Trade needs more talk, fewer factions
by Catherine Grant Makokera,
2016-02-05 05:40:37.0
THE African Growth and Opportunity Act (Agoa) dominated the trade relationship between SA and the US last year. While many of us were enjoying the summer slow-down, work continued behind the scenes to ensure this year would see uninterrupted access for agricultural exports to the US under Agoa.
It is worth revisiting some aspects of this issue as it is still not fully resolved and provides insight into SA’s broader trade policy.
There are signs that the US is now prepared to use the leverage Agoa provides to attend to long-running concerns in their trading relationship with SA (such as access for poultry, pork and beef products).
This leverage was also raised against broader concerns from American business about SA’s economic policy direction and the effect on the investment environment of draft legislation and regulations (private security industry reforms, for example).
It should not come as a surprise that the out-of-cycle review SA has been through under the new Agoa legislation has not been an easy process. The US seized the chance to place pressure on South African officials to focus on and progress technical trade issues that have been brushed aside for some time.
The strategy worked, especially when the Americans announced that the consequences of failure would be to remove the preferences for agricultural exports from SA.
The latest communication from President Barack Obama gives SA until March 15 to not only tackle the policy concerns, but ensure implementation of the changes.
Leaving aside the technicalities, it is worth highlighting some broader lessons. First, communication is critical. The Department of Trade and Industry has chosen to downplay the risks and put up an optimistic front. Minister Rob Davies has provided numerous assurances that the process is on track and there will be a positive outcome for SA.
It was unfortunate that on a number of occasions this message was undermined by anti-US rhetoric from other politicians, the governing party and members of the governing alliance. It is one thing for the trade minister to recognise the importance of Agoa preferences, quite another for there to be wider buy-in to the broader partnership between SA and the US.
These mixed signals are reflected in the degree of mistrust the Americans have shown by insisting on full implementation of any agreement on imports of poultry.
Second, there is specific need for communication and mutual understanding between the government and the private sector on economic issues such as Agoa.
Even if it is decided to maintain a positive spin in public, government officials need to be open and honest with the business community about the status of the negotiations, and this should be done in regular, closed briefing sessions. These can’t just be with a select group, but must reflect the key stakeholders who will be affected by any changes.
Finally, the Agoa review process has highlighted the challenge of entering into a trade negotiation in which one party holds all the cards. SA’s trade policy approach is built on a reluctance to consider broad-based free trade agreements — even those discussed with African neighbours are of limited scope.
If SA were more open to the idea of a negotiation with the US (among others), the issues under consideration would be part of a broader agenda that would enable a range of trade-offs to play out in pursuit of a mutually satisfactory outcome.
It is time for SA to take a fresh look at its stance on trade negotiations and take advantage of the opportunities that exist for trade to contribute to the development and growth of the economy.
The review of SA’s trade agreements proposed by the African National Congress at its most recent national executive committee meeting could provide an opportunity for a fresh take on trade.
• Grant Makokera is a senior associate at Tutwa Consulting
Picture: THINKSTOCK
THE African Growth and Opportunity Act (Agoa) dominated the trade relationship between SA and the US last year. While many of us were enjoying the summer slow-down, work continued behind the scenes to ensure this year would see uninterrupted access for agricultural exports to the US under Agoa.
It is worth revisiting some aspects of this issue as it is still not fully resolved and provides insight into SA’s broader trade policy.
There are signs that the US is now prepared to use the leverage Agoa provides to attend to long-running concerns in their trading relationship with SA (such as access for poultry, pork and beef products).
This leverage was also raised against broader concerns from American business about SA’s economic policy direction and the effect on the investment environment of draft legislation and regulations (private security industry reforms, for example).
It should not come as a surprise that the out-of-cycle review SA has been through under the new Agoa legislation has not been an easy process. The US seized the chance to place pressure on South African officials to focus on and progress technical trade issues that have been brushed aside for some time.
The strategy worked, especially when the Americans announced that the consequences of failure would be to remove the preferences for agricultural exports from SA.
The latest communication from President Barack Obama gives SA until March 15 to not only tackle the policy concerns, but ensure implementation of the changes.
Leaving aside the technicalities, it is worth highlighting some broader lessons. First, communication is critical. The Department of Trade and Industry has chosen to downplay the risks and put up an optimistic front. Minister Rob Davies has provided numerous assurances that the process is on track and there will be a positive outcome for SA.
It was unfortunate that on a number of occasions this message was undermined by anti-US rhetoric from other politicians, the governing party and members of the governing alliance. It is one thing for the trade minister to recognise the importance of Agoa preferences, quite another for there to be wider buy-in to the broader partnership between SA and the US.
These mixed signals are reflected in the degree of mistrust the Americans have shown by insisting on full implementation of any agreement on imports of poultry.
Second, there is specific need for communication and mutual understanding between the government and the private sector on economic issues such as Agoa.
Even if it is decided to maintain a positive spin in public, government officials need to be open and honest with the business community about the status of the negotiations, and this should be done in regular, closed briefing sessions. These can’t just be with a select group, but must reflect the key stakeholders who will be affected by any changes.
Finally, the Agoa review process has highlighted the challenge of entering into a trade negotiation in which one party holds all the cards. SA’s trade policy approach is built on a reluctance to consider broad-based free trade agreements — even those discussed with African neighbours are of limited scope.
If SA were more open to the idea of a negotiation with the US (among others), the issues under consideration would be part of a broader agenda that would enable a range of trade-offs to play out in pursuit of a mutually satisfactory outcome.
It is time for SA to take a fresh look at its stance on trade negotiations and take advantage of the opportunities that exist for trade to contribute to the development and growth of the economy.
The review of SA’s trade agreements proposed by the African National Congress at its most recent national executive committee meeting could provide an opportunity for a fresh take on trade.
• Grant Makokera is a senior associate at Tutwa Consulting
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