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MANY believed that a deal would not be struck in Bali but Roberto Carvalho de Azevêdo, the World Trade Organisation’s (WTO's) director general, managed to facilitate and motivate the 159 members (soon to be 160 once Yemen ratifies the membership deal) to reach consensus on a number of very important issues.
For global commerce, the most significant of the “Bali package” is the trade facilitation part. This is about cutting red tape and speeding up port clearances through the following objectives: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption; and use technological advances.
Despite the success in Bali and the conclusion of the Doha Development Agenda now looking ever more likely, I am not sure the WTO will continue playing such a central role in international trade and development in the coming years.
I say this because economic integration is an item of rising importance in national trade policies and if one considers the Transatlantic Trade and Investment Partnership (TTIP), one can understand why.
The TTIP is a trade and investment agreement between the European Union (EU) and America, and estimates predict the agreement could boost the EU’s economy by €120bn, America’s economy by €90bn and the global economy by €100bn.
America is also involved in the Trans-Pacific Partnership (TPP), which aims to create a free trade agreement involving 12 Asia Pacific countries, including Australia, Japan, Singapore, Vietnam, Canada and New Zealand. In 2012, the TPP countries contributed 39% to global GDP and 25.8% to world trade.
The point is that countries are starting to look regionally from a strategic point of view, and it is no wonder why if you look at the figures above. There are, however, more fundamental traits we also need to keep our eyes on, some of them obvious and others slightly more obscure.
Some of the more obvious ones include demographics, which impact comparative advantage and investment, particularly foreign direct investment (FDI); this can also alter comparative advantage by moving countries up the value chain.
The more obscure ones include energy and other natural resources: As North America becomes energy sufficient thanks to the shale gas revolution, there is likely to be a shift in the pattern of energy production.
With water becoming scarcer in large parts of the developing world, the long-term decline in the share of food and agricultural products in international trade might be halted or even reversed.
What should South Africa be focusing on in the coming years? Firstly, aside from growth in demand driven by a rising population, we must look at driving the Cape-to-Cairo trade agreement because as the world invests in Africa, the continent will grow and we need to be in a position to benefit from this.
Secondly, South Africa needs to attract FDI especially with the lapsing of the bilateral investment treaties.
Thirdly, South Africa must establish how much shale gas can commercially be extracted from the Karoo so that if there is a significant amount, we can commence operations.
Lastly, we need to invest in securing water for agriculture so that we do not become food dependent.
How do we achieve these?
As demonstrated by other sub-Saharan countries, we need to improve our macroeconomic policies and combine these with structural reforms and reliable external financing. Doing so will foster productive investment and stimulate growth, which in turn will allow us to channel the necessary funds and resources to priorities such as water and the Cape-to-Cairo trade agreement.
- Fin24
* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.
For global commerce, the most significant of the “Bali package” is the trade facilitation part. This is about cutting red tape and speeding up port clearances through the following objectives: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption; and use technological advances.
Despite the success in Bali and the conclusion of the Doha Development Agenda now looking ever more likely, I am not sure the WTO will continue playing such a central role in international trade and development in the coming years.
I say this because economic integration is an item of rising importance in national trade policies and if one considers the Transatlantic Trade and Investment Partnership (TTIP), one can understand why.
The TTIP is a trade and investment agreement between the European Union (EU) and America, and estimates predict the agreement could boost the EU’s economy by €120bn, America’s economy by €90bn and the global economy by €100bn.
America is also involved in the Trans-Pacific Partnership (TPP), which aims to create a free trade agreement involving 12 Asia Pacific countries, including Australia, Japan, Singapore, Vietnam, Canada and New Zealand. In 2012, the TPP countries contributed 39% to global GDP and 25.8% to world trade.
The point is that countries are starting to look regionally from a strategic point of view, and it is no wonder why if you look at the figures above. There are, however, more fundamental traits we also need to keep our eyes on, some of them obvious and others slightly more obscure.
Some of the more obvious ones include demographics, which impact comparative advantage and investment, particularly foreign direct investment (FDI); this can also alter comparative advantage by moving countries up the value chain.
The more obscure ones include energy and other natural resources: As North America becomes energy sufficient thanks to the shale gas revolution, there is likely to be a shift in the pattern of energy production.
With water becoming scarcer in large parts of the developing world, the long-term decline in the share of food and agricultural products in international trade might be halted or even reversed.
What should South Africa be focusing on in the coming years? Firstly, aside from growth in demand driven by a rising population, we must look at driving the Cape-to-Cairo trade agreement because as the world invests in Africa, the continent will grow and we need to be in a position to benefit from this.
Secondly, South Africa needs to attract FDI especially with the lapsing of the bilateral investment treaties.
Thirdly, South Africa must establish how much shale gas can commercially be extracted from the Karoo so that if there is a significant amount, we can commence operations.
Lastly, we need to invest in securing water for agriculture so that we do not become food dependent.
How do we achieve these?
As demonstrated by other sub-Saharan countries, we need to improve our macroeconomic policies and combine these with structural reforms and reliable external financing. Doing so will foster productive investment and stimulate growth, which in turn will allow us to channel the necessary funds and resources to priorities such as water and the Cape-to-Cairo trade agreement.
- Fin24
* Geoffrey Chapman is a guest columnist and trade policy expert at the SABS. Views expressed are his own.
