Trade is a topical issue as countries seek to reap the potential benefits of the African Continental Free Trade Area (AfCFTA). Still under negotiation, the AfCFTA aims to support the African Union’s efforts to transform, develop and integrate the African economy. There are no labour provisions in the AfCFTA Agreement. Trade unions have been pushing for the inclusion of labour provisions in the Agreement by influencing the negotiations, particularly at the national level, as the AfCFTA is a member-driven agreement, and at least two-thirds of negotiations should happen at the country level.
The The African Regional Organisation of the International Trade Union Confederation (ITUC-Africa) supports trade unions in developing an active presence and voice on trade issues in their countries. Underpinning trade union advocacy for the AfCFTA is research that speaks directly to the need to motivate labour provisions and for the countries to commit to social dialogue. However, the main concern is that many countries tend to protect policy space and lack recognised mechanisms for social dialogue. Only about 30% of African countries have such mechanisms. Here we look at the basic framework for trade negotiations in South Africa and the entry points for trade unions to engage through recognised social dialogue mechanisms.
“If we cannot influence our national government, then we have squandered our main opportunity for influence.”
The South African approach
South Africa takes an institutional and inclusive approach to trade negotiations. At the national level, key institutions exist, with the National Economic Development and Labour Council (NEDLAC) at the forefront. NEDLAC comprises representatives from civil society, business, labour and government. The mechanism conforms with the commitment to participatory democracy, a fundamental principle enshrined in the Constitution. Within this overarching structure, various national chambers deal with different aspects of policy-making and trade negotiations, with some dedicated to development, finance, public budgeting and green industries. Each of these chambers plays a different role in shaping trade negotiations.
The role of the trade and industry chamber – Balancing trade priorities
The Technical Sectoral Liaison Committee (TESELICO), which brings together government, business and civil society, plays a key role in the trade and industry chamber. The committee evaluates and improves trade agreements between South Africa and its trading partners.
One of the challenges in trade negotiations is balancing reducing tariffs to allow cheaper imports and ensuring market access for ambitious export targets. Achieving this balance is no small feat, as discussions revolve around identifying strategic industries for tariff concessions. The AfCFTA, for example, provides for tariff reductions on 90% of existing tariff lines. However, these reductions are not uniform, with 7% potentially phased in and 3% subject to exclusions. These exclusions would be crucial to protect infant industries of strategic importance to South Africa.
Challenges for the common customs union
Trade negotiations require a comprehensive approach considering revenue generation and sustainable economic growth. However, a significant challenge arises when customs union partners prioritise tariff revenue over industrial development. This raises moral questions about focusing solely on revenue generation at the expense of local industrial development. Scrutiny of the expertise and detail of proposed joint plans becomes imperative.
The importance of master plans
The definition of tariff structures is a critical aspect of trade negotiations, requiring an in-depth examination of industries and their components. South Africa uses master plans and detailed roadmaps that dissect various industries as a strategy for industrial development. These plans analyse factors such as industry maturity, productivity levels, government incentives and more to identify areas where concessions are possible for lower tariffs. Master plans provide a solid basis for trade agreements based on economic viability and strategic objectives.
Case study: The poultry industry
The poultry industry is a notable case study in South Africa’s trade negotiation strategy. In a country with high unemployment and poverty, poultry is the primary source of protein. South Africa’s master plan delves into the poultry industry, capitalising on the demand for ‘dark meat’ from the thighs and legs of chickens. This contrasts with the European preference for ‘white meat’.
“On closer examination, a mutually beneficial trade deal became clear. South Africa could export white breast meat to Europe and import dark chicken. Both countries would benefit from this arrangement, creating a win-win scenario. It’s worth noting that this attention to detail in bilateral agreements mirrors the principles that extend to continental agreements, sometimes linked to the World Trade Organisation (WTO). This approach ensures that trade agreements are comprehensive, equitable and benefiting all parties”.
~ Tony Ehrenreich, Western Cape Regional Secretary of the Congress of South African Trade Unions (COSATU).
Adapting to a changing global landscape
Adapting to a changing global landscape is critical for Africa’s growth and development. The evolving global economic landscape, shifting power relations and potential changes in the world’s reserve currency requires African countries to engage with new trading partners, such as the BRICS, and reimagine trade regimes for equitable development. The countries can seize opportunities in international trade by effectively managing these changes.
Possible trade union actions in the AfCFTA negotiations
- Demand social dialogue mechanisms. The most effective trade negotiator understands the political economy at home and in other member states.
- Articulate sectoral concerns
- Play a monitoring and review role
- Develop own capacity to engage effectively
- Build alliances for influence