A SMALL and shrinking percentage of bilateral trade flows are eligible for preferences. Modern free trade agreements (FTAs) offer substantially less “preferential” tariff access than in the past; the focus is rather increasingly on regulatory standards and other non-tariff measures.
The so-called “behind-the-border-protectionism” in the form of regulation, standards and subsidies is thus highly relevant in the 21st Century and any business failing to be aware of this faces higher compliance and trade costs.
Given the lacklustre economic growth globally and locally, with unemployment up to 25.5% a reflection of the worries in South Africa, we can no longer afford to be ignorant of behind-the-border-protectionism. Ignorance, in this case, is not bliss but a shot to the foot – and the other foot is already held down by lead.
Government has in place its National Infrastructure Development Plan (NIDP), which is supposed to be radically different than previous initiatives because it is geared towards attracting and facilitating investment, while reaching across all provinces. The NIDP is geared towards a) transforming South Africa’s economic landscape, b) virtually eliminating unemployment and c) improving the delivery of basic services. Furthermore, the plan forms part of our country’s measures to counter the impact of the struggling global economy on South Africa. In other words, government is trying to remove the lead boot.
With the lead boot removed, the private sector must come to the party. Any business wishing to “attract and facilitate investment” needs to be attractive to the foreign investor, which implies some degree of proactive behaviour, for all because of the country’s low credit rating. Thinking pragmatically and in terms of potential financial gain/loss, would you invest in a country with a rating only just above “junk” status?
To be proactive, South Africans need to worry less about tariffs and more on regulatory standards and other non-tariff measures, as mentioned. One way of staying informed of the behind-the-border-protectionism, is to collaborate with your export association or industry association. However, these associations charge.
In order to save you money, you can circumvent the associations and go directly to the primary source of such information: South Africa’s Enquiry Point, which sits within the SABS. The Enquiry Point can and will assist you with regulatory standards free of charge and all that is needed from you, is an email.
Better still, the Enquiry Point receives notifications of regulatory standards before they come into effect, which means you have time to comment on the standards and potentially alter them in your favour. Or, at the very least, change your production line so that you are compliant with the standards as soon as they come into effect.
In other words, the Enquiry Point helps you minimise your compliance and trade costs. In addition, being aware of the behind-the-border-protectionism will only benefit your trade and lead to growth for your business which, in turn, is a great way to demonstrate that investing in your business is worthwhile.
* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.