|
|
|
|
|
|
THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
South Africa
South Africa is the largest and most developed economy in Sub-Saharan Africa. Agriculture contributes only 6 percent to South African GDP. Until recently, the bulk of South Africa’s agricultural products were marketed through commodity boards. These have all been dismantled and are being replaced by producer cooperatives which are reorganizing as private sector companies. Some of these groups are involved in export promotion, particularly for wine and fruit. South Africa has also eliminated its direct export subsidies under the General Export Incentive Scheme (GEIS). The Department of Trade and Industry (DTI) still operates export market promotion programs and promotes exports through its overseas offices, however, most of its programs are for industrial, rather than agricultural products.
Government Programs:
DTI introduced the GEIS on April 1, 1990. It was an export subsidy on the local content of the exported product and was intended to counteract the anti-export bias in the South African economy. The program operated for an initial 5-year period ending March 31, 1995, but was restructured in that year to restrict its use for primary products and to abolish the program on December 31, 1997 in compliance with South Africa’s commitments under the World Trade Organization. Products eligible for subsidies under GEIS included cut flowers, deciduous fruits, citrus products, wheat and wheat products, corn and corn products, sugar, cocoa and cocoa preparations, vegetables, fruit and nut preparations and juices, wine, wool and hides and skins. The South African Department of Agriculture is currently formulating a new export promotion strategy.
The South African Department of Trade and Industry’s principal market promotion program is the Marketing Assistance and Investment Assistance Scheme (EMIA). This scheme, with a 1997/98 budget of about $35 million, partially reimburses private companies and associations for expenses incurred in export promotion, research and in seeking foreign investment. It is primarily targeted at industrial companies. It can be used to assist in researching demand in foreign markets, for outward sales or inward buying trade missions and for participating in trade shows. EMIA funds are also available to fund start-up costs for export councils for specific industry sectors.
Other assistance available from DTI include a number of financing facilities to aid banks in financing exports or import of capital goods and services. Duty rebates are also available for raw materials used in manufacturing, processing or for export. DTI also provides advice, export promotion and trade servicing through its domestic offices and its overseas Economic Officers stationed abroad.
Private Sector activities:
Prior to 1997 production and marketing of agricultural products was controlled by Agricultural Control Boards which were funded by compulsory levies on producers and processors. Most of these boards were abolished as of April 30, 1997, except for the Wheat Board which terminated on November 30, 1997. Most control boards are converting to non-profit organizations which will not have access to compulsory levies and will have to compete with other such organizations. One former control board, the Cooperative Winegrower Association of South Africa (KWV) has become a private company and has reached an agreement with the Ministry of Agriculture to set aside funds to support South African wine industry activities, including export promotion, over the next ten years. Other companies have combined their overseas marketing efforts under one umbrella organization, Capespan which has its head office in London and other offices in Europe, the Far East and the United States.
Other South African private sector companies, like the South African Foreign Trade Organization (SAFTO) and commercial banks provide a wide range of export assistance services. SAFTO, which originated as a service of DTI, provides consultancy services, international market research, market and trade information, training, and networking assistance for companies trying to become involved in exporting. Most of these activities have recently been resumed directly by DTI and SAFTO has been closed down. The banks provide export financing, including credit guarantees and other assistance programs as well as export consulting services.
Competitor Activities:
In South Africa, U.S. agricultural products face competition from the EU, Australia, Argentina, Canada, India and Thailand. India and Thailand are the main competitors in the rice market, while Canada, Brazil, the U.K. and France are the principal competitors in the poultry sector. In the wheat market Australia, Argentina, Canada, France and Germany are the main competitors.
EU exports of these products generally benefit from export subsidies. The EU and South Africa are in the process of negotiating a Free Trade Area which could enhance EU access to the South African market. The other competitors are often able to offer lower prices either because of transportation advantages or as a marketing tool of their marketing boards. Competitor countries also gather market information and sponsor trade missions to develop markets for their products in South Africa.
|
|