Johannesburg - Minister for Economic Development Ebrahim Patel’s band-aid thinking to “aggressively” use tariffs to protect jobs exposed the lack of coherent government policy for job creation, analysts said yesterday.
In addition, that sort of policy might likely expose South Africa to trade retaliation and being blacklisted by its trading partners, the analysts added.
Addressing Cosatu delegates at the trade federation’s 12th National Congress this week, Patel tried to curry favour with the labour movement by promising that the government planned to use instruments such as tariff hikes to protect jobs in sectors threatened by imports.
With South Africa facing high unemployment, stagnant gross domestic product figures and a protracted battle to save the status of the Africa Growth and Opportunity Act, more coherence was expected from the government on the role of the National Development Plan in stabilising the economy.
“It looks likely that South Africa is using band-aid measures to deal with the mounting unemployment crises and placate its labour allies,” an analyst said yesterday.
Patel’s comments come as a major decision is due by the International Trade Administration Commission for tariff increases in various codes of the steel sector applied for by major steel producers against an onslaught of cheap steel from China.
In August, the government announced a conditional 10 percent duty on certain imported steel products to save the ailing steel industry, which is taking strain from cheap imports, mainly from China.
“I think we are stuck between a rock and a hard place because with the rand’s fall, we shouldn’t really need this tariff protection because the rand has fallen over 30 percent in the last two years. That in effect is a very good tariff barrier for us. If we need extra, I wonder if the firms that need them are efficient,” Mike Schussler, the chief economist at Economists.co.za, said.
“I understand the thinking to protect local industries but the point is how long you can apply these tariffs and you cannot apply tariff protection for industries that are not competitive, it would end up affecting the consumer and relations with other trading countries,” SA Institute of International Affairs research associate Azwimpheleni Langalanga said.
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