Renewed EWC push threatens South Africa’s trade privileges – IRR

The implications of the signing of the Expropriation Act for South Africa’s trade access should not be underestimated, warns the Institute of Race Relations (IRR).

The presidential assent to the legislation signals renewed determination to push the expropriation without compensation (EWC) agenda. Much has been made of what this implies for South Africa’s investment environment, but there are implications for trade, too.

South Africa is a small, relatively open economy, for which global trade is a necessity. South Africa's exports make up the equivalent of around a third of GDP. Indeed, expanding its trade links – particularly its export performance – has been a consistent policy theme for decades.

In this respect, trade concessions and agreements that allow South African goods into foreign markets at favourable terms should be protected. Nothing posed a greater danger to this than threatening the interests of the countries extending those privileges.

“EWC and the threat to property rights represents just the sort of threat that will hit South African trade where it hurts,” says IRR projects and publications manager Terence Corrigan.

The most obvious casualty would be South Africa’s enhanced access to the US market through the Africa Growth and Opportunity Act. This explicitly requires respect for property rights; EWC would be the end of South Africa’s participation.

“AGOA may not be existential for South Africa, but is extremely useful; losing the access it grants would be painful,” comments Corrigan. “Arguably more important than its direct benefits, exclusion from AGOA would deal a significant reputational blow to South Africa’s international commercial standing. The current iteration of AGOA is in any event due to expire in September of this year; if there was ever a time when discretion was the better part of valour, this is it.”

Corrigan notes that this is a hazardous time for South Africa’s trade relations with the world. “President Trump is unlikely to feel any special sympathy for South Africa, given that it has long positioned itself as an opponent of the US. If South Africa moves towards threatening US commercial interests, AGOA would be off the table. Meanwhile, South Africa has a lot of global light on it given that it holds the presidency of the G20. This is a uniquely unpropitious combination of circumstances to push ahead with such a damaging policy.”

It should also be noted that EWC might not just be a factor for access to the US market. Since South Africa has trade deals with a number of other jurisdictions, notably the European Union, a far wider circle of trade relationships could be imperilled if the EWC course is pursued.

Globally, trade and investment flows are volatile, and countries that can provide safe and predictable environments stand to benefit disproportionately. There are significant opportunities in the reordering of global supply chains. South Africa needs to step back from EWC and embrace an economic course that will bring prosperity to the country's people.

Support the IRR in its fight for property rights via its website at www.irr.org.za.

Media contact: Terence Corrigan IRR projects and publications manager Tel: 066 470 4456 Email: terence@irr.org.za  

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za