HERMAN BEZUIDENHOUT: South Africa and the imperatives of global trade agreements

Global trade agreements, governed by the World Trade Organisation (WTO) and anchored in the Marrakesh Agreement, have redefined the global economic landscape. For South Africa, these frameworks have been pivotal in transforming the nation from decades of protectionist policies into a dynamic, export-driven economy integrated into global value chains.

The journey — from an era marked by high import tariffs and extensive non-tariff barriers (NTBs) to a more outward-looking and competitive market — illustrates how international trade rules have reshaped domestic policies and spurred growth.

The Marrakesh Agreement, signed in 1994, established the WTO to promote fair competition, transparency, and the gradual liberalisation of global trade. Its guiding principles — especially non-discrimination through the most favoured nation clause — have provided a stable environment for economic engagement.

For South Africa, joining this rules-based system in 1995 required significant commitments, including lowering tariffs and reducing non-tariff barriers (NTBs). These reforms created a more competitive environment while granting access to the WTO’s dispute settlement mechanism, which safeguards national interests and addresses unfair trade practices.

Before the 1960s, South Africa’s economic policy prioritised self-sufficiency through high import tariffs, quotas, and licensing requirements designed to protect local industries from international competition. While this approach fostered domestic production, it resulted in inefficiencies and elevated consumer costs, ultimately hindering economic growth.

By the late 1980s, economic isolation had become increasingly unsustainable. Faced with internal economic pressures and international sanctions, the government pivoted towards a more outward-orientated strategy. The general export incentive scheme, introduced in 1990, marked a critical shift by encouraging exports. This policy change laid the foundation for South Africa’s integration into global markets in the 1990s.

The end of apartheid in 1994 marked a new era of economic reform. Between 1995 and 1999, the new democratic government implemented significant trade liberalisation measures. Import tariffs were systematically reduced and numerous NTBs were dismantled. These reforms aligned with WTO commitments under the Marrakesh Agreement and aimed to modernise South Africa’s industrial base.

While some industries experienced short-term job losses as competition intensified, the long-term strategy was to create a resilient, globally competitive economy. Lower tariffs reduced input costs, attracting foreign investment and enhancing the efficiency of local producers. Key sectors like automotive manufacturing, agriculture, and mining benefited from greater global market access.

Since 2001, South Africa’s economic strategy has evolved to focus on WTO-compliant supply-side measures. The government shifted away from direct export incentives, which the WTO discourages, towards broader initiatives aimed at enhancing competitiveness. Investments in infrastructure, skills development, and innovation have become central to this approach, enabling domestic industries to thrive in global markets without distorting competition.

Simultaneously, South Africa has pursued bilateral and multilateral trade agreements to secure preferential market access. These agreements complement the WTO framework, ensuring that South African goods can compete under favourable conditions. This dual strategy — combining improvements in domestic competitiveness with targeted market access initiatives — has been essential for sustainable growth.

The role of Agoa in South Africa’s trade strategy

A notable example of how preferential trade agreements enhance export-led growth is the African Growth and Opportunity Act (Agoa). Enacted by the US in 2000, Agoa provides duty-free access to the US market for a wide range of products from eligible African countries, including South Africa.

Agoa has significantly benefited South Africa’s automotive, agricultural (citrus and wine), and textile sectors, aiding in the diversification of its export markets. While it does not impose strict conditions, it encourages improvements in governance and higher labour standards, aligning trade with broader socioeconomic objectives. Despite its dependence on US political decisions, Agoa remains an essential component of South Africa’s export diversification strategy.

South Africa’s transformation from a protectionist economy to a dynamic, export-orientated player underscores the importance of aligning international trade commitments with domestic objectives. While trade liberalisation has brought substantial benefits, it also emphasises the need for policies that address the social impacts on vulnerable sectors.

Enhancing competitiveness must be accompanied by targeted support for workers and communities affected by rapid economic changes. Leveraging WTO rules, engaging in strategic bilateral agreements and capitalising on initiatives like Agoa will be crucial for future growth.

South Africa’s adaptive response to global trade imperatives has transformed its economic landscape. The Marrakesh Agreement and WTO framework have supplied both the structure and impetus for significant reforms, while preferential arrangements such as Agoa have opened vital pathways for market access. Looking ahead, balancing global integration with domestic priorities will be crucial to ensuring that the benefits of trade are widely shared across society.

• Bezuidenhout is the founder of international trade/banking FSP BeztForex.co.za and the global trade AI platform Zynched.com