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Know your trade rights

Jul 05 2012 15:37 *Geoffrey Chapman

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AS PART of government's imperative to tackle the triple threat of unemployment, inequality and poverty, it is vital for manufacturers, importers and exporters to be aware that they have access to an enquiry point which gives them an opportunity to comment on and shift technical regulations in their favour before they become an unnecessary trade obstacle.

Under the World Trade Organisation's Technical Barriers to Trade Agreement (WTO's/TBT Agreement), which tries to ensure that regulations, standards, testing and certification procedures do not create needless stumbling blocks, each WTO member must have a TBT enquiry point to ease access of information for the different trade role players.

South Africa's TBT enquiry point sits within the South African Bureau of Standards (SABS).

Amid this background and with international trade being an integral component of economic growth, South Africa cannot afford to be ignorant of any draft technical regulations submitted to the WTO.

This would hinder not only trade and economic growth, but also job creation and poverty reduction.

In May, several of South Africa's major trading partners, including SA itself, sent draft technical regulations to the WTO. Interested parties have a 60-day window to comment on the regulations.

Technical regulations refer to a set of requirements, used by governments, to determine compulsory requirements for product or service characteristics or the related processes that should be complied with.

These requirements have specific administrative provisions and testing, certification and other conformity assessment requirements with regard to public safety, health and environmental issues in which compliance is mandatory.

This means that if unopposed, draft technical regulations can become barriers to international trade. This in turn can result in costly losses not only for companies, but for South Africa as a whole.

For example the European Union - which is not only one of South Africa's major trading partners but also a major holiday destination - sent a notification about aircraft equipment, common airspace usage and operating procedure on airborne collision avoidance.

Studies have shown that per flight hour, there is a 2.7 × 10–8 probability of a mid-air collision with the current airborne collision avoidance system (ACAS) software installed; hence, the ACAS II version 7.0 is considered an unacceptable safety risk.

So, the EU proposes that a new software version of the ACAS II system be installed to ensure the highest possible safety standards. To achieve the safety benefits of the upgrade, all aircraft need to be equipped as soon as practically possible, taking into account the availability of new equipment.

Boeing, for one, feels that costly changes for the very arguable benefit of the ACAS II version 7.1 may be worth resisting – especially as the cost to industry of making the ACAS 7.1 change will probably need to be spent again when the next set of ACAS and ADS-B changes are mandated.

Although the above comment was rejected by the European Aviation Safety Agency, numerous others were noted and accepted. The size of the commentator in fact plays no part in the rejection or acceptance of the comment.

Also, thanks to a totally transparent process, all comments are responded to and justification provided for either rejecting or accepting them.

Other draft technical regulations, covering agricultural products, food, medical equipment and electrical equipment, were sent to the WTO by China, the United States, Malaysia, the Republic of Korea, Thailand and Taiwan.

With some of South Africa's major trading partners sending draft technical regulations to the WTO, companies involved in international trade must be aware of these proposals.

Failure to do so can result in costly changes to equipment and/or goods and services, as well as lost income due to delays in compliance.

With international trade being an integral component of economic growth, lack of knowledge can hamper not only trade and economic growth, but also job creation and poverty reduction.

It would also would work against government's efforts to fight the separate but interlinked threats of unemployment, inequality and poverty.

The country's latest unemployment figure of 25.2% (in the first quarter of 2012) and a year-on-year trade balance figure of -R9 873.91m show the severity of the issue.

South Africa is traditionally a net importer, meaning we import more than we export and that we do so regularly. As such, national growth is restricted to an extent.

By alerting manufacturers and exporters to potential trade barriers, we can influence regulations to favour us. This would remove restrictions that can limit the economy, instead of making us face the costly consequences of ignorance.

The exportation of goods and services is a source of growth which, in turn, leads to employment. Through growth and employment creation, poverty and inequality will be partially alleviated.

That is why the industrial policy action plan (Ipap), now in its third iteration, focuses on value-added sectors with high employment and growth multipliers – it is government's industrial arm for tackling the triple threat.
   
 - Fin24

* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS.

geoffrey chapman  |  unemployment  |  poverty  |  inequality
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