The current proposals would result in a disproportionate impact on certain key, relatively labour intensive sectors of the South African economy. In a country with an unemployment rate of around 25%, these NAMA proposals are both politically and economically untenable.
BUSA has called upon the developed members of the WTO to show leadership this week and to live up to their responsibilities by ensuring that effective reform takes place in the area of agriculture. The normalisation of conditions for trade in agriculture has the potential for economic upliftment and poverty alleviation for millions of people in South Africa and elsewhere in the developing world.
Certain developed countries have not yet made the expected commitments with regards to reductions in domestic support and tariffs on agricultural products. The Doha Round was supposed to target agricultural products with high tariffs and trade distorting subsidies as well as other issues of specific interest to developing countries. The result for South Africa of agreeing to the modalities as they currently stand would be large tariff cuts on industrial products by a relatively small developing country with a high level of unemployment, in exchange for inadequate commitments on agriculture.
Under the Uruguay Round, South Africa was regarded as a developed country and had to make the required 1/3rd cut in the bound rates for industrial or non-agricultural products. At the time South Africa also increased its binding coverage from 16% to 97%. About 53% of our industrial tariff lines have zero applied tariffs and we have therefore unilaterally opened up our market for imports.
There are some sectors that are sensitive, particularly in terms of employment. Even these sectors, such as textiles, clothing, footwear and automotive products already experience high levels of import penetration. This is indicative of South Africa's open trade regime and is also reflected by the lack of any significant non-tariff barriers (NTBs). Under the proposed co-efficients for the Swiss Formula that were indicated in the last draft of the Chair's text, a high percentage of the applied rates of sensitive products will have to be cut by more than 30%.
Although provision is being considered for less than the full formula cut on a restricted number of lines, this still means that the applied rates of 21% of South African NAMA tariff lines would have to be cut by more than 30%. To make the situation worse, certain developed countries are now proposing the so-called anti-concentration provision. If this last-minute proposal is accepted then South Africa would only be able to partially accommodate its limited number of sensitive products under the flexibilities proposed.
BUSA supports the view that agriculture forms the central pillar of the current round of negotiations. There should be a comparably high level of ambition in market access for agriculture and NAMA. On domestic support BUSA calls for effective cuts in the overall trade distorting domestic support. Furthermore, capping products-specific support will limit concentration on certain products. Proposals to allow countries such as South Africa to provide support towards its agricultural development goals through so-called green box support should be accepted.
All forms of export subsidies must be eliminated and greater disciplines must be placed on food aid to limit commercial displacement. Regarding market access, BUSA is concerned that any ostensible advantage which South Africa stands to gain through multilateral talks on agriculture may be negated by the demand of developed countries to exclude certain products from tariff cuts - i.e. so-called sensitive products. The formula for tariff cuts must be ambitious and the minimum average cut of 54% for developed countries is to be supported.
