The export-led strategy underpinning SA’s trade policy entails a deliberate effort to get the country’s agriculture and other industrial sectors to export products beyond existing international markets. There are at least two diametrically opposing views about how well SA has done in executing this strategy in agriculture.

The first is that SA has not done enough to open up new markets, limiting the country’s scope to grow exports further. This view is widely shared by private-sector agricultural role players that have struggled to penetrate and grow market share in countries such as China, India and Saudi Arabia. They argue that in the recent past, the growth in SA’s agricultural exports in these key markets has primarily been driven by productivity gains that have established a big enough competitive advantage that overcomes high-tariff and non-tariff barriers.

The experiences of exporters reveal that there has been a lack of institutional and human capacity to deliver critical services such as lab testing for perishable products such as meat, which has led to delays in the issuance of export permits. Another example is protracted government negotiations aimed at ensuring citrus producers in certain parts of the country could access the US market, which took more than a decade to conclude.

Based on these issues, which are a microcosm of SA’s fundamental state capacity issues, the prevailing sentiment is that agricultural exports have increased despite limitations on market access.

The second view is that SA has excelled in opening up new markets, as evidenced by several free trade agreements (FTAs) with critical regional and global groupings. This includes the Southern African Development Community (Sadc) FTA, the Sadc-EU economic partnership agreement (EPA), the SA Customs Union (Sacu)/Mozambique-UK EPA, the African Continental Free Trade Area and the Sacu-Mercosur preferential trade agreement.

All the agreements have been achieved over the past 15 years, quite a feat in itself given the technical and institutional demands that have to be committed to negotiating and successfully implementing trade agreements.

All these FTAs are only in two of SA’s biggest markets — Africa and Europe — which collectively account for 65% of the country’s total agricultural exports in 2020. The opening of markets through these agreements has thus arguably indeed deepened, consolidated and improved SA’s position in the EU and Africa — particularly the latter, where pervasive challenges of non-tariff barriers remain a critical problem.

SA would be best served if its market access is diversified beyond Africa and Europe. The Middle East, Asia, and North and South America now account for 35% of agricultural exports. This is where most increased attention and the pursuit of FTAs have the potential to be more beneficial. Some of SA’s fiercest competitors in the agricultural arena — such as Chile, Peru, Australia, Argentina, New Zealand and Uruguay — have struck various forms of trade agreements with markets in Asia, the Middle East and the Americas. SA thus faces higher tariffs than its competitors in these areas.

Can SA realistically follow the model of its competitors in aggressively pushing for more access in Asia and the Middle East? The answer is complicated, as SA has shown a desire to retain trade policy space, limiting its ability to pursue further FTAs given the need to make concessions that further liberalise markets. This explains SA’s reluctance to pursue a Sacu-US FTA or a bilateral agreement with China. Moreover, due to the focus on localisation, SA’s inward-looking approach risks becoming protectionist, further complicating efforts to expand market access for agriculture and various products the country produces.

This leaves the country with an extremely narrow set of options that balance political and economic imperatives. The challenges for the export-orientated farming sector are likely to linger for some time.

This essay first appeared on Business Day, 21 September 2021

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