Trade and Industry Minister Rob Davies fears a major effect on future industrial, tariff and trade policies. Photo: Supplied

CAPE TOWN – South Africa was getting the short end of the stick in the escalating global trade war, which might have a major impact on the country's future industrial, tariff and trade policies, Trade and Industry Minister Rob Davies said yesterday. 

Davies attended a meeting of the World Trade Organisation (WTO) in France on Thursday, where he discussed the growing plight of developing countries such as South Africa

Davies said in a phone interview from Paris that Thursday's meeting had followed a recent meeting of developing countries in India, where the problems experienced by other developing countries in the global trade war were brought to the fore.

South Africa's trade and tariff policy is underpinned by WTO rulings and the WTO provides dispute and enforcement mechanisms that have, in the past, been able to protect the local market from unfairly low-priced imports from other countries.

“The WTO is facing an existential crisis arising from the US’s refusal to agree to appoint the appellate body of the dispute mechanism of the WTO. If this continues until the end of the year the future of the enforcement of tariffs and duties on trade rules is uncertain,” said Davies. He said the US was also increasingly acting in a way where its trade policies appeared to be taken on arguments of national security, but there was no jurisprudence in the WTO for national security interests. 

A recent example was the imposition last year by the US on South Africa of a 10 percent ad valorem tariff on imports of aluminium products, and 25 percent ad valorem tariff on steel products on certain countries, for national security purposes. The US later gave South Africa some exemptions after Davies made representations to US trade officials about the potential impact on South Africa and the possible job losses to the local aluminium industry.

Davies said yesterday that the US and other OECD countries were demanding a reform of the WTO, but this had different meanings to different countries. 

While these developed countries were demanding a tightening of subsidies and greater transparency on tariffs, emerging market countries want developmental aspects and greater inclusivity in trade policies to be included in the reform process.

This would imply that allowing developing countries better access and benefits to trade agreements, in recognition of their far greater need to industrialise, and allow them to gain easier access to world markets that might otherwise be dominated by other, far bigger global competitors.

“In all trade agreements there are winners and losers. Better inclusivity would mean developing countries also derive benefit from trade agreements.

“Our trade and tariff policy was negotiated in the Uruguay round of the WTO negotiations by the former apartheid government, who defined South Africa as a developed country to the WTO, and our tariffs were cut too deep in the 1990s, which has had discernibly negative impact on our industrialisation,” he said.

“We don't want to be put in that position again,” said Davies.

The meeting that Davies attended was on the fringes of the Ministerial Council Meeting of the OECD, which started on Wednesday.

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