South Africa said on Monday that industry bailouts by rich nations, especially in the carmaker sector, could be a covert form of protectionism skewing competition against developing countries.
Deputy Trade and Industry Minister Rob Davies said the vast sums of money being disbursed to rescue industries in advanced countries were far beyond anything that developing countries could contemplate.
At the same time there was a risk that pressure to avoid protectionism would focus on the only measures that developing countries can afford, such as higher tariffs, he said.
”We need to make sure that those disbursements do not mean that if there is going to have to be job layoffs, plant closures, these will fall disproportionately on plants and branches in the developing world,” Davies told Reuters after a lecture at Geneva’s Graduate Institute.
South Africa hosts operations of Toyota, General Motors, Ford, Volkswagen, Daimler and BMW, and exports cars to Japan, as all of Daimler’s right-hand-drive ”C” class Mercedes are made in here.
But the motor industry, which relies on both exports and domestic sales, has been hit by the global crisis, and South Africa has shed 36 500 jobs in the carmaker sector and in mining between July and February, Davies said.
He said the industrial bailouts now under discussion in countries such as the United States and France were not classic counter-cyclical spending to deal with a downturn, but subsidies to support particular industries which could have the effect of determining where factories remain open and where they shut.
”The motor industry is in decline. There is a necessary destruction of capital that is taking place in the motor industry. The question is who is going to bear the brunt of this,” he said in a question-answer session after the lecture.
Davies said it was important to avoid a situation where industrial subsidies were tolerated but measures suitable for developing countries were declared illegitimate.
”We’ve got to make sure that measures that are adopted do not disadvantage the developing countries,” he said. — Reuters