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WITH the rand fluctuating at R10/$ and reports that the European Union (EU) wants to block our citrus exports, I thought I would once more broach the topic of South Africa’s trade balance and technical barriers to trade.
Firstly, the reports concerning the EU citrus issue mention the citrus black spot (CBS) disease and that in 1993, the EU declared CBS a phyto-sanitary measure.
Phyto-sanitary measures are a part of the greater sanitary and phyto-sanitary measures, simply referred to as SPS measures. SPS measures are there to ensure a country’s consumers are supplied with food that is safe to eat - “safe” being defined by the standards a country considers appropriate.
The appropriateness of applying these standards (keep in mind, standards are voluntary; they only become mandatory once included in legislation) is governed by the World Trade Organisation (WTO) and covers food, animal and plant health.
Further, the EU, being a member of the WTO, cannot simply block our exports of citrus – they must have justifiable reasons for doing so, such as SPS measures.
To be specific, the WTO agreement states that regulations must be based on science and should be applied only to the extent necessary to protect human, animal or plant life or health. The regulations must not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail.
Let’s imagine though that the EU does manage to block our exports of citrus, or the more realistic likelihood that they simply cut down on imports. What can South Africa do?
It is quite simple: South Africa needs to look local! In Tunisia recently, the chief economist and vice-president of the African Development Bank, Professor Mthuli Ncube, pointed out that Africa has some of the highest visa requirements in the world.
These visa requirements imply missed economic opportunities for intraregional trade and for the local service economy such as tourism, cross-country medical services or education.
For example, in the Economic Community Of West African States more than 80% of all migration is intraregional, yet Africans need visas to go to 80% of African countries. Moreover, the restrictions are higher for Africans travelling within Africa than for Europeans and North Americans.
Despite the high visa requirements, the robust growth taking place in numerous economic hubs across Africa along with very attractive business opportunities - particularly for consumer-facing industries - places South Africa in a prime position.
How will this help South Africa’s trade balance? Well, the latest three-year roll-over of South Africa's Industrial Policy Action Plan (IPAP) focuses squarely on boosting the country's manufacturing sector.
E-visas on tap
Thus, if visa requirements are relaxed and if we can achieve something along the lines of the planned growth in manufacturing and the production of value added goods, we can position ourselves as the continent’s supplier.
Right about now you are probably saying: “This all depends on two big ‘ifs’. If visa requirements and if we can achieve…”
I agree, it does, but I also think that South Africa’s existing trade agreements may just provide the golden key over countries like China.
In addition, one must consider the following:
• The cost associated with importing from China in terms of distance;
• The relative weakness of the rand against the renminbi; and that
• 25% of all trade in Africa is informal.
China cannot trade informally with Africa, whereas South Africa can. We have the opportunity to follow the example of Rwanda, which since the beginning of 2013 moved to biometrix border management, low restrictions on transfer of services in engineering and legal services as well as visas on arrival for all African citizens.
Rwanda has even introduced e-visas in order to reduce the costs and time constraints of people in obtaining visas.
Through taking simple measures to encourage the movement of goods and services, Rwanda’s tourism from African countries increased by 24%. Furthermore, the trade pattern shifted away from Europe and North America towards its neighbours.
As a result, trade with neighbouring countries increased by 50% last year and trade with neighbouring Democratic Republic of Congo by 73%.
Imagine the possibilities if South Africa can implement something similar to Rwanda but achieve more through the IPAP, weak rand and local trade agreements.
- Fin24
*Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.
Firstly, the reports concerning the EU citrus issue mention the citrus black spot (CBS) disease and that in 1993, the EU declared CBS a phyto-sanitary measure.
Phyto-sanitary measures are a part of the greater sanitary and phyto-sanitary measures, simply referred to as SPS measures. SPS measures are there to ensure a country’s consumers are supplied with food that is safe to eat - “safe” being defined by the standards a country considers appropriate.
The appropriateness of applying these standards (keep in mind, standards are voluntary; they only become mandatory once included in legislation) is governed by the World Trade Organisation (WTO) and covers food, animal and plant health.
Further, the EU, being a member of the WTO, cannot simply block our exports of citrus – they must have justifiable reasons for doing so, such as SPS measures.
To be specific, the WTO agreement states that regulations must be based on science and should be applied only to the extent necessary to protect human, animal or plant life or health. The regulations must not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail.
Let’s imagine though that the EU does manage to block our exports of citrus, or the more realistic likelihood that they simply cut down on imports. What can South Africa do?
It is quite simple: South Africa needs to look local! In Tunisia recently, the chief economist and vice-president of the African Development Bank, Professor Mthuli Ncube, pointed out that Africa has some of the highest visa requirements in the world.
These visa requirements imply missed economic opportunities for intraregional trade and for the local service economy such as tourism, cross-country medical services or education.
For example, in the Economic Community Of West African States more than 80% of all migration is intraregional, yet Africans need visas to go to 80% of African countries. Moreover, the restrictions are higher for Africans travelling within Africa than for Europeans and North Americans.
Despite the high visa requirements, the robust growth taking place in numerous economic hubs across Africa along with very attractive business opportunities - particularly for consumer-facing industries - places South Africa in a prime position.
How will this help South Africa’s trade balance? Well, the latest three-year roll-over of South Africa's Industrial Policy Action Plan (IPAP) focuses squarely on boosting the country's manufacturing sector.
E-visas on tap
Thus, if visa requirements are relaxed and if we can achieve something along the lines of the planned growth in manufacturing and the production of value added goods, we can position ourselves as the continent’s supplier.
Right about now you are probably saying: “This all depends on two big ‘ifs’. If visa requirements and if we can achieve…”
I agree, it does, but I also think that South Africa’s existing trade agreements may just provide the golden key over countries like China.
In addition, one must consider the following:
• The cost associated with importing from China in terms of distance;
• The relative weakness of the rand against the renminbi; and that
• 25% of all trade in Africa is informal.
China cannot trade informally with Africa, whereas South Africa can. We have the opportunity to follow the example of Rwanda, which since the beginning of 2013 moved to biometrix border management, low restrictions on transfer of services in engineering and legal services as well as visas on arrival for all African citizens.
Rwanda has even introduced e-visas in order to reduce the costs and time constraints of people in obtaining visas.
Through taking simple measures to encourage the movement of goods and services, Rwanda’s tourism from African countries increased by 24%. Furthermore, the trade pattern shifted away from Europe and North America towards its neighbours.
As a result, trade with neighbouring countries increased by 50% last year and trade with neighbouring Democratic Republic of Congo by 73%.
Imagine the possibilities if South Africa can implement something similar to Rwanda but achieve more through the IPAP, weak rand and local trade agreements.
- Fin24
*Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.
