Trade Protectionism

Cosatu favours more trade protectionism

Deputy minister suggests return to marketing boards

By Donwald Pressly

The shift to greater protectionism in South Africa's trade policy has been broadly welcomed by Cosatu, which addressed the trade and industry portfolio committee yesterday.

Etienne Vlok, a Southern African Clothing and Textile Workers' Union representative, spoke on behalf of Cosatu at hearings on tariff policy at Parliament. He particularly welcomed the focus on beneficiation in the Department of Trade and Industry's policy and hailed what Cosatu called "the possible use" of export duties where required to support this.

While he did not spell it out, export duties could be used to encourage local manufacturers to focus on directing their products to local markets rather than turning to international - and unpredictable - markets.

Vlok argued that the recent economic crisis had exposed the weaknesses of the belief that developing countries should focus on exports to grow their economies. "After decades of pursuing this strategy, many developing countries continue to export raw materials and import finished goods."

A strategy of import substitution was needed, both to create jobs and to address South Africa's trade deficit.
The trade policy could be "the spinal cord" linking manufacturing as well as agriculture through increased beneficiation and protection where required, the labour federation argued.
Asked by MPs whether the input cost of workers was not an important ingredient in garnering greater industrial competitiveness, Vlok warned against South Africa engaging in "a race to the bottom".
For example, workers in the eastern Free State were told that workers in Lesotho were accepting lower wages. Then those workers in Lesotho were told that workers in Madagascar were paid less than they were, so they were not competitive. Then the workers in Madagascar were told that Bangladeshi workers were paid even less. "Where does that end?" Vlok asked.

Published on the web by Business Report on April 7, 2010.