The Role of Trade in the Economy of South Africa

Since 1994 and the end of Apartheid regime in South Africa, This country has been rapidly integrated into the Global Economy. South Africa's trade and Industrial policy has been increasingly moving away from a highly protected economy toward an internationally competitive economy capitalizing on its comparative advantages. One of the major reasons behind this growing openness can be lifting of several sanctions and boycotts imposed by international society as a means to end apartheid.

South Africa is the second largest producer of Gold and is the world's largest producer of Chrome, Manganese and Platinum. Its is also one of the world's largest coal producers and has a large Agricultural sector.

Principal International trading partners of South Africa are African countries and countries like : Germany, the United States, China, Japan, Spain and the United Kingdom.

The gains from globalization are not equally distributed and whereas some industries and consumers have benefited from higher output or lower prices, others have lost out to more competitive foreign industries or lost their jobs. These trends are likely to continue. Tariffs and other forms of trade protection will come down, exports and imports will rise, and there will be further adjustment costs and benefits.

South Africa began an ambitious set of tariff and trade policy reforms in the mid-1990s. This included substantive multilateral liberalization through the WTO, the elimination of quotas and most import surcharges, the replacement of most formula, specific and mixed tariffs with ad valorem duties, and new bilateral agreements with the EU and South African Development Community  (SADC). The tariff structure has also been simplified through a substantial reduction in the number of tariff lines and some reduction in the number of rates levied.Almost 90% of South Africa's exports to rest of Africa go to the SADC economies. South African exports to the rest of Africa are predominantly of value-added goods. The country's investment stock in Africa has increased from Rand14.7 billion in 2001 to Rand121 billion in 2010, amounting to 21% of its total outward Foreign Direct Investment.

 As a member of the Southern African Development Community, South Africa has signed-up to an ambitious program of regional integration, which is supposed to culminate in the launch of a customs union by 2010 and a common monetary area just 6 years later. In addition, South Africa continues to grapple with implementation problems arising from the new SACU (Southern African Customs Union) Agreement and as a participant in the SADC Economic Partnership Agreement (EPA) block of countries, is also involved in complex bilateral negotiations with the EU.