252417 Learner Guide

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The various agreements which make up the Marrakesh Agreement combine as an indivisible
whole; no entity can be party to any one agreement without being party to them all.

From a South African point of viewRthIeSMKarrMakeAch Agreement played a very important role

in South Africa’s economic history since, by lucky coincidence, the Marrakech Agreement
came into force in 1994, the same year in which South Africa re entered the world a trading
partner no longer restricted by sanctions.

Southern African Development Community (SADC)

The following was sourced from the SADC website:

The Southern African Development Community (SADC) has been in existence since 1980,
when it was formed as a loose alliance of nine majority-ruled States in Southern Africa
known as the Southern African Development Coordination Conference (SADCC), with the
main aim of coordinating development projects in order to lessen economic dependence on
the then apartheid South Africa. The founding Member States are: Angola, Botswana,
Lesotho, Malawi, Mozambique, Swaziland, United Republic of Tanzania, Zambia and
Zimbabwe.

SADCC was formed in Lusaka, Zambia on April 1, 1980, following the adoption of the Lusaka
Declaration - Southern Africa: Towards Economic Liberation.

The transformation of the organization from a Coordinating Conference into a Development
Community (SADC) took place on August 17, 1992 in Windhoek, Namibia when the
Declaration and Treaty was signed at the Summit of Heads of State and Government thereby
giving the organization a legal character.

SADC was established under Article 2 of the SADC treaty by SADC Member States
represented by their respective Heads of State and Government or duly authorised
representatives to spearhead economic integration of Southern Africa.

SADC VISION

The SADC vision is one of a common future, within a regional community that will ensure
economic well-being, improvement of the standards of living and quality of life, freedom
and social justice; peace and security for the peoples of Southern Africa. This shared vision
is anchored on the common values and principles and the historical and cultural affinities
that exist amongst the peoples of Southern Africa.

SADC OBJECTIVES

Provided for in Article 5 of the SADC Treaty, the SADC Objectives are to:

• achieve development and economic growth, alleviate poverty, enhance the
standard and quality of life of the peoples of Southern Africa and support the
socially disadvantaged through regional integration;

• evolve common political values, systems and institutions;

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• promote and defend peace and security;

• promote self-sustaining dRMeevIemSlobKpemr SeMtnatteAosn; the basis of collective self-reliance, and
the inter-dependence of

• achieve complementarity between national and regional strategies and
programmes;

• promote and maximise productive employment and utilisation of resources of the
region;

• achieve sustainable utilisation of natural resources and effective protection of the
environment;

• strengthen and consolidate the long-standing historical, social and cultural
affinities and links among the peoples of the region;

TO ACHIEVE ITS AIMS, SADC SHALL:

• harmonise political and socio-economic policies and plans of Member States;

• mobilise the peoples of the region and their institutions to take initiatives to
develop economic, social and cultural ties across the region, and to participate fully
in the implementation of the programmes and projects of SADC;

• create appropriate institutions and mechanisms for the mobilisation of requisite
resources for the implementation of the programmes and operations of SADC and
its institutions;

• develop policies aimed at the progressive elimination of obstacles to free
movement of capital and labour, goods and services, and of the peoples of the
region generally within Member States;

• promote the development of human resources;

• promote the development, transfer and mastery of technology;

• improve economic management and performance through regional cooperation;

• promote the coordination and harmonisation of the international relations of
Member States;

• secure international understanding, cooperation and support, mobilise the inflow
of public and private resources into the region; and

• develop such other activities as Member States may decide in furtherance of the
objectives of SADC.

The signatories of the SADC Treaty agree that underdevelopment, exploitation, deprivation

and backwardness in Southern Africa will only be overcome through economic cooperation

and integration.

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The Member States recognise that achieving regional economic integration in Southern
Africa requires them to put their full support behind SADC to act on behalf of all Southern

Africans for their common prospeRrityI,SpeKaceManAd unity.

In pursuit of this agenda, SADC has adopted milestones to facilitate the attainment of the
SADC Free Trade Area (FTA) by 2008, the Customs Union (CU) by 2010, the Common Market
(CM) by 2015, Monetary Union (MU) by 2016 and the Single Currency by 2018. The SADC
Free Trade Area (FTA) was launched on August 17, 2008 at Sandton, South Africa during the
28th Summit of SADC Heads of State and Government.

SADC PRIORITIES AND COMMON AGENDA

The SADC Common Agenda is based on various principles, such as development orientation;
subsidiarity; market integration and development; facilitation and promotion of trade and
investment and variable geometry.

