While it is “essential” to
protect local industry,
increasingly higher tariff
barriers could signal the
death knell for further
manufacturing growth in
South Africa, according
to former Minister of
Trade and Industry
and director of Ubu
Holdings,
Alec
Erwin.
Speaking at the
Manufacturing Indaba in
Johannesburg earlier this
month, Erwin pointed
out that shooting too high
for tariff protection could
potentially harm trade
relations with key export
markets.
“South Africa has to be
able to trade as freely as
possible with all global and
regional export markets for
the local manufacturing
sector to be stimulated.
After all, the products need
to find global markets,” he
said.
Erwin added that there
were various avenues that
African governments
could pursue to ensure
protection of its
local industries, but
they did not educate
themselves
properly
and instead
sheltered
behind tariff
protection
as the only
way.
“I am
f labbergasted
by the lack
of attention
paid by
countries
around this issue,”
he said.
Chairman
of the
Manufacturing
Circle, Andre de Ruyter,
agreed, highlighting
that the International
Trade Administration
Commission (Itac) of
South Africa had to have
a clear mandate to protect
local industry and “not act
merely as a tool to ensure
compliance with World
Trade Organisation (WTO)
policies”.
He added that the
protection of industry was
far broader than imposing
high tariff protection.
“Preferential procurement
programmes, more
focused tax
incentives
and
addressing
the nontariff
barriers are
some other
ways in
which trade
policies can
be adapted.”
Riaz
Haffejee,
CEO of
Sumitomo
Rubber
South
Africa, pointed out that
as a local tyre producer he
saw the need for stronger
non-tariff barriers. “The
competing imports in our
sector – often produced with
some sort of government
subsidisation or incentive –
are a challenge,” he said.
He added that the
Automotive Production
and Development
Programme (APDP)
incentive, introduced by
government in 2013, had
been a “major boost” to the
company’s competitiveness.
“We would not have been
able to invest in our second
manufacturing plant in
Ladysmith without support
from the programme,”
Haffejee
commented.
He added
that, once
implemented,
the Tripartite
Free Trade
Area
Agreement
(TFTA) –
bringing
together
member
and partner
states of the
Common
Market for
Eastern
and Southern Africa
(Comesa), the East African
Community (EAC) and
the Southern African
Development Community
(SADC) – would be a
“major game-changer” in
terms of improved market
access.
Shooting too high
for tariff protection
could potentially
harm trade relations
with key export
markets.
– ALEC ERWIN
"Imports in our sector
are often produced
with some sort of
government subsidy or
incentive."
~ Sumitomo Rubber
