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Date : 30/09/2003
Source: Department of Trade and Industry
Title: Erwin: Opening of SA Trade Exhibition (SAITEX)


SPEECH BY THE MINISTER OF TRADE AND INDUSTRY, ALEC ERWIN, AT THE OPENING OF THE SOUTH AFRICAN INTERNATIONAL TRADE EXHIBITION (SAITEX)


Introduction

I am delighted to join you at this 2003 South African International Trade Exhibition (SAITEX). SAITEX is the most important international trade exhibition in southern Africa. Since its inception in 1993, SAITEX has successfully promoted increased trade between South African, African and foreign companies. For instance, over a decade ago, SAITEX was host to more than 40 countries who had never done business with South Africa before.

So far, SAITEX is the only multi-sector trade fair of its size and kind on the continent and annually plays host to hundreds of exhibitors showcasing products, services, and economic opportunities from all over the world. We would like to see this phenomenon developing and being entrenched in other countries and regions of the African continent.

SAITEX is well known for translating export, import, development and investment opportunities into business transactions. Indeed, this annual event has become an important "pilgrimage" for many international traders.

For many of you SAITEX is one of the many circuits you have visited and will still visit this year. Your enthusiasm leaves one with a great sense of optimism about the prospects of the global economic recovery.

Outcome of the Cancun Summit

To a certain extent, your participation in this and other international exhibitions provides evidence of your faith in the (equitable) global trade system. As you were preparing to come to Johannesburg, the 146 member states of the WTO were uncertain about what was going to be achieved at Cancun. Yet, you were not discouraged, you went ahead with your plans to come to this exhibition.

At Cancun, we were meeting to review the progress of the Doha Round of trade negotiations. The significance of the Doha Round lies in the fact that the 4th WTO Ministerial Conference marked the first time that developing country interests were put at the centre of the agenda of multilateral trade negotiations. These interests include agriculture, intellectual property and public health, and strengthening special and differential treatment for developing countries.

The time frames for concluding agreements on these issues have been missed. Hence, there was uncertainty surrounding the Cancun Conference.

Notwithstanding the uncertainty surrounding the conference, we went to Cancun hoping to achieve a breakthrough in the negotiations of the Doha Round. This was not to be as the conference failed to reach consensus on critical issues.

Despite the setback in Mexico, there still is a glimmer of hope in that the Ministerial Statement issued in Cancun urges WTO Members to continue working on outstanding issues with a renewed sense of purpose and to take fully into account the views expressed at the conference. What remains now is to ensure that negotiations are kept on track.

It is heartening that the developing countries have come out of the meeting stronger and more united in their approach to the WTO trade negotiations.

It has become imperative that the WTO member states conclude the Doha Round if we are serious about eradicating the scourge of poverty in the developing world. Also a successful Doha Round will serve to boost international trade. By removing trade restrictions - especially in areas of interest to developing and least developed countries. At the same, developing countries have a greater responsibility of stimulating trade with each other (in order to diversify dependence on developed markets).

Developing Countries: A Growing Force

The South African Government is particularly pleased to acknowledge the presence of so many traders from the developing countries. Your presence here serves to enhance the South-South cooperation at the economic level.

According to the United Nations Conference on Trade and Development (UNCTAD), between 1990 and 2000 the share of intra-developing countries trade grew at an annual average of 12% - two times faster than global trade. However, the effects of the Asian crisis dampened the developing countries import growth between 1997-2000.

The challenge facing us is replicate the gains of 1990 and 2000. Not only that, as countries with a large number of the population living under poverty, we need to mainstream trade in order to advance our socio-economic development agenda. This is what is we set out to do in the Doha Round in November 2001, and we reinforced this idea at the World Summit on Sustainable Development (WSSD) in September last year. At the WSSSD, the WTO member states were urged to ensure that their negotiations in the Doha Round takes into account the special needs of developing and least developing through asymmetrical reduction of trade barriers.

Unlike the developed countries, the South has a pressing moral obligation to increase its share of international trade in order to lift its population from the slums of poverty. A number of trade opportunities are being created that could be exploited in partnerships with African countries. For instance, the African Growth Opportunities Act has opened up the United States market for African-based businesses. Similarly, more opportunities will be created once the US-Southern African Customs Union free trade negotiations are concluded.

