Meh, Pretoria says as trade pact kicks in
Trade and commerce organisations applauded in March when the businessand job-boosting Trade Facilitation Agreement came into effect. But the government was silent.
The pact, brokered by the World Trade Organisation (WTO) and the UN Conference on Trade and Development, promises to streamline global customs clearance procedures, cut trade costs nearly 15% for low-income countries and create about 20-million jobs — the vast majority of them in developing countries.
“It could be a highly valuable development for us,” says International Chamber of Commerce SA director Pat Corbin. “It is expected to contribute $1-trillion to world trade, with Africa benefiting most handsomely.”
The agreement lists enforceable government commitments aimed at reducing red tape at borders, speeding up movement of goods internationally, reducing costs, increasing exports and creating employment. SA ignored the invitation to ratify the agreement, despite claiming for years that the government was dedicated to alleviating the barriers to trade by creating a fair playing field.
African countries have for years been fighting a losing battle to beef up trade among themselves. They have come up against the brick walls of bureaucracy, high transport costs, deal-busting tariffs and inefficiencies in delivery.
“The Trade Facilitation Agreement addresses these obstacles and more,” says Corbin. “For the first time, we in Africa have been presented with solutions that have a better chance of succeeding than anything we’ve had before — particularly in view of the long distances from our major trading partners.
“It’s as puzzling, I’m sure, to the WTO as it is to me that the South African government is not grasping this opportunity with both hands by refusing to partner with business and labour to implement the agreement.
“With the Trade Facilitation Agreement being supported and made the most of by enthusiastic governments, this continent cannot but benefit.”
Trade and Industry Minister Rob Davies did not respond to requests for comment.
Hester Hopkins, MD of Africa-wide Dutiport, a Durbanbased company focused on advisory and training services to the public and private sectors in international trade, believes the internal turmoil at the South African Revenue Service (SARS) and other issues are responsible for the government’s negative response to the agreement.
“There is quite a lot going on besides the Trade Facilitation Agreement — for example, the new border management agency and the imminent implementation of the new customs legislation,” she points out. “I don’t think they have sufficient capacity to fully consider and prepare for the implementation of the agreement.”
The agreement is made up of two sections: one deals with trade facilitation measures and obligations; the other with flexibility arrangements for developing countries and least developed countries. The biggest benefit would be for small businesses in developing and emerging economies, offering them greater integration into global markets.
Hopkins says one of the measures to support developing economies is that they are not obliged to invest in infrastructure that is related to trade facilitation beyond their means.
She says the costs of trade disproportionately affect small and medium-sized enterprises and, in some cases, render them uncompetitive.
THE FIRST STEP
Now that the Trade Facilitation Agreement has been ratified, it has to be implemented by WTO member countries.
“While entry into force of the Trade Facilitation Agreement is a pivotal moment for the multilateral trading system, it is only the first step in realising the real world benefits of the agreement,” says International Chamber of Commerce secretary-general John Danilovich.
“It is up to each country to determine how ambitious its implementation of the programme will be.”
The WTO requires that member countries form a committee representing the government and the private sector to bring the agreement into force. The South African government insists it will countenance only an “internal” forum that excludes business and labour.
Hopkins says there is no clarity on whether the interdepartmental committee involves all relevant government departments.
“This is often the first point of disconnect leading to the inability to reach conclusions or implementation. Unless both public and private sectors are involved, limited forward movement will occur,” she says.
“I would think that by now SA has learned [a lesson] through the long and arduous road of the SARS customs modernisation and limited stakeholder involvement but, alas, it appears not to be so.”