SA ready to warn G20 off protectionism

Protectionism is a key issue confronting heads of state and finance ministers of the Group of 20 (G20) meeting in London on Thursday. South Africa is expected to play a key role in persuading the developed countries not to close their markets.

South Africa's delegation is led by President Kgalema Motlanthe and Finance Minister Trevor Manuel, while Treasury director-general Lesetja Kganyago represents the broader interests of the government, the Reserve Bank and the Department of Trade and Industry.

Trade and industry director-general Tshediso Matona told Business Report yesterday that in the context of the global economic downturn, "we don't want to generate a trade war" and force developing countries to retaliate against unfair trade from the developed world.

Unfair trade was already a factor in the US and EU support for their automotive industries, in particular, he noted.

South Africa could not bail out its motor industry, as "we don't have the resources".

It was tempting for developing nations to retaliate by raising tariff barriers and seeking other protections of industry.

Trade Law Centre director Trudi Hartzenberg said expectations for the G20 meeting were "extremely high", but there were "serious concerns about more protectionism" by the developed economies.

Although it was understandable that countries wanted to avoid job losses, protectionism would be the wrong way to go.

"If one looks at the trends in the global economy … there is much production sharing and global supply chains have been established," she said.


She believed Manuel had the stature to drive this point home to international leaders.

Hartzenberg said South Africa had to keep in mind that it represented the African continent "and it needs to take on board its own interest and the interests of the rest of Africa".

Many of the least developed countries were in Africa, she noted, and they were keen for advanced countries to continue providing development assistance, particularly as demand for commodities was plunging.

Lesotho, for example, had developed a market for its garment exports in the US, but was suffering as demand dropped.

Sam Henkeman, the spokeswoman of Reserve Bank governor Tito Mboweni, said the bank would not be directly represented this time, but Mboweni had emphasised that developed nations had to clean up their banking systems. He had repeatedly stated that they needed to improve banking regulation and the supervision of their financial institutions.

Peter Draper, an SA Institute of International Affairs research fellow, said there was a small window of opportunity for South Africa to persuade the G20 to implement proposals of the Doha trade round, but he was not confident of it. Factors such as the lack of a US trade representative and the pending review of trade policy made it unlikely in that country.

Elections in South Africa and India would complicate such discussions.