SA's export restriction worries

A recent World Trade Organisation
(WTO) decision on China’s export
restrictions has raised questions about
the implications for SA’s trade policy
options, according to Nkululeko
Khumalo and Magalie Masamba of
lawyers, Bowman Gilfillan.
Despite the prevalent use of export
restrictions, they said, their legality
under the international trade law regime
is highly contentious.
The WTO appellate body issued a
report that found China had unlawfully
used export restrictions on raw
materials. The complainants, the US,
the European Union (EU) and Mexico
were concerned about China’s export
restriction measures on raw materials –
of which it is the dominant supplier.
From an SA perspective, the decision
is very instructive, added the authors.
One view is that this is relevant
considering that the government
has in recent years been lobbied by
certain industry players to consider
the use of export restrictions in the
form of export taxes as a policy tool
to foster local beneficiation, especially
in the chrome sector.
Under the WTO legal framework,
export taxes are not generally prohibited.
Indeed, export taxes are permitted
under the WTO law, unless otherwise
prohibited in a protocol of accession of
an individual member state.
SA’s position is very different from
that of China. It is one of the founding
members of the general agreement on
tariffs and trade (Gatt) and consequently
was not required to sign an accession
protocol. China, on the other hand,
entered into an accession protocol when
joining the WTO, in terms of which it
committed to eliminate various forms of
export restrictions.
What may, however, pose as barriers
to the possible use of export taxes by SA,
are the bilateral and regional free trade
agreements (FTAs) which it has entered
into with the EU, amongst other parties.
While SA’s WTO commitments
allow it to use export taxes, its bilateral
and regional FTA commitments must
be heavily weighed before such taxes
are imposed. It should also consider
preserving its right to use export
restrictions when negotiating future
FTAs.