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South Africa: Free-trade agreement with China not on cards

Business Day | 7 July 2010

South Africa: Free-Trade Agreement With China Not on Cards

Loyiso Langeni

Johannesburg — SA WILL not pursue a conventional free-trade agreement with China as this is not in the interests of the country, Trade and Industry Minister Rob Davies says.

If it were to make a conventional free-trade agreement with China, SA would not be able to compete with that nation’s economies of scale.

In an interview with Business Day from China yesterday, Mr Davies said SA was not at a developmental stage to initiate discussions on a free-trade deal with one of the fastest-growing economies in the world.

"There’s a structural disadvantage with our economy that we need to address" before considering a China free-trade deal, he said.

China is the third-largest economy in the world after the US and Japan. It also has the largest population in the world, with about 1,3- billion people.

These factors offered a huge return on investment for companies seeking to penetrate that market.

SA established full diplomatic relations with China in 1998 in a calculated move to realise the potential economic benefits from that market. China forced SA to downscale its diplomatic ties with Taiwan as a condition for normal diplomatic relations with Beijing.

Mr Davies is on a trade and investment promotion visit to the Chinese city of Shanghai, where SA is one of 48 African countries participating in Expo 2010 Shanghai.

The huge trade fair presents an opportunity to market and profile SA as a leading investment destination on the continent.

Thirty high-profile executives from SA’s mining, metals and capital equipment sectors have accompanied Mr Davies on the three-day official trip. This included a delegation led by Limpopo’s MEC for economic development and tourism, Pitsi Moloto.

SA also intends to use the visit to Shanghai to learn more about China’s mineral production beneficiation process.

Ebrahim Patel, senior vice-president of the Middelburg Chamber of Commerce and Industry, said: "SA’s business has a lot to learn from the manufacturing models in China. I think we should emulate the Chinese model as they are now the top trading partner with SA."

Mr Patel has urged SA’s trade unions to educate their members to subscribe to the ethic of a "higher- production labour force" if SA was to compete with China.

Mr Davies said that the Shanghai expo would depict SA as a modern and vibrant economy.

SA’s pavilion at the fair has so far attracted 1-million visitors since the event began in May. The Shanghai Expo ends in October.

 source: Business Day