Agricultural trade policy reform in South Africa

• Main Authors: M. Chitiga, T. Kandiero, P. Ngwenya
• Format: Publication
• Language: English
• Published: African Development Bank 2008
• Subjects: agricultural policy; agriculture; Agriculture and food; liberalisation; market access; rural development; South Africa; trade; Trade Policy; UNCTAD; South Africa

This paper empirically investigates the impact of agricultural trade reform in South Africa. Using the United Nation's Conference on Trade and Development's (UNCTAD) Agricultural Trade Policy Simulation Model (ATPSM), the study performs two specific scenarios that capture the magnitude of both: the economic impact of global agricultural trade reform in South Africa the economic impact if the reform in South Africa is coupled with agricultural reforms in the European Union (EU) Trade reform focuses on substantial tariffs reduction, although in the case of the EU scenarios also include reduction in domestic support and export subsidies. The results show that unilateral tariff reduction in the selected number of agricultural products amounts to welfare gains of US$21 million. These gains are three times higher when accompanied by extensive reforms in the EU. The authors conclude by noting that: in the trade liberalisation process, “own” (domestic) reforms are important, however, further gains will be derived from a substantial reduction of existing export subsidies and reduction in other trade impediments by developed countries such as the EU although these gains are promising, tariff peaks still remain in areas such as meat and dairy, among others market access is not the only important issue in boosting exports in agriculture;  the industry should also address supply-side bottlenecks associated with poor transport infrastructure, port logistics and infrastructure to meet health and technical standards. In addition, adjustment issues have to be taken into consideration in case some workers are displaced due to the liberalisation process.(adapted from author)