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Secondly, a number of bilateral agreements have already been concluded in the region. The Government will aim to finalise and implement an agreement with Zimbabwe. Currently a number of agricultural products can be exported from Zimbabwe to South Africa free of duty subject to an import permit issued by the NDA. Agreements exist with Malawi in terms of which all goods produced or manufactured in Malawi may enter South Africa free of customs duty, and with Mozambique according to which specific products and quantities may be imported into South Africa subject to tariff rebates.
In all these agreements the NDA will establish effective mechanisms for monitoring agricultural trade resulting from the agreements and their impact on our sector. In future, South Africa's trading relationships with the EU will be of great importance to the agricultural sector. South Africa is therefore currently engaged in negotiations with the EU with a view to establishing a free trade agreement.
The Government's aim is to negotiate greater access to the EU market and remove the discrimination which South African producers currently face. It appears that the terms of the agreement, as far as agriculture is concerned, may fall well short of what is satisfactory to the sector.
The Government will, however, persist over time in arguing the case for improved access for all agricultural products to EU markets. To strengthen the diplomatic approach to opening up trade, South Africa joined the Cairns Group in April This is a lobby group consisting of agricultural exporting countries with relatively low levels of domestic protection. It operates on an informal basis without disciplinary procedures or strict rules and takes a consensual approach to decision making.
This disparate group's strength lies in the fact that through collective action it has more influence and impact on agricultural trade issues than its members have individually. Its principal lobbying is directed towards major trading countries with continuing domestic agricultural protection. The Government's intention is to use this platform to negotiate for further liberalisation of international agricultural markets. Since June , the Geneva-based coordination of activities of the Group have been a useful supplement to South Africa's capacity in this field.
This section has emphasised the importance of trade diplomacy in agricultural policy. The effective use of trade diplomacy requires careful planning not only of the negotiations themselves, but also of the development of specific agricultural subsectors. Box 4 outlines some basic guidelines that will be followed by the NDA in all negotiations. In the final analysis, market access is a means to an end, not an end in itself.
The impact of an agreement on the RDP objectives of reducing income disparities, creating employment, enhancing growth and improving quality of life must be clearly demonstrated. To this end, a study of South African agricultural structure and competitiveness is being carried out in the Minister's Office which will provide a baseline. This study will be broadened to include characteristics of agricultural subsectors and how these change and affect the objectives above.
Such information must be kept in a database and must be updated continuously. Negotiation mandates must make reference to this database and a full report showing how agriculture will change in the course of the implementation of the agreement will be prepared. The Parliamentary Portfolio Committee will also be kept informed of all developments. Tariffs will be applied as an important component of specific strategies for enhancing competitiveness and creating jobs through trade-based mechanisms such as liberalisation.
Two strategic objectives of the agricultural tariff policy are therefore to protect domestic agriculture and to facilitate structural adjustments within the sector. It is not Government policy to use customs tariffs as a means for generating revenue. Various policy instruments will be applied to achieve these objectives. Ordinary duties are limited by negotiated agreements and obligations enshrined in the WTO.
The tariff equivalents set through the process of complying with the WTO commitments represent the maximum level of tariff that can be levied, and these are bound against increase. Agricultural products were tariffed by , thus setting ordinary duties. WTO rules also require that the bound tariff levels be reduced by specified percentages over the periods indicated in the agreements. South Africa's tariff commitments are presented in Box 2. As a matter of policy, ordinary duties will be constantly reviewed to ensure that tariff levels applied are consistent with the stated policy objectives of making agriculture efficient and competitive.
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The margins existing between bound and applied are critical if ordinary duties are to be used to influence the restructuring process. Tariffs will be kept under review to ensure that they are both in line with policy and simpler to administer. In addition, variable import charges can be applied to certain agricultural imports.
In this instance, import duties are linked to a target variable—in most cases price—and altered as the variable fluctuates.
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The variability of such duties has to remain within the bound ceilings. Such a price band scheme can be operated to reduce price variability of certain commodities rather than to increase protection. This is a useful tool for minimising the variability of food prices. Tariff quotas are used mostly in trade agreements and are therefore country and product specific. Protection against unfair external competition is a major concern of both the Government and the farming sector. The GATT Agreement, , Article VI makes provision for countries to eliminate injury to local industries demonstrably arising from dumping or subsidies, by imposing antidumping and countervailing duties respectively.
