Government wants stricter rules for imports in South Africa
The Department of Trade, Industry and Competition (DTIC) has published a new trade policy statement, outlining its policy objectives for South Africa’s international trade in the wake of the Covid-19 pandemic.
A key focus of the statement relates to imports and South Africa’s role in the wider economy. While trade can contribute to growing the domestic industry and create jobs, fair competition must be maintained between domestic and foreign producers, the DTIC said.
“South Africa will step up efforts to ensure that trade defence instruments are deployed effectively against unfair and injurious imports. In this regard, we are reviewing the applicable legislation to streamline the application and investigation processes to enable swift and more effective action.”
The department said it will also continue to strengthen coordination with SARS to eliminate illicit trade and the under-invoicing of imports that cause enormous damage to the economy in lost revenue, jobs and industrial capacity.
It said that South Africa is a comparatively small and open economy, accounting for 0.53% of world merchandise trade and approximately 0.28% of world services trade. International trade in goods and services is 60.4% as a percentage of GDP.
It added that import growth tends to outstrip exports, resulting in a persistent deficit in goods trade.
“This was particularly evident in the period from 2000 to 2008 when SA enjoyed strong GDP growth,” the DTIC said.
“Since 2009, growth in South Africa has been subdued, and while the trade balance has fluctuated year on year, trade in manufactured products is consistently in deficit.”
While South Africa recorded its biggest trade surplus on record in 2020 – largely off a sharp reduction in imports due to the economic downturn – the longer-term trend line must be reversed.
In 2019, South Africa imported a significantly higher proportion of goods, measured as a percentage of GDP, than many other economies.
While South Africa’s imports accounted for 25% of GDP, Brazil stood at 9.6%, the US at 12%, the EU at 14%, Russia and China at about 14.4% and India at just under 17%.
Localisation drive
Not mentioned in the policy document, but a standing intention of the DTIC is the implementation of a strategy that would see the localisation of up to R200 billion of additional production over a five year period.
Small business development minister Khumbudzo Ntshavheni said that she was in talks with the DTIC to designate more products under the 100% local content category to support SMMEs in the local manufacturing sector.
Ntshavheni said South Africa runs an open economy, which means it competes internationally and products are allowed to be in the country.
However, the Department of Trade, Industry and Competition designates certain products for 100% local content, which means that products that are produced in other countries in certain categories cannot be allowed into South Africa because the products that must be in the country are those products that are produced locally.
This would see a list of products – 42 identified so far – targeted for localisation, where it could be designated that up to 100% of production take place in South Africa, minimising the entrance of other products in the country.
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