The SADC Common Agenda includes:

• the promotion of sustainable and equitable economic growth and socio-economic
development that will ensure poverty alleviation with the ultimate objective of its
eradication;

• promotion of common political values, systems and other shared values which are
transmitted through institutions which are democratic, legitimate and effective;
and

• the consolidation and maintenance of democracy, peace and security.

Current Member States are: Angola, Botswana, the Democratic Republic of Congo, Lesotho,
Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland,
United Republic of Tanzania, Zambia and Zimbabwe.

SADC headquarters are located in Gaborone, Botswana.

South African Customs Union (SACU),

The following was taken from the website of the Department of Trade and Industry (the
DTI):

The Southern African Customs Union came into existence on 11 December 1969 with the
signature of the Customs Union Agreement between South Africa, Botswana, Lesotho,
Namibia and Swaziland. It entered into force on the 1st of March 1970, thereby replacing
the Customs Union Agreement of 1910.

SACU is the oldest Customs Union in the world. It meets annually to discuss matters related
to the Agreement. There are also technical liaison committees, namely the Customs
Technical Liaison Committee, the Trade and Industry Liaison committee and the Ad hoc Sub-
Committee on Agriculture, which meet three times a year.

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Its aim is to maintain the free interchange of goods between member countries. It provides
for a common external tariff and a common excise tariff to this common customs area. All

customs and excise collected in RthIeScoKmmMonAcustoms area are paid into South Africa’

national Revenue Fund. The Revenue is shared among members according to a revenue-
sharing formula as described in the agreement. South Africa is the custodian of this pool.
Only the BLNS Member States' shares are calculated with South Africa receiving the residual.
SACU revenue constitutes a substantial share of the state revenue of the BLNS countries.

Following the formation of the Government of National Unity in South Africa in April 1994,
Member States concurred that the present Agreement should be renegotiated in order to
democratise SACU and address the current needs of the SACU Member States more
effectively.

With this in mind, the Ministers of Trade and Industry of the five-member states met in
Pretoria on 11 November 1994 to discuss the renegotiation of the 1969 agreement. The
Ministers appointed a Customs Union Task Team (CUTT) which was mandated to make
recommendations to the Ministers. CUTT has met on numerous occasions in the various
Members States and good progress has been made in the renegotiation process.

At a meeting of Ministers of Trade and Finance Departments from the five SACU Member
States, held in Centurion, Pretoria on 5 September 2000, the Ministers reached consensus
on the principles of underpinning the Institutional reform in the Southern African Customs
Union.

The Administrative Institutional structure of the revenue pool that was discussed was
agreed to consist of the following:

Council of Ministers: A body represented by one Minister from each SACU member state. It
would be the supreme SACU decision-making body and would meet on quarterly basis. The
decisions taken by this Council would only be by consensus.

Commission: Administrative body comprised of Senior Officials, three Technical Liaison
Committees and an established Agricultural Liaison Committee.

Tribunal: An independent body of experts. It would report directly to the Council of
Ministers. The tribunal would be responsible for tariff-setting and the Anti-dumping
Mechanism.

Secretariat: Responsible for day to day operations of the pool. It would also be funded from
the revenue pool. Its location would be determined by Senior Officials who were directed
to meet after a period of a month to develop proposals for the implementation of the
revised SACU Institutional Structure.

SACU Ministers further agreed that the revenue share accruing to each Member State
should be calculated from three basic components:

• a share of the customs pool;

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• a share of the excise pool; and

• a share of a developmentRcoImSpKoneMnt A

Further, it was agreed that these three different components would be distributed as
follows:

The customs component should be allocated according to each country’s share of total intra-
SACU trade, including re-exports.

The excise component, net of the development component, should be allocated on the basis
of GDP. The development component should be fixed at 15% of the total excise pool and
distributed to all SACU members according to the inverse of each country’s GDP/capita.

African Growth and Opportunity Act (AGOA)

The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as
Title 1 of The Trade and Development Act of 2000. The Act offers certain incentives for
African countries to continue their efforts to open their economies and build free markets.

AGOA provides trade preferences for quota and duty-free entry into the United States for
certain goods, expanding the benefits under the Generalized System of Preferences (GSP)
program. Notably, AGOA expanded market access for textile and apparel goods into the
United States for eligible countries. This resulted in the growth of an apparel industry in
southern Africa, and created hundreds of thousands of jobs.

However, the dismantling of the Multi Fibre Agreement's world quota regime for textile and
apparel trade in January 2005 reversed some of the gains made in the African textile industry
due to increased competition from developing nations outside of Africa, particularly China.
Already, many factories have been shut down in Lesotho, where most of the growth
occurred. However, following the imposition of certain safeguard measures by US
authorities, orders from African manufacturers stabilised somewhat. Still, Africa is the only
region that has in fact a reduced share of the US apparel import market following the
phasing out of quotas.

