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.