The current trade balance between the two partners is weighted in favour of South Africa, mainly due to South African exports of raw materials and raw materials, particularly gold, diamonds and coal. This will open up the Indian market to potential South African exports, while strengthening the competitiveness of the products we already market with. A trade agreement with India can potentially have positive effects on exports such as iron and steel, chemicals, plastics and aluminum and provide access to more competitive medicines, motor vehicles and heavy industrial equipment. But this is accompanied by the PTA, which effectively expands trade between the two countries. Both South Africa and India have SIGNED with the South American trading bloc Mercosur, but the resulting trade agreements are commercially sterile. It is therefore very plausible that the lists of candidates, both from India and South Africa, tell a long and sensitive story about sectors that will ultimately not be willing and unable to liberalize. Countries are also on positive lists, where only the products listed are liberalized and everything else is out of control. The very nature of a preferential trade agreement requires that the level of trade opening be much more limited than if countries concluded a free trade agreement. Even the Department of Trade and Industry recognized, within its trade policy framework, that the PTA with Mercosur had limited commercial value.
It is one of the least ambitious trade agreements in which South Africa participates. In order to avoid a new unnecessary trade agreement, the trade in services negotiations may indeed offer a third opportunity to allow useful compromises in the negotiations. India appears to be interested in a comprehensive trade agreement covering both trade in goods and trade in services. South Africa would do well to review its position in this regard, especially since there are sectors where South Africa would have a competitive advantage over India and would benefit from the liberalization of these sectors. This is a waste of time and resources to pursue trade agreements, regardless of broader foreign policy considerations. It`s a bit of a thought-provoking way when you`re negotiating. While there is potential for deeper trade relations, the national lobbies of both countries do not allow this potential to be exploited. As a member of the BRICS, South Africa`s commitment to prioritising the role of emerging economies in the international development agenda is strengthened. Beyond the usual trade in goods, other issues must be taken into account if the value of the trade agreement is to be maximized.
The liberalisation of trade in services would strike a balance between the very likely discrepancies between product requirement lists and the list of sensitive products, despite the very strong domestic lobby (particularly organized work) in South Africa. In addition, a tariff comparison between the two countries will show that while South African tariffs are generally low, India has much higher tariffs and South Africa will benefit if the trade agreement results in a reduction in these tariffs. India is one of South Africa`s top ten trading partners, but it would be good to expand and diversify the products traded. At least the PTA should at least boost the level of trade between the two countries demanded by the heads of state. But is it really okay? While the benefits of enhanced trade between the two countries cannot be ignored, there are many foreign considerations that call into question the way the proposed TSP is approached. Issues such as investment come into play. Higher investments are being praised as one of the expected outcomes of a trade agreement between the two countries. However, the two countries do not see investment as a trade problem, so there is a good chance that investment rules in both countries will not be discussed during the negotiations.