Thursday, January 29, 2009
By Dr. Jim Harris
To a protectionist, whenever two governments bilaterally remove some import-export taxes his country is ‘making a concession’ by doing his own consumers and the other country’s producers and consumers a big favour. He’d rather make everything locally and ‘support local jobs’ than trade across borders. The EU wants to finalise an economic partnership agreement (EPA) with the Southern African Customs Union (SACU) Botswana, Namibia, Lesotho and Swaziland (BNLS) have already signed. South Africa says it won’t sign without some changes. The crux – EPA includes a most-favoured nation (MFN) clause, properly requiring future trade concessions made by BNLS to other countries to be extended automatically to the 27 EU member-states.
If it won’t sign EPA-MFN, South Africa will destroy regional SACU solidarity to everyone’s disadvantage. In their own longer-term interest in exports and growth, the EU and BNLS should carry on regardless. Their desired end-goal is global free trade, not lunatic local self-sufficiency. EU trade officials Peter Mandelson and Louis Michel may have persuaded Messrs Motlanthe and Zuma to see sense. South Africa’s protectionist chief negotiator Xavier Carim may soon be replaced. We need someone keen to co-operate and globalise free trade for mutual benefit.
Dr. Jim Harris is with the Free Market Foundation in South Africa