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SA business perceptions of a Free Trade Agreement with the US

SA business perceptions of a Free Trade Agreement with the US. Reg Rumney R.W. Rumney & Associates. Overview. Survey intended for CEOs – but few actually responded A divergence of views on detail Little unprompted response, suggesting a paucity of knowledge. Generalisations. An FTA is:

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SA business perceptions of a Free Trade Agreement with the US

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  1. SA business perceptions of a Free Trade Agreement with the US Reg Rumney R.W. Rumney & Associates

  2. Overview • Survey intended for CEOs – but few actually responded • A divergence of views on detail • Little unprompted response, suggesting a paucity of knowledge R.W. Rumney & Associates

  3. Generalisations An FTA is: • A ‘good thing’ • Would encourage the working of a free market in SA • Bring in more competition, especially in services R.W. Rumney & Associates

  4. More generalisations • FTA ‘neutral’ for many industries, but • Sectoral approach stressed • No “one size-fits all’ approach R.W. Rumney & Associates

  5. Neutral view • Commodities firms - little effect because of lack of protection • Services firms – Tariffs not what is keeping US competition out • Some sectors will lose and others gain R.W. Rumney & Associates

  6. Benefits • Locking in and extending Agoa benefits • Preserving GSP benefits • Greater access to world’s biggest market R.W. Rumney & Associates

  7. Threats • Automotive industry would contemplate no real free trade in its sector • Highly regulated industries would come under pressure to deregulate • Local regulation for social purposes, such as BEE procurement, could be challenged R.W. Rumney & Associates

  8. Level of ambition for FTA How comprehensive should an FTA be? • Most happy with a Free Trade Agreement as such • Some would only accept another format, such as the EU TDCA R.W. Rumney & Associates

  9. Services • Opening of services markets seen as neutral to positive as long as US firms get national treatment • Competition generally welcomed though new competition is not a given • Services industries do not speak with one voice R.W. Rumney & Associates

  10. Technology transfer Again, views were neutral to positive with some caveats • Technology transfer is seen as flowing fairly well already, supported by SA IP regime • Life-saving pharmaceuticals are one exception • Caution where strings are attached R.W. Rumney & Associates

  11. Non-tariff barriers • Hard to pin down – can be at State or municipal level • Most affected are agricultural products by sanitary and phytosanitary rules • Anti-dumping duties on steel etc from SA also important R.W. Rumney & Associates

  12. Procurement policies • Recognition that transparency and harmonisation may limit BEE procurement and equity transfer … • … but some firms seemed to be happy with this limitation • Again, no special treatment for US firms R.W. Rumney & Associates

  13. Harmonisation • Confusion about degree of compliance – do we have to bring our laws into line with theirs? • General belief is that our legislation matches or outdoes US law • Some feeling that harmonisation would be beneficial R.W. Rumney & Associates

  14. Specifics of harmonisation • Competition policy – few concerns, though caution about differing size of markets • Customs transparency – again, little concern • Labour – except for minimum wage law, firms would prefer US practices to hold sway here R.W. Rumney & Associates

  15. Regional nature of FTA • SACU’s relative lower development status poses serious problems for the FTA • SACU lacks common regulations now – could an FTA encourage these? R.W. Rumney & Associates

  16. Warning signs • How will an FTA affect highly regulated sectors such as the fuel industry? • Environmental flexibility – a competitive advantage • BEE procurement – can this be left out of FTA? R.W. Rumney & Associates

  17. Caveats • Can business speak with one voice on this issue? • Bilateral agreements second best to multilateral ones • US is more aggressive an exporter than EU R.W. Rumney & Associates

  18. Awareness Trade issues are: • Not ‘top of mind’ • Perplexing for some economists • Mostly left to the experts R.W. Rumney & Associates

  19. Conclusion • Business generally favours an FTA … • … but needs to consider and weigh sectoral effects and political implications closely and • … effect on SACU will complicate matters

  20. Thank you regrum@iafrica.com

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