Page 23 - 20 Cotton SA December 2019

/ INDUSTRY

The main objectives of the SADC are to: TRADE AND DEVELOPMENT
• achieve development and economic growth; COOPERATION AGREEMENT (TDCA)
• alleviate poverty; The current Trade and Development Cooperation
• enhance the quality of life of the people of Agreement (TDCA) between the European Union
Southern Africa; and and South Africa provides for the liberalisation on
• support the socially disadvantaged through the EU side of 95% on South African products and
regional integration. on the South African side of 86% of its duties on
imports from the EU. A new agreement between
In spite of these admirable goals, there is little South Africa, Botswana, Lesotho, Namibia,
evidence of real regional integration in the Swaziland, and Mozambique (known as the
SADC. SADC EPA group) and the European Union was
signed in 2016 and will replace the TDCA. It
THE NEW DREAM: AFRICAN will provide more access to EU markets for South
CONTINENTAL FREE TRADE African agricultural products.
AREA (AFCFTA)
In May 2019, AfCFTA was established when 24
countries submitted the necessary paperwork. Summary
To date 27 countries have ratified the AfCFTA Global economic growth largely depends
agreement. AfCFTA will focus on five operational on a stable trading environment. The recent
aspects namely: trade war between the USA and China has
• Rules of origin already resulted in weaker confidence and
• An online negotiating forum a slowdown in industrial production, particu-
• Monitoring and elimination of non-tariff larly in China, but also in other countries.
barriers The International Monetary Fund (IMF) warns
• A digital payment system that countries will have to resolve trade dis-
• African trade observatory agreements cooperatively and roll back the
recently introduced distortionary barriers.
African economic integration is still only a Realis tically, this will not happen very soon.
dream. While South Africa and the BLNS The international trade environment is
countries are still not able to integrate fully and very complex. The WTO provides a rule-
eliminate trade barriers between them, it seems based system for harmonising international
overly ambitious for a diverse group of countries trade. In addition to the very slow progress
to progress towards economic integration. towards freer trade and less trade-distorting
domestic support within the WTO, countries
BI- AND MULTILATERAL TRADE and groups of countries enter into bilateral
AGREEMENTS and regional trade agreements with the goal
South Africa has trade agreements with various of promoting freer trade. While progress to-
countries and groups of countries like the South wards freer global trade is slow and erratic
American MERCOSUR, European Free Trade and sometimes takes a few steps backwards,
Agreement (EFTA), SADC, Brazil, Russia, China it is slowly but surely progressing towards a
and South Africa (BRICS), and the European freer trade environment, with less support
Union (TDCA). Of these, the TDCA is probably to farmers in developed countries. Farmers
the most important one. While these agreements in South Africa produce at globally com-
provide opportunity for South African exports at petitive levels with little or no government
lower tariffs to these countries, it also provides assistance. This meagre support will de-
opportunities for these countries to export to crease further in future. The competition from
South Africa. In many cases, while the other developed countries may become slightly
partner countries are able to enjoy the more “fairer” as countries reduce domestic sup-
favourable opportunities in the South African port. However, South African farmers will
market, South African exports frequently find that have to be globally competitive to survive.
phytosanitary non-tariff barriers prevent exports.

Volume 21 No 4 December 2019 | 23