Official policy threatens SA’s participation in AfCFTA and could contravene our trade law obligations under the WTOShipping containers are unloaded from a ship at a container terminal at Los Angeles Port in California, the US. File photo: LUCY NICHOLSON
The long-term harm trade protectionism causes is often overlooked in favour of its short-term appeal, such as its ability to protect local industries from foreign competition and the temporary gains in employment that can be realised. However, these benefits soon evaporate when the products that local companies produce start to decline in terms of quality and rise in price, and when jobs are outsourced due to diminished competition and a lack of market access.
While Trump may have succeeded in delivering on his promise to his political base to “Put America First”, the unintended consequences were plentiful. Coupled with the decision to promote import substitution and increase tariffs on Chinese goods, on the grounds that China had long participated in unfair trade practices and intellectual property theft, these actions led to the start of a trade war between the two countries.
Fast forward 10 years or so and it is clear that the transaction was a clear-cut example of privatisation in name, and not in practice. To this day the primary steel industry remains one of the most highly protected and regulated industries in the country. Government has tried to tariff the industry into profitability, with no fewer than 17 agreed to since 2015.
The rhetoric that accompanies this kind of thinking draws on manufactured resentment among a given populace in which globalisation, international trade and migration are said to be the root causes of their lack of economic prosperity and wellbeing. It is popular with constituents and aids governments in deflecting from the fact that they have made historically bad policy choices.
In respect of possible contraventions of GATT and GATS, Peter Leon, Africa chair at Herbert Smith Freehills, argues that:
What is wrong with a bit of protectionism? Isn't that what China has been doing for the last 20 years?
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