the 159 WTO member countries.
If you engage with the enquiry point, not only will you regularly be informed of these technical regulations (and any relevant changes) but you will also be able to comment on draft regulations that might impact your exports or enable you to change your production line to comply with new regulations.
By being well informed, proactive and focusing on the three avenues of export growth, South Africa can make inroads into its trade deficit, despite the lingering economic downturn in many of our export partners.
- Fin24
* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS.
