India-SACU trade pact may be restricted to a few products

JOHANNESBURG: The proposed preferential trade agreement between India and Southern African Customs Union (SACU) countries may be restricted to tariff exchanges on a limited number of products in the wake of concerns over potential harm to the local industry, a media report said.

The two parties plan to limit negotiations to a reduced level of tariff exchanges, 'Business Day' newspaper quoted General Xavier Carim, Deputy Director South African Ministry of Trade and Industry, as saying in a report.

The report said a ministerial meeting last month had decided to limit the SACU-India talks, which were initiated five years ago, to tariff exchanges on a limited number of products.

The list of products subject to preferential tariffs would be used to incrementally enhance the bilateral trade, the report said.

Carim ascribed the long delay in finalising the pact on difficulties in reaching agreement on common trade and tariff data and more recently on preparing offers.

Mutual requests for 1,000 products from each side were shared in December 2011 and were currently being assessed, the report said.

Carim said that further talks on the matter are expected to take place before June this year.

South Africa's main exports to India are gold, diamonds and platinum, while the main Indian imports are pharmaceuticals and steel.

India and South Africa on a number of bilateral fora have committed to closer trade ties, with targets for bilateral trade having been exceeded ahead of schedule.

Bilateral trade saw growth to the extent that India moved to being South Africa's sixth largest trading partner in 2011, from the 20th position in 2000.

However, there have been concerns from both business and labour in South Africa, the leader in the SACU alliance, over potential harm to the local industry. SACU members include Botswana, Lesotho, Swaziland and Namibia.

The primary concern expressed via National Economic Development and Labour Council (Nedlac) was that access to the Indian market would be difficult because of many non-tariff barriers such as regional state levies and customs regulations in India.

Nedlac members felt that this would offset any benefits that could accrue from granting preferential access to South African exporters.

There was also concern over India wanting preferential access to sensitive areas such as the clothing industry, which has been decimated in South Africa due to cheaper Chinese imports.