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ECS3702 - International Trade (ECS3702) Assignment 02 Semester 1 Year 2022
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ECS3702ASSIGNMENT 2
SEMESTER 1
YEAR 2022
, 1. Define trade openness (2 marks)
Trade openness is defined as the ratio of exports plus imports over GDP.
2. Perform a thorough google search and in no more than 1 000 words, explain South Africa’s major
trade policy reforms between 1970 and 2019. Your discussion must speak to the trade policies
adopted in chronological order, what the objective of the policy was, why it was considered
ineffective and thus replaced by a later policy. Your discussion must be succinct, informative and
ANY and ALL sources used MUST be cited at the point of use in-text as well as in the list of
references at the end of the assignment. Note that WIKIPEDIA should not be used (10 marks)
Introduction
Due to a new political dispensation taking shape in South Africa and as international trade
sanctions against the country are being lifted, South Africa's trade policy is, of necessity, undergoing
certain changes.
The Department of Trade and Industry (DTI) said trade policy was an instrument of industrial policy
and should support industrial development and upgrading, employment growth and increased value-
added exports. South Africa had a relatively open economy, protected only moderately by tariffs,
where 56% of duties were set at 0%. In the 1986 Uruguay Round of multinational trade negotiations,
SA had negotiated as a developed country and the country had taken on commitments on a par with
those of the United States of America (USA), Canada, the European Community and Japan.
There had been extensive tariff liberalisation since 1994, but while South African exports had
increased significantly, the basket of export goods, with some notable exceptions, remained largely
unchanged. SA’s exports continued to be dominated by commodities, except in African markets.
There was a bias towards capital and high skill-intensive growth and the National Development Plan
(NDP), the New Growth Path (NGP) and the Industrial Policy Action Plan (IPAP) called for
“developmental trade policies” to encourage and upgrade value-added, labour-absorbing industrial
production.
SA’s trade agreements included the SACU, whose membership consisted of SA, Botswana, Lesotho,
Namibia and Swaziland. SACU’s work programme focused on the promotion of regional industrial
development, trade facilitation, the review of revenue sharing arrangements, the establishment of
common institutions and a unified engagement in trade negotiations with third parties. The SADC
free trade area (FTA) had been established in 2008 and implemented by 2012. Its priority was to
consolidate the FTA based on the recommendations of the Ministerial Task Force, as a prerequisite to
further consideration of the SADC Customs Union.
The SADC-Eastern African Community (EAC)-Common Market for Eastern and Southern Africa
(COMESA) tripartite FTA was the most promising initiative and in effect, SACU would negotiate tariff
concessions with non-SADC members of the tripartite FTA , notably the EAC and Egypt. The SACU-
India Preferential Trade Agreement (PTA) posed some challenges because of the Indian non-tariff
barriers, and the trade ministers had agreed in January 2013 to a reduced level of tariff exchange.
The SADC-EU Economic Partnership Agreement (EPA) had improved the Trade, Development and
Cooperation Agreement (TDCA) market access for SA agricultural exports, notably wine, ethanol and
sugar. The EU had agreed to eliminate all agricultural export subsidies on goods destined to SACU.
There was an agreement on Geographical Indicators (GIs), which included protection of “Rooibos”,
“Honeybush” and “Karoo Lamb” in the European market. The African Growth and Opportunity Act
(AGOA) had assisted in growing trade between SA, Sub-Saharan Africa (SSA) and the USA, and SSA had
called for a 15-year extension of AGOA beyond its expiry in September 2015.
Prior to the WTO’s Bali Ministerial Conference, the Doha Round had been at an impasse since July
2008. The recent Trade Facilitation Agreement was a major positive development, as well as
agreements that had a positive outcome on food security for India.
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