South Africa’s Country Statement delivered by the Minister of Trade and Industry, Dr Rob Davies at the UNCTAD XIV Ministerial Conference in Nairobi, Kenya, on 20 July 2016
This Conference is taking place in the midst of a deepening global crisis
This Conference is taking place in the midst of a deepening global crisis. A feature of this phase is sharply depressed commodity prices which are having a significant impact on developing countries, including those on the African Continent. Many developing countries remain confined in the low value added parts of Global Value Chains (GVCs) as suppliers of primary products and commodities. The current circumstances require that we intensify our efforts to diversify our economies away from an over reliance on primary, unprocessed products, and move up the value chains through pursuing industrialization.
An integral component of this involves pursuing a development integration agenda on the African continent which combines market integration, infrastructure and industrial development. The aim is to create a larger regional market that supports diversification and industrialization across the continent. Global negotiations and rules must provide a supportive framework for this agenda and not complicate it. This requires recognising that developing countries’ efforts to transform their economies also need policy space.
In this regard South Africa reiterate its commitment to the WTO’s Doha Development Mandate. At the 10th WTO Ministerial Conference held here in Nairobi last year we agreed to non-binding discussions on other possible issues for future negotiations. However, I want to stress that we did not agree to discard the WTO Doha Mandate in favour of a new mandate dealing with so called 21st century trade issues. While some of the matters raised in exploratory discussions do speak to important new realities, we insist that any subject must be addressed from a developmental perspective and that we will not agree to proposals that will constrain policy space needed to support industrial development and pursuit of SDGs by Developing Countries.
In light of these dynamics, UNCTAD must continue to play an active role in assisting developing countries to understand profound developments underway in the world economy and issues arising in the interdependence in the areas of trade, finance, investment, macroeconomics, and technology that affect the growth and development prospects of developing countries. At the heart of UNCTAD’s mandate is a development-centered approach that eschews a one-size-fits-all approach. The global economic, financial and trading systems remain unbalanced and the current economic crisis has had significant impacts on the ability of developing countries to implement measures to address the consequences of sustained economic turbulence.
An investment led strategy is required to contribute to the economic transformation of African countries. In this regard there is a need for investment policies that promote and attract investment that contributes to sustainable development. These must be complemented by targeted trade and investment promotion and facilitation measures that are aimed at channeling investment to the manufacturing sector, including promoting corporate governance and good business practices that support the sustainable development agenda.
Developing countries therefore need policy space to industrialize and to integrate in a more favourable way into the global economy
Investment policy must be part of the broader development objectives of Governments. South Africa’s National Industrial Policy Framework (NIPF) and Trade Policy and Strategic Framework (TPSF) are explicit in demanding an approach to development and industrialization that is decided on a sector by sector basis, and dictated by the needs and imperatives of sectoral strategies. Sectoral work is grounded on a ‘self-discovery’ process of engagement between government and stakeholders and will build in appropriate disciplines to meet industrial policy objectives. Our experience has been that deliberate policy interventions are needed to promote diversification beyond a traditional export basket dominated by primary products. Tariff reductions alone have not induced the necessary structural changes in the economy to significantly alter the export basket beyond the range of products that reflect South Africa’s static comparative advantage. South Africa’s strongest export performance in more sophisticated products has been in sectors that have been built up through past and present industrial policy.
Virtually all of today’s developed countries actively used developmental trade and industrial policies and used a range of policy tools to help themselves “pull away” from their existing and potential competitors. Developing countries therefore need policy space to industrialize and to integrate in a more favourable way into the global economy.
UNCTAD must continue to be given a robust mandate to provide analytical work that supports developing countries in their efforts to promote developmental regional integration, as well as helping them assess the increasingly complex implications of plurilateral and mega-regional trade agreements. Sustainable industrialization must be promoted through a policy mix that support inclusive growth through an investment framework that establishes investors’ legal responsibility and adequate procedure for redress and accountability as well as developing policy options to increase tax transparency in the operations of multinational enterprises.
More broadly, the issue of changing international tax rules and closing loopholes which facilitate and enable international tax evasion and aggressive avoidance cannot just be ‘dealt with’ by one organization, the OECD, which the vast majority of developing countries are not even members of. It must be at the centre of a multilateral intergovernmental process under the auspices of the United Nations. UNCTAD has an important role to play in the development of a normative definition of illicit trade flows while developing support and capacity to enhance the involvement of developing countries in addressing base erosion and profit shifting to safeguard their taxing rights.
Technology transfer is essential to the enabling of sustainable development in developing countries and UNCTAD should continue to take a lead role in supporting these efforts by developing countries rather and provide an approach to intellectual property rules that takes into account the development dynamics of developing countries. The ability of developing countries to participate in scientific collaboration and to build local capacity is an essential component of any Science, Technology, Engineering and Mathematics (STEM) policy. South Africa has partnered with various countries and institutions to build the MeerKAT, originally the Karoo Array Telescope, which is a radio telescope under construction in the Northern Cape of South Africa. It will be the largest and most sensitive radio telescope in the southern hemisphere until the “Square Kilometre Array” is completed around 2024. Although the MeerKAT radio telescope has only just entered initial testing, early photographs have already lead to the discovery of 1,230 new galaxies. This telescope, which is predominantly a locally designed and built instrument, shows the world that Africa can compete in international research, engineering, technology and science.
It is therefore important to support an overarching UNCTAD mandate that will support research and analysis, policy advice and technical assistance on issues related to trade, development and interrelated issues. South Africa will work for an UNCTAD XIV Ministerial Declaration that reaffirms principles underlying UNCTAD’s mandate in order to strengthen the role of developing countries in the global economy and to achieve sustainable development goals. South Africa will hence not be able to support any Declaration that waters down UNCTAD’s mandate in respect of Do