Trade between the United States and South Africa has not always been simple, particularly due to various barriers that impact the cross-border flow of goods. In this International Business Spotlight, we’ll examine one of those factors, the TRQ, as well as South Africa’s involvement in trade organizations, both domestic and international.
Tariff-Rate Quota (TRQ)
Throughout the 2000s, South Africa and the U.S. have agreed on implementing and updating a TRQ, which allows for lower tariff rates on product imports beneath a certain quantity ceiling. If the quantity exceeds the ceiling, the tariff price will increase. The TRQ was first implemented in regards to U.S. chicken exports, requiring them to meet health certificate, permit, and quantity standards. The goal of this TRQ is to support anti-dumping duties, which prevents the U.S. from simply sending over as much chicken as they can at a nominal price, which could damage the meat and agriculture industries in South Africa.
Trade Organization Involvement
Despite its numerous regulations, South Africa is quite active in international trade. Having been a World Trade Organization (WTO) member since 1995, South Africa has had a voice in countless conversations about global business. South Africa’s government is highly involved and thorough when it comes to developing and signing trade agreements; Its three key trade bodies—the Departments of Trade and Industry, Economic Development, and International Relations and Cooperation—were involved with seven-year-long EPA negotiations between the European Union and Southern African Development Community (SADC). The aforementioned Department of Trade and Industry has primary control over imports, ensuring the validity of permits and goods alike.
The International Trade Administration Commission of South Africa (ITAC)
Formed by the International Trade Administration Act in 2003, ITAC aims “to foster economic growth and development in order to raise incomes and promote investment and employment in South Africa.”
Although ITAC only became official in the early 2000s, it follows some of the same strategies as its early 1900s predecessors. The 1920s, for instance, saw an increasing complexity in South African import structure, with a focus on promoting industrialization and domestic economic growth. This translated to higher tariffs and, as the years went by, increasing exports of basic commodities as goods. As exporting became more lucrative and importing less popular, South Africa established its Board on Tariffs and Trade (BTT). From 1986 until 1992, the BTT adjusted industry export programs, ensuring that exports were seen as a promotional and positive option for businesses. However, by 1992, the BTT turned its focus to import tariffs. It continued on until 2003, when ITAC was formed to make South Africa’s 1920s standards applicable to modern-day trade.