Opportunities Presented by SADC, SACU, and NEPAD

Southern Africa with a population of over 150 million citizens is potentially a lucrative market for investors. The Southern African Development Community (SADC) countries are working to restructure and modernise their economies. The same is happening at the continental level, where we have the NEPAD framework as one of the driving forces for the modernisation of the African economies.

The SADC region has now managed to restore peace and stability - with the end of the civil wars in Angola and the Democratic Republic of Congo. As a region, we recognise the urgency of restoring and upgrading our infrastructure to enhance both intra-regional and international trade.

In this regard, South Africa has launched spatial development initiatives (SDIs) that are focused on the southern Africa region. The Maputo Development Corridor - a successful example of such SDIs - has resulted in substantial investments in both Mozambique and South Africa. The work on the corridor entailed, among other things, restoring and upgrading the Maputo harbour. The South African government is working to address the problem of congestion at the Durban port - the busiest port in Africa.

Therefore, as the region sets about upgrading its infrastructure there will be greater demand for heavy equipment machinery and other infrastructure-related equipments - e.g. cranes for ports, containers, rolling stocks, etc.

SA Economy

SA recorded solid growth during 2002, with gross domestic product (GDP) expanding by 3% as domestic demand remained relatively robust, thus helping to counteract the negative effect of the sluggish global economy and strong rand on exports. There has been strong growth in the tertiary sector, which accounts for 67% of GDP, reflecting robust growth in sectors such as wholesale and retail trade, transport and communications, finance and real estate. Although we have a positive growth rate, it remains inadequate to deal with South Africa's problems of unemployment and poverty.

2002 data show that South African labour costs have fallen in real terms by 6% in the last 10 years. An analysis of the GDP shows that the share that went to labour had fallen below the share that went to profits for the first time in 21 years.

The data shows that the South African exports are growing, and these were not just the traditional commodity exports, but items such as cars, furniture, paints, and chemicals. Non-traditional agricultural exports were also growing - e.g. olive oil and dried fruits. Exports have increased by 70% over the past decade to more than 29% of GDP. Manufactured exports now comprise 32% of the total, indicating that companies are moving into value-adding manufacturing.

Manufacturing Performance

South Africa's total manufacturing production soared by 5,4% in 2002. This was the highest annual increase since 1995, when manufacturing production surged by 8,1% after six years of subdued growth. Increases in manufacturing sales were reported by all 27 manufacturing divisions. The total value of sales of manufactured products at current prices for the year 2002 surged by 22,2% to R613, 94 billion.

Services

South Africans are also exporting services. For instance, American architects are subcontracting their work via the Internet to local architects. Similarly, South African banks are doing 'back office work' for London banks the same way. All this had been achieved without subsidies from government.

The dti offerings

Since 1994, the South African government has been working to ensure a fair, competitive, and efficient markets for domestic and foreign enterprises and consumers, because these are critical in creating an enabling environment for economic growth and development.

Our government is playing an activist role in developing and strengthening the linkages between economic growth and higher levels of employment and equity.

We believe that an integrated and advanced manufacturing sector can bring about higher levels of economic growth and development across the economy. As a result, we have prioritised ten sectors that have a strong potential to drive our economic growth. These include the following sectors: agro-processing, chemicals, clothing and textiles, minerals and mining; aerospace; manufacturing, services, and tourism. These form part of the exhibition by the South African industry and business.

The South African government upholds and protects private property and intellectual property rights.

When you visit the dti stall you will find publications outlining government's and the dti's view on industrial and trade policies. Some of these publications contain information on the dti offerings.

Conclusion

Apart from providing an opportunity to sell your goods and services, this trade exhibition also provides a chance for you to draw on local expertise and culture to create mutually beneficial and sustainable business relationships. South African companies operating business interests on the continent have come to understand and embrace the true value the local partners bring to their businesses.

Source: Department of Trade and Industry (http://www.dti.gov.za)
Published 2 October 2003

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