Three factors need to be established before such duties are levied: 1 that dumping has occurred and to what extent. This means the dumping margin must be established 2 that as a result, an industry suffers material injury 3 that injury in 2 is a direct result of the dumping. The critical issue for policy is the use of trade remedies where local industries suffer injury due to unfair practice.
The use of these remedies, however, must be within the strict WTO disciplines, which makes them complex mechanisms. Nevertheless, it is policy to strengthen the use of these remedies and reduce reliance on ordinary duties to deal with unfair trade practices.
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Agriculture will work with the DTI to design agriculturally defined guidelines on the use of anti-dumping, safeguards and countervailing duties. Such systems will not be burdensome, but predictable and able to respond swiftly to problems that arise. Tariff policies are only as meaningful as the systems put in place to regulate and control the flow of imports. Agricultural trade requires well-qualified and vigilant personnel at the ports of entry. The two principal problems are underinvoicing and misidentification. Since almost all tariffs are raised on the transaction value of a shipment, underinvoicing is a means of illegally underpaying the required tariff.
In both cases, the onus lies with the administration to be vigilant about these problems, and to take severe action. Better training, more agents, improved incentives, and more efficient recording and checking systems are needed.
The Department of Agriculture will work closely with the South African Revenue Services regarding the effective implementation of tariff policy. The importance of export growth to South Africa's development strategy cannot be overemphasised. While an enabling trade-policy environment is a critical element of an export-led growth strategy, the increased level of competition in the global economy demands that Governments design measures to improve the competitive edge of their own producers.
Vital elements of a competitive sector include the transmission of information on subjects ranging from market locations to packaging, labelling and meeting certain technical requirements; the provision of quality control services; and the development of infrastructure. Although marketing is generally a private-sector function, the Government can also play a key role in facilitation. The main problems faced by exporters are a lack of information and of skills, inadequate access to financing, and poor infrastructure.
The Government will therefore use non-trade-distorting mechanisms to assist in providing an environment conducive to export growth. These measures will include: - market development support—the Government will provide assistance to the agricultural sector to develop markets.
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It will, for example, facilitate the sector's participation in trade missions, exhibitions, fairs and other activities that increase international awareness of South African agricultural products. The Departments of Agriculture will seek partnerships with local authorities to ensure the provision of infrastructure that will lower transaction costs for farmers.
This section of the policy paper has outlined important elements of an agricultural trade policy conducive to:. Deregulation has created an incentive structure that will stimulate and reward investment not only in domestic and export markets but also in the ancillary industries. It is envisaged that the role of the Government will in future pertain particularly to trade diplomacy and to providing an efficient regulatory framework.
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The deregulation of domestic agricultural markets and the liberalisation of international agricultural trade have increased, rather than diminished, the need for a framework of standards for the quality and safety of both inputs into crop and animal production and outputs from such production. Effective measures are needed to maintain such standards through, for example, the prevention and control of epidemic diseases and effective inspection and diagnostic services.
In striving to achieve these objectives, the Government wishes to ensure that regulations are not used to erect unfair barriers to those who wish to enter into agricultural production and commerce, and do not, therefore, put limits on competitiveness. Wherever appropriate, the costs of regulation should be borne by those producers who benefit directly from such measures, and the Government will investigate the most cost-effective ways of implementing regulations. All countries maintain health and sanitary regulations for exports, imports and domestic products.
An SPS measure is applied by a country to protect the life or health of people, animals and plants from risk arising from the entry, establishment or spread of pests, diseases, and disease-carrying or disease-causing organisms. This requires regulation, which includes laws, processing and packing regulations and labelling requirements. Box 5 shows the quality attributes for all food products.
The responsibility for setting food safety standards and enforcing them lies with the Department of Agriculture and other Government institutions, particularly the Department of Health. As a general principle, SPSs will be enforced in accordance with the provisions of the SPS Agreement and other international conventions. The relevant international standards, guidelines and recommendations of the Codex Alimentarius will be used as quantitative benchmarks.
The NDA will ensure strong participation from the agricultural sector including legal and scientific contributions in the body's international standard-setting activities. The enforcement of SPS measures will be based on the assessment of risk. Inspection is required in order to establish the processes and production methods used as well as the scientific evidence and prevalence of specific diseases or pests.