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SA, India in preferential trade talks

Business Day | 29 September 2008

SA, India in preferential trade talks

Mathabo le Roux
Trade and Industry Editor

SA HAS started talks on a preferential trade agreement with India — a move that would make trade easier.

The move is in line with ambitions to remap patterns traditionally centred on north-south trade relationships and to foster closer south-south ties.

However, some trade commentators say despite political commitments, the level of ambition of the negotiations was too low to really whet exporters’ appetites. It is understood the agreement would earmark 1000 product lines for tariff liberalisation, but there were doubts that even that ambition would be achieved.

The trade and industry department last week gazetted the launch of the trade talks, urging industry to make inputs in the compilation of the list of goods of export interest to SA.

Trade expert Danie Jordaan, who is involved in the process, said the Southern African Customs Union (Sacu) had already drawn up a tentative list, which included agricultural and agri-processed goods, chemicals, automotive parts and metals, machinery and engineering equipment. India is compiling a similar list.

Exporters were also asked to make submissions regarding non tariff measures used by India.

In terms of the original working programme the parties were scheduled to have met this month to compare lists. However, the Doha negotiations, in which India in particular was very active, had pushed back bilateral priorities.

Jordaan said the parties would now meet in November .

Exporters at an India-SA investment conference in Johannesburg last week urged the countries to instead pursue a full-blown free-trade agreement that would substantially cover all trade .

Stavros Nicolaou, executive director of Aspen Pharmacare, said a free trade agreement between Sacu and India was preferable. “We should keep tariffs on North America and remove them between ourselves. That would be a more strategic approach.”

But others were less enthusiastic. “India is a difficult market to penetrate . The country is technologically very advanced, so it is a competitive market,” said one industry source.

Of more concern were taxes aimed at keeping imports out.

While India had drastically reduced import tariffs over the past few years, bringing them down to an average 10%, the country levied a host of additional taxes on imports, which hampered access to that market, the source said.

Despite a surge in Indian interest in SA, South African companies’ presence in India is negligible, with only an estimated 10% of SA’s top 100 companies operational there. With India having embarked on a $500bn infrastructure expansion programme, that market offered lucrative opportunities, especially for construction companies, Indian consul-general to SA Navdeep Suri said.

In terms of the India, SA and Brazil trilateral initiative, the ultimate aim is for a trilateral trade pact deal between the three economic powerhouses in the south.

But India’s high commissioner to SA, Rajiv Bhatia, said trade growth between the three countries was lagging behind on targets.

 source: Business Day