SA is intensifying its efforts to enter preferential trade agreements with major economic blocs in the developing world in a major shift in foreign policy.
THE centre of gravity in the world of trade has changed, Trade and Industry Minister Rob Davies said yesterday.
SA is intensifying its efforts to enter preferential trade agreements with major economic blocs in the developing world in a major shift in foreign policy, which previously gave priority to the country’s traditional trading partners such as the US and European Union.
As an influential member of the Southern African Customs Union (Sacu), SA will, together with India, begin preliminary negotiations this year with South America’s biggest regional trading bloc, Mercosur.
Brazil, Argentina, Paraguay and Uruguay make up the full membership of Mercosur. Other South American countries, such as Bolivia, Chile, Colombia, Ecuador and Peru, have been granted associate membership. Oil-rich Venezuela has signaled its intention to become a full member.
Speaking at the opening of the India Show yesterday, Mr Davies said the balance of economic forces favours developing countries and this development is the major factor that has influenced Sacu’s decision to pursue this agreement.
He said this preferential trade agreement with India and Mercosur will strengthen trade and investment opportunities between the regions.
Indian Commerce and Trade Minister Anand Sharma said a preferential trade agreement between the regions will “greatly enhance the (economic) relationship between the (three) regions”.
Mr Sharma is in SA to finalise details of a preferential trade agreement between India and Sacu.
He reiterated that the target of reaching a trade agreement worth 10bn by 2012 is on track.
SA enjoys a favourable trade surplus with India. The latest figures from the Department of Trade and Industry indicate that total exports to India were in the region of R5bn, while SA’s imports from India totaled R3bn.
Both ministers were speaking at the official opening of the week-long India Show at the Nasrec Exposition Centre yesterday.
The show will showcase about 54 of India’s major companies in sectors such as manufacturing, pharmaceuticals, engineering and the automotive industries.
Since President Jacob Zuma ’s inauguration last year, SA has targeted emerging markets to strengthen its economic relations.
Mr Zuma began courting these powerful emerging markets last year with a state visit to Brazil.
This was followed by state visits to India, Russia and China this year.
Analysts have lauded Mr Zuma’s decision to focus his diplomatic initiatives on gaining favourable trade agreements from emerging markets.
Mr Zuma, who also spoke at the India Show, confirmed SA’s intentions to work with India to pursue the transformation of multilateral institutions.
“We also have a common approach on a number of global issues including reform of the United Nations, the future of multilateralism, climate change, South- South co-operation and multilateral trade negotiations,” he said.
From Business Day