Dot Keet crossfire
South African trade negotiators must surely have learned from this country’s hard experiences with the European Union that trade negotiations have very little to do with the rhetoric of “partnership” and a lot to do with the ruthless promotion – and, where necessary, protection – of the interests of national and multinational producers, exporters and investors driving European technocrats and politicians. However, judging by their current enthu-siastic pursuit of free trade agreements in a number of directions, it seems that South Africa’s trade strategists have still not begun to understand the tendentious aims and fallacious claims about “free trade”, and the enormous risks they are taking not only on behalf of South Africa but also the rest of the Southern African region. The fundamental problems with South Africa’s trade agreement with the EU do not actually lie with the much-reported “labelling” devices and delays imposed by the Europeans. The real problem is that, despite a certain degree of asymmetricality in the respective product coverages and implementation time- tables for EU and South African exporters, it is doubtful how many or which, and to what extent or on what scale the latter will be able to take advantage of the relatively greater “openings” into the EU market that the free-trade agreement promises to bring. On the other hand, there can be no doubt that large-scale, highly competitive EU producers and exporters are poised to move energetically into the South African market as it opens up. Many are already doing so, even under the current tariff regime, with already evident negative effects in various sectors within this country. Minister of Trade and Industry Alec Erwin urges South African producers and exporters to be “more professional” in their marketing strategies, but the problem is much deeper. There is a real danger that the competitive pressures from EU imports on local manufacturers will not follow neo-classical trade theories that free trade will stimulate them to “become more competitive”. It is far more probable that, in the difficult process of restructuring the South African economy, such foreign competition will prove fatal to what may be potentially productive but currently “internationally uncompetitive” companies. They will be pre-emptively wiped out by European companies in what is dubbed “efficient resource reallocation”. This is the real meaning of the euphemistically termed “adjustment costs” which South African trade officials and analysts blithely state that the South African economy and workers will have to bear in order to reap the eventual rewards of free trade. The dangers are real and already manifest. The future gains are a hypothesis or promise. This sounds more like theology than a soundly based and secure economic development and employment- creation strategy. What threatens South African producers and workers is even more dangerous to the even weaker and “less competitive” companies in Botswana, Lesotho, Namibia and Swaziland. They will, as members of the Southern African Customs Union (SACU) with South Africa, be included in South Africa’s free-trade agreement with the EU. This means that, even where they have reasonably effective companies – such as Fridge Master in Swaziland – which rely largely on exports into the SACU market, they will have to “compete” with European exporters. They could also be losing the right that they have long had with the Europeans through the Lome Convention not to have to reciprocate trade access. These dangers also apply to the rest of the Southern African Development Community (SADC) as they now enter into a free-trade agreement with South Africa. There are differential tariff reduction schedules between South Africa and the other SADC countries, and also among them in reflection of their own relative economic strengths. However, as with South Africa in relation to the EU, it has to be asked whether the apparently generous opening up of the South African market to the rest of SADC is really meaningful while their product quality and price competitiveness, production volume and delivery capabilities are very limited.
On the other hand, South African producers and exporters have already shown themselves well able to take advantage of even the existing levels of tariff liberalisation in these countries to create growing trade imbalances of an average of 7:1 in South Africa’s favour. And, like the EU, South Africa has been very careful to ensure that most of the products in which the other SADC countries could even remotely offer some competition to South African producers – such as textiles and clothing, food, beverages and tobacco – have been placed on the list of “sensitive products” to be dealt with at some future date, or subject to quota limitations.
Far from recognising such dangers of free trade for the countries of Southern Africa in relation to South Africa, and for them all in relation to the EU, Erwin appears to favour working towards an EU-SADC free-trade area, according to a paper delivered to a forum of SADC parliamentarians in March 1998. This approach is now also being pursued by the Department of Trade and Industry through preferential or free-trade agreements with a number of countries in Africa, Asia and Latin America. These South African “bilaterals” will de facto involve the other members of the putative SADC free-trade agreement. In the case of South Africa’s own proposed – and very risky – free-trade agreement with the much more developed Brazilian economy, this bilateral free-trade agreement will also entail direct implications for the whole of SADC, and with the whole of the much more developed Mercosur common market, of which Brazil is the leading member. The alternative is not to argue for unqualified policies of protectionism and, even less so, economic autarchy. What is needed is a strategy that starts from integrated economic development and diversification programmes – within and towards which appropriate, variable, targeted and preferential external trade relations are negotiated, as and where necessary. But, of course, this entails challenging and changing the so-called “global free trade” system being driven on behalf of the stronger economies and their corporations by the International Monetary Fund, the World Bank and the World Trade Organisation.