The relationship and
interaction between South Africa's trade policy and
industrial policy.
The timing and impact of
supply side measures in relation to tariff reductions.
The restructuring and
harmonisation of our tariff structure.
The effect of tariff
reduction and supply side measures on employment
creation.
The relevance of training
and human resource development to industry restructuring.
The impact of current
tariff reductions on the competitiveness of industry.
The effectiveness of the
Department of Customs and Excise in enforcing tariff
policy.
The negative impact of
foreign dumping on different sectors.
The monitoring of
international protectionism and unfair trade practices.
The accessing of
international fora to advance South Africa's interests.
Introduction
The industrial policy of
the present government is qualitatively different from
that of the previous government. Previous industrial
policy was focused on ensuring protectionism and inward
development of the different sectors. Domestic industry
was protected by high tariff barriers, high exchange
rates and subsidisation, and other demand side assistance
to an uncompetitive industry. The government and
parastatals like the IDC also invested in what were seen
as strategic capital intensive mega projects, whose
products were highly protected and resulted in
significant high costs for down stream industries.
The policy instruments of
the previous government included high tariffs, subsidies,
investment in large capital intensive projects and
subsidies for exports. This approach did not create a
world class competitive manufacturing sector nor
sufficient sustainable jobs. Also, many of the previous
programmes are not compatible with present international
trading practices and WTO rules.
The key instruments of the
present industrial policy are: incentives for value added
manufacturing projects, support for industrial
innovation, improving access to finance, creating an
enabling environment for SME development, export
incentives, promoting competition and consumer
protection. The current industrial policy is designed to
stimulate competitiveness, create a value added export
oriented manufacturing sector, and increase employment.
Integration into a
globalising world economy creates a number of
opportunities, but must also be recognised as a highly
uneven process in which there are losers as well as
winners. Globalisation can also lead to the
marginalisation of some countries, while others benefit.
There is an urgent policy need to develop a perspective
on South Africa's position in the global economy. As part
of this process, South Africa should ensure that any
international interaction should be on terms that benefit
the country. We should also become a driving force, in
working with other developing countries, to change the
global environment, with results that benefit peoples of
marginalised countries.
It is generally accepted
that South African industry needs to be transformed to
become more competitive in the world market. However the
timing of tariff reductions is important because some
local industries lag behind in establishing the
appropriate structures and capacities to become more
internationally competitive. If tariff reduction proceeds
too rapidly we risk losing local manufacturing capacity
and potential for job creation. An important question
raised during the hearings focused on the continued
protection of our vulnerable industries until they can
compete on the international market.
It was argued that we
should not weaken our domestic productive capacity in the
process of making South Africa more competitive. We need
to identify what parts of the economy we want to defend
and expand. This should inform a strategy for lowering
tariffs and should be complemented by effective supply
side measures.
In the invitations issued
to industry, emphasis was placed on the Committees
preference for presentations to be made by active
manufacturers with direct hands-on experience. The
Committee understands that although a very wide number of
views were heard, the presentations are partly self
selected and may be biased towards those who are
experiencing problems of adjustment. However a good range
of industry gave evidence and we are satisfied that a
sound overall impression of problems was obtained.
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Last Updated on August
31, 1998 by
Henri Fortuin from
the CSIR
