Academic journal article Strategic Review for Southern Africa

Towards a Trade Policy for Development: The Political Economy of South African External Trade, 1994-2014

Academic journal article Strategic Review for Southern Africa

Towards a Trade Policy for Development: The Political Economy of South African External Trade, 1994-2014

Article excerpt

1. Introduction

South Africa's external trade policy and level of openness to the world economy occupies an increasingly prominent position in political economy debates about the country's growth and development path. The government's most auspicious economic policies--namely the National Development Plan (National Planning Commission 2011), the New Growth Path (Economic Development Department 2010), and the National Industrial Policy Framework (NIPF) and its annual Industrial Policy Action Plan (IPAP) (Department of Trade and Industry, 2007)--all call for more 'developmental' trade policies to shift the structure of the economy onto a more sustainable, diversified and labour-absorbing industrial development path. The government's focus on a more strategic trade policy stands in contrast to the immediate post-apartheid years, when extensive tariff and trade reforms were pursued without any overarching industrial policy framework.

The trade liberalisation project of the 1990s that initially drove South Africa's post-apartheid global economic re-integration has now stalled amid growing liberalisation scepticism and de-industrialisation concerns. Whereas trade liberalisation was complementary to the austere macro-economic reform agenda of the initial post-apartheid years, industrial policy considerations have been the hallmark of the second decade of democracy. These measures, designed to strengthen and diversify South Africa's productive capabilities rather than outward-oriented reforms, continue to provide the overarching framework for South Africa's external trade agenda and negotiations. This emphasis on more development-oriented trade policies reflects sensibilities by the governing tripartite alliance led by the African National Congress (ANC) and a progressive global epistemic community that more strategic trade and tariff policies are instrumental for achieving industrial development (UNCTAD 2006; UNCTAD 2014). This view is consistent with the structural transformation experiences of the East Asian and other late-industrialising developmental states (Amsden 2001; Chang 2002).

This article critically reviews the evolution of South Africa's trade policy as an instrument of industrial policy over the two post-apartheid decades. South Africa's trade regime may be characterised as consisting of three pillars: trade policy (including tariffs and trade remedies (1), trade agreements or negotiations, and regional integration in Africa. The central argument of the article is that each of these policy pillars has been strategically recalibrated to support and reinforce the central objective of industrial development.

To advance this argument, the article is divided into four sections. The first section outlines how trade policy broadly defined has been integrated into South Africa's national development strategy as an instrument of industrial policy. The second section explores how South Africa's trade negotiating agenda at the multilateral, regional and bilateral levels is increasingly geared towards not only leveraging improved market access, but preserving and expanding policy space in international agreements to support the country's industrial development objectives. The third section outlines a fundamental shift in thinking on regional integration away from a conventional market-led model premised on the European Union's (EU) experience, to a 'developmental integration' approach that concurrently prioritises market integration, infrastructure development and structural economic transformation (DTI 2010). The article concludes with some observations about the future direction of South Africa's trade agenda during the third decade of democracy.

2. From Smith to Keynes and developmental trade policies

In 1994, the democratic government led by the ANC and its alliance partners inherited an economy in stagnation and crisis. Notwithstanding episodic trade policy reforms since the 1970s (Bell 1997; Edwards 2014), the new government confronted the challenge of building a modern, vibrant and outward-oriented economy that is internationally competitive, while also addressing the massive backlogs in access to social and economic services. …

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