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Q&A: “Africa Can Provide More Than Minerals in South-South Trade”

Louise Redvers interviews ROB DAVIES, South Africa?s minister of trade and industry

JOHANNESBURG, Jun 29 2011 (IPS) - South-South co-operation is firmly on Africa’s agenda. Leading the way is South Africa, which has recently joined up with Brazil, Russia, India and China’s BRIC formation to form a new global grouping of emerging markets, known as BRICS.

Rob Davies: South Africa's huge trade imbalance with the rest of Africa cannot be allowed to go on forever. Credit: South African Department of Trade and Industry

Rob Davies: South Africa's huge trade imbalance with the rest of Africa cannot be allowed to go on forever. Credit: South African Department of Trade and Industry

IPS spoke to South Africa’s Minister of Trade and Industry Dr. Rob Davies about the future of South- South trading and what impact the proposed Tripartite Free Trade Area (T-FTA) might have on trading relations within emerging market economies.

Q: What is South Africa’s current trading relationship with the BRIC countries? A: We have seen a very large quantitative increase in trade between South Africa and BRIC countries. South Africa’s exports increased four-fold between 2006 and 2010 and our imports doubled over the same period.

Meanwhile our trade with developed countries took a significant dip in 2009 and, although it recovered somewhat in 2010, it still remains at pre-2008 levels. So what you can see is definitely a shift in terms of our South-South trade and this is a policy we are pursuing.

Q: How would the South African government want South-South trade to develop from here? A: What we’re looking to do is to try to change some of the quality of the trade we do with the BRIC countries. For example, here in South Africa, we are mostly supplying primary products but we also have bilateral undertakings from countries that we now want to enforce.

We want these countries to purchase more value-added products from us so we can try and even out the imbalances that exist in the trading relationship at the moment.

And, within the African framework, we want to bring about more balance of trade with the rest of the continent. We can’t continue to carry on just selling to them if there’s a huge imbalance, which is something we recognise.

Q: So, you want Africa to do more than export raw minerals and resources? A: Yes. That’s what we’re looking at, to construct a set of relations with other countries of the South and on the African continent. Because the principles that are often mentioned in trade agreements are very often not followed through, like mutual benefits and reciprocity.

We want to see these principles being put into place in the trading relationships with other developing countries, either the emerging markets or even those on the African continent.

Q: Do you think being part of the Tripartite Free Trade Area (T-FTA) gives South Africa more weight within BRICS? A: I think we already represent Africa in terms of carrying a mandate. We’re there as a member in our own right but I think it’s obviously very clear that the other BRIC members felt they were lacking something from the African continent when they were thinking about enlarging the group.

So they chose us because we are a key player on the African continent. The dynamic and relationship between us and the BRICS, and us and the African continent, is very much connected.

Q: Do you therefore think the BRIC countries will start to see Africa as more of a single entity due to the T-FTA? A: We would hope so. I have said this before: it’s not very difficult to find someone to construct the infrastructure from the mine to the coast, to get raw materials out of the African continent, there are plenty of people who are willing to do that.

But a more difficult nut to crack is building the infrastructure that connects us, because all the main communications routes on the African continent go from the inland to the coast. They don’t go from north to south, nor connect us as people.

And I think that’s where the challenge lies. We would like to work with other partners on those kinds of infrastructure challenges to improve the connections, the transport logistics between central, eastern and southern Africa ourselves.

Q: What has been the reaction from the BRIC countries to the proposed T-FTA? A: I am not aware of any specific comments made since the summit but we had shared the ideas for this project before and we had talked about it on several occasions during our interactions with them. They all seem pretty positive about it and view it as an important development.

All of the BRICS are becoming increasingly involved with the African continent, and they all know that Africa is a source of opportunity. I think this is the big change that has been happening since the recession: Africa is now increasingly being recognised as source of opportunity.

A number of studies are saying that Africa has the best growth prospects globally, after China and India.

Q: Is South-South trade more attractive to Africa than the historical North-South relationship? A: I think there’s a clear historic opportunity for us to create a new pattern of trading relations based on real delivery on principles of mutual benefit.

To some extent, the model of North-South trade has so far been replicated with South-South trade, as Africa has been supplying raw materials. This is due to the fact that you have new players, the fact that China is industrialising and creating a commodity boom and that commodity prices are high.

But the African continent is very well aware that it cannot continue to live on the basis of a commodity boom, nor anticipate that it will carry on forever. We have to develop more value-added activity. So I think we’re looking to, among other things, South-South trade and co-operation to give us ways of moving that forward.

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