South Africa Trade Performance Reviews (TPR)

Intra-SADC Trade Performance Review 2006: Chapter 6: South Africa

Year of publication: 
2006
Author(s): 
Landon McMillan, TIPS
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South Africa enjoyed a trade surplus with the rest of SADC under the review period, with trade peaking at R24.1bn in 2002. The region, though, made up slightly more that 10% of South Africa’s total trade. Imports from the SADC were 2.5% of South Africa’s total imports while exports had a 8.5% share of total.

South Africa’s leading trade partner was the EU, with more than 70% of the country’s total trade occurring with that market. From the SADC region, South Africa imported mainly mineral products and from the rest of the world, it imported predominantly machinery. The national structure of production is shaping the pattern of trade in the region though the level of development prevailing in countries surrounding SA and the state of infrastructure in these countries curtail exports.

There are mixed effects of the characteristics and changes thereof for the future pattern/direction of trade: on the one hand, a lowering of the miscellaneous barriers against the movement of goods and against trade will increase trade. In contrast, increasing FDI could lower trade as capacity develops outside SA thus increasing product variety. However, the latter could be associated with an increase in trade if FDI (and trade) allows these economies to diversify their production base However, the data analysed in this chapter suggests a declining export focus to the SADC region over the period.

In parallel South Africa is displaying growing import orientation towards its SADC partners. The data also suggest that retailers might have played a key role in SA developing RCA around its exports to the region; in other words, we can identify through the data, the importance of services in driving the expansion of trade in goods.

Trade Performance Review 2005: South Africa

Year of publication: 
2005
Author(s): 
Owen Willcox
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SA's trade balance declined from quite healthy surplus in 1999 and 2000 to a general neutral balance between 2001 and 2003. The movements of the Rand have been central to SA's trade. For instance, the effect of the substantial currency depreciation at the end of 2001 can be seen clearly in the large increase in exports in 2002. During 2002 and into 2003, the Rand strengthened and exports declined. 2003's decline in imports was probably due to a slowdown in domestic demand. The long-run trend shows that imports are growing more quickly than exports.

SA has consistently had a trade surplus with SADC. In fact, much of SA's large trade surplus in 1999 and 2000 appears to be due to trade with SADC. Trade with SADC is growing marginally quicker than trade with the rest of the world. SADC trade also mirrors world trade in that imports are growing quicker than exports, but SA exports to the region are still nearly five times as much as imports. Exports to the region make up almost 10% of SA's total exports, while imports from the region account for only 2% of total imports.

The fact that trade with the region is unbalanced explains why SA has undertaken asymmetrical liberalisation as part of the SADC Trade Protocol. The unbalanced trade may also be reflective of SA's relatively good infrastructure for getting products to markets, and the SADC countries' relatively weaker infrastructure. It may also be due to the terms of trade between SA and other SADC countries - SA exports mainly higher value-added manufactured goods but imports largely lower value primary commodities. SA's main formal statement of trade policy from Government, GEAR (Growth, Employment and Redistribution), was issued in 1996 as part of the country's macroeconomic strategy. GEAR was similar in many respects to a structural adjustment programme, and sought to make the economy more competitive and export-focused by reducing very high tariffs - one of the side-effects of sanctions and disinvestment during the apartheid era. SA acceded to the WTO in 1995 and the initial offer contained significant cuts in levels of protection. Tariffs were reduced from the mid-1990s, faster than the rate bound in the WTO offer. This process ended around 2000. Since then, SA has pursued liberalisation through bilateral trade agreements.

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