QUESTION FOUR (20 MARKS)
Foreign trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP).
Elucidate the involvement of South African Government in the Foreign Trade. (20)
The South African government plays a critical role in facilitating and regulating foreign trade in the country. Here are some ways in which the government is involved:
1. Trade Policy: The government formulates and implements trade policies that govern the import and export of goods and services. These policies are aimed at promoting economic development, protecting domestic industries, and maximizing the benefits from foreign trade. The Department of Trade, Industry, and Competition (DTIC) is responsible for formulating and implementing these policies.
2. Trade Agreements: The South African government negotiates and enters into various trade agreements with other countries or regional blocs. These agreements, such as the Southern African Development Community (SADC) Free Trade Agreement or the African Continental Free Trade Area (AfCFTA), aim to reduce trade barriers and promote increased trade between countries.
3. Tariffs and Customs Duties: The government regulates the imposition of tariffs and customs duties on imports and exports. These measures are used to protect domestic industries, generate revenue, and correct trade imbalances. The South African Revenue Service (SARS) is responsible for administering customs procedures and collecting import and export duties.
4. Export Promotion: The government actively promotes and supports South African exporters in accessing foreign markets. This includes providing export incentives, grants, trade promotion events, and market intelligence to help local businesses expand their international reach. The Export Credit Insurance Corporation (ECIC) offers insurance products to mitigate the risks associated with exporting.
5. Trade Facilitation: The government works towards improving trade facilitation measures, such as simplifying customs procedures, reducing bureaucratic barriers, and enhancing transport and logistics infrastructure. This is done to ensure efficient movement of goods and services across borders, making international trade easier for businesses.
6. Trade Remedies: In cases where unfair trade practices, such as dumping or subsidization, harm domestic industries, the government may impose trade remedies. These can include anti-dumping duties, countervailing duties, or safeguard measures to protect domestic producers from unfair competition.
7. Market Access Negotiations: The government engages in negotiations with other countries or regional blocs to improve market access for South African goods and services. This involves reducing tariffs, eliminating non-tariff barriers, and increasing opportunities for South African businesses to compete in foreign markets.
Overall, the South African government plays a crucial role in setting and implementing policies, regulations, and initiatives to promote foreign trade, protect domestic industries, and enhance the country's participation in the global economy.