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To Liberalise or Not to Liberalise?
A Review of the South African Government’s Trade Policy

Peter Draper


28 May 2003

Posted with the permission of the South African Institute of International Affairs
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Trade policy is a central feature of the South African government’s economic policy. In the early years of the transition to democratic rule it was widely debated. This debate receded recently, but is returning to centre stage as government’s trade negotiators tackle a series of significant negotiations.

Yet trade policy is generally not well understood outside of the small circle of practitioners and thinkers involved in its formulation. Partly this arises from its ever-increasing scope. Entrenched ideological positions and associated misconceptions are also partly to blame. At a time when trade policy is returning to the center-stage of South Africa’s economic policy debate, it is necessary to remind ourselves where we stand on these issues, and chart possible future directions. This paper is intended to be a small contribution to that process. Section Two assesses a stylised debate between ‘free-traders’ and ‘protectionists’ in light of various strands of academic theory. It concludes that trade liberalisation is generally good for promoting competitiveness and that the latter is essential in a globalising world. However, this conclusion is hedged with the caveat that limited time-bound protection may be appropriate under certain circumstances arising predominantly from issues of social harmony.

Section Three assesses government’s trade policy by looking at the thinking of the Department of Trade and Industry, the main formulator and implementer of trade policy in South Africa. It reviews the entire web of trade policy formulation and synthesises recent evaluations of its impact. In doing so, possible future impacts and new directions are identified.

The concluding remarks summarise the central argument in this paper in light of South Africa’s experience with trade policy. Essentially, it is argued that whilst significant liberalisation has taken place since 1994, there is scope to undertake substantial further liberalisation. This should be seen as beneficial in its own right, to the extent that it actually occurs, but will to some extent be forced on us in any event. Therefore government’s current strategic approach finds support in this paper, although it is debatable whether this goes far enough.

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