Alexis de Tocqueville observed that democracy and socialism have nothing in common but for one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.
In the corridors of power, where policy meets politics, SA’s trade landscape is a battleground of Tocquevillian proportions, murky dealings, and lost opportunities. While the five tenets of successful trade policy formulation — public consultation, measurable goals, competent implementation, continuous evaluation, and adjustments when needed — seem like elusive mirages on the horizon, the nation’s trade policy journey has been fraught with obstacles and questionable decisions, leaving business grappling with a deeply uncertain future.
Trade policy advisers tell me that the implementation of trade policy has experienced a huge degree of politicisation of late, undermining the ability of technocrats to execute their roles effectively. The upshot is that decision-making has been plagued by outcomes that fall woefully short of achieving their intended economic aims, resulting in a frustratingly slow process. Adding to the complexity is the requirement imposed by trade, industry & competition minister Ebrahim Patel of reciprocal agreements for each duty-related decision from the International Trade Administration Commission (Itac). This additional layer of demand has deterred many companies from pursuing the application process altogether.
A glaring consequence of this politicised approach to trade policy is the decline in the use of critical trade policy instruments. All indications point to the number of tariff investigations conducted by Itac falling to a decade low, a troubling trend particularly during times of economic stress when such instruments should be more actively employed. The reduction in the use of these instruments has left businesses uncertain and hesitant, reflecting a loss of trust in the process and highlighting its inherent flaws.
In the delicate dance of global commerce, trade policy serves as the maestro, orchestrating the harmonious coexistence of imports and exports. It is the art of economic diplomacy that shapes our competitive standing on the world stage. Yet, our once well-tuned policy dance is now wholly out of step with the rest of the world, tripped up by Patel’s two left feet.
Gone are the days of proper public consultation, where the wisdom of the crowd guided policy course corrections. Instead, policy decisions have become shrouded in secrecy, hidden behind the veil of political expediency in the form of Patel’s reciprocal agreements. The agreements are confidential and Donald MacKay of XA Global Trade Advisors says they should be made public. As clear and measurable goals dissipate into thin air, we’re left wondering if our trade policy compass has lost its direction.
Most businesses are collapsing under the weight of chronic load-shedding and the resulting increase in operating expenses to compete with the rest of the producing world, where power is a given and is usually available 24 hours a day, 365 days a year. If trade relief evaporates in the smoke-filled rooms of Patel’s quid pro quo policy preference then businesses will do what they have to to survive — cut costs, cut jobs, delay new investment, close branches. This is how an economy dies.
Trade policy instruments, once wielded with some degree of purpose, now gather dust on the shelf. Their usefulness diminished, and their potential squandered. Instead of a well-orchestrated symphony of economic empowerment, we are left with a cacophony of missed opportunities.
Patel clings to a questionable life raft of localisation and import replacement. A strategy with limited potential given our competitive constraints, anchored by trade policy levers, but it too is showing signs of strain. Designation, hailed as a panacea for government procurement, falters under a cloak of opacity and rampant mafia demanding their 30% share. A black box of decisions, leaving businesses in the dark, uncertain of their fate.
Amid the chaos, the XA Tariff Investigation Reports released earlier in 2023 provides a sobering reality check. Prolonged delays and escalating costs paint a bleak picture of a system on the brink. Attempts to engage with the arbiters of trade policy fall on deaf ears, leaving crucial issues unresolved.
To bring our trade policy back into harmony MacKay’s solutions are relatively straightforward.
Put in place legal time constraints. There is no legal necessity for a tariff inquiry to be completed. The approach is to set restrictions, like we do with antidumping investigations. Only two antidumping investigations have ever lasted longer than 18 months since World Trade Organisaton regulations require them to expire beyond that time.
XA recommends amending the tariff regulations to impose a hard limit of 12 months on all tariff investigations, after which they are forced to terminate.
And publish all private settlements. It is probable that some of the past-due cases were handled privately with the applicants. When this occurs, it must be publicised in order for the matter to be legally concluded. The report, like all previous investigations, should be disclosed along with the reasons for the conclusion.
If a case is closed because the applicant declined to sign the reciprocal agreement, this information should be included in the report.
What we’ll probably get, though, is yet another Master Plan to deal with outstanding investigations.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at badger@businesslive.co.za.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.