Economic development

Minister Patel’s “bring and braai”

South African industries threatened by imports have to rely on more than an official investigation to secure protection through tariffs and anti-dumping duties. They also, it seems, have to give something in return.

And, if you don’t give, then no matter how valid your application might be, you probably won’t get the trade protection you deserve, according to Donald MacKay, CEO of XA Trade Advisors.

He says tariff determinations have become dependent on “reciprocal agreements” between Trade, Industry and Competition Minister Ebrahim Patel, and the industry concerned.

The agreements are confidential and MacKay says they should be made public.

Reciprocal agreements have become a normal component of tariff investigations, MacKay writes. “If you want a duty change, you need to ‘give’ something in return (Minister Patel quaintly refers to this as a bring and braai).

“The something might be more jobs, training, additional investment and so on. If agreement cannot be reached, the concession is presumably not given. These agreements are confidential, making it impossible to determine the positive (or not) economic impact of the terms in the agreement.”

MacKay says South Africa’s trade regulator, the International Trade Administration Commission (ITAC), need not publish the details of such an agreement, but “I believe it essential that ITAC record if an agreement was signed, or not, and how this impacted the final decision.”

He referred to an application by food producer Nature’s Garden for increased duties on imported frozen vegetables. Not only was the investigation not completed in the required six months, but it took ITAC 53 months to recommend the higher duties requested.

This month, Minister Patel rejected the recommendation and instructed ITAC to report back in nine months’ time on the possible price impact of the duty increase.

“In this case, we don’t know if the reason for the rejection of Nature’s Garden’s application is because it had no merit or because they refused to sign the reciprocal agreement,” MacKay said.

He didn’t mention another possible factor – that most of the vegetable imports about which Nature’s Garden is complaining come from China, a member of the BRICS group of nations which will be meeting in South Africa next month.

The financial newspaper Business Day said Minister Patel had to perform “a tough juggling act” when considering imposing any trade instruments on South Africa’s BRICS partners “as he has to balance diplomacy with the country’s trade ambitions”.