AGOA has resulted in limited successes in some countries. In addition to growth in the textile
and apparel industry, some AGOA countries have begun to export new products to the
United States, such as cut flowers, horticultural products, automotives and steel. While
Nigeria and Angola are the largest exporters under AGOA, South Africa's have been the most
diverse and unlike the former are not mainly concentrated in the energy sector. To some
countries, including Lesotho, Swaziland, Kenya and Madagascar, AGOA remains of critical
importance. Agricultural products is a promising area for AGOA trade, however much work
needs to be done to assist African countries in meeting U.S. sanitary and phytosanitary
standards.

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The U.S. government is providing technical assistance to AGOA eligible countries to help
them benefit from the legislation, through the U.S. Agency for International Development

(USAID) and other agencies. The UR.S.IgSovKernMmeAnt has established three regional trade hubs

in Africa for this purpose, in Accra, Ghana; Gaborone, Botswana; and Nairobi, Kenya.

Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the
AGOA Acceleration Act of 2004, which extended the legislation to 2015. The Act's apparel
special provision, which permits lesser-developed countries to use foreign fabric for their
garment exports, was to expire in September 2007. However, legislation passed by Congress
in December 2006 extended it through 2012.

Every year an AGOA Forum is held, which brings together government leaders and private
sector stakeholders from Africa and the United States. The Forum is held in Washington
every other year and in an AGOA eligible African country in the other years. So far, the Forum
has been held three times in Washington, and once in Mauritius, Senegal and Ghana.

While AGOA is often synonymous with preferential garment exports, the fact remains that
AGOA opens the US market to a large number of African-sourced goods that are able to
enter the United States free of import duty.

Some allege that AGOA is in contradiction with WTO rules. Furthermore, it is seen as a one-
sided agreement as there was little African involvement in its preparation.

Others claim AGOA encourages fraud by making Chinese and Indian clothing manufacturers
label their goods "Made in Kenya" and transshipping them to the United States through
Kenya.

In South Africa, AGOA is administered by SARS.

South Africa/European Union Free Trade agreement,

In a clear break with its former policy, partly due to the stalemate of the Doha Development
Round negotiations and to the changes in the global economic balance, the European Union
(EU) announced in 2006 its plan to seek comprehensive Free Trade Agreements with a series
of countries and regions. To provide European industry with new opportunities for growth
and development, these agreements need to be comprehensive in scope, provide for
liberalisation of substantially all trade and go beyond multilateral disciplines.

These agreements also have very important implications for developing countries: they
certainly have potential to provide them with new trading opportunities, lock in reform and
be powerful tools for economic growth. However, liberalisation between countries with
vastly different levels of development, if it is too fast and too deep, could be very damaging
for the weakest part. For liberalisation to benefit developing countries, these should be
granted special and differential treatment so that they can protect their infant industries
(via tariffs, subsidies, state intervention or any other tools) until they are strong enough to
compete internationally.

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From the South African point of view, an additional Protocol to SA/EU Trade, Development

and Cooperation agreement was implemented on the 16 January 2006 with retrospective

effect from 1st May 2004. RISK MA

The European Union was expanded from 15 to 25 Member States. The new members are:
Cyprus; Czech Republic; Estonia; Hungary; Latvia; Lithuania; Malta; Poland; Slovakia;
Slovenia.

The purpose is, amongst others, to facilitate free movement of goods & establish Free Trade
Area by 2012 on the side of SA and 2010 on the side of the EU.

Generalised System of Preferences (GSP)

The GSP was devised by the United Nations Conference on Trade and Development
(UNCTAD) to enable developed countries to provide preferential treatment to products
exported from developing and least developed countries.

GSP’s for EU, Switzerland and Norway were implemented by SARS as from 01 Jan 2004 and
Turkey from 01 Dec 2005

European Union

The GSP is an autonomous trade arrangement through which the EU provides non-
reciprocal preferential access to the EU market to 176 developing countries and territories,
in the form of reduced tariffs for their goods when entering the EU market. It is implemented
by a Council Regulation applicable for a period of three years at a time.

The Generalised System of Preferences (GSP) covers three separate preference regimes:

(i) the standard GSP, which provides preferences to 176 Developing Countries and
Territories on over 6300 tariff lines;

(ii) the special incentive arrangement for Sustainable Development and Good
Governance, known as GSP+, which offers additional tariff reductions to support
vulnerable developing countries in their ratification and implementation of relevant
international conventions in these fields; and

(iii) the Everything but Arms (EBA) arrangement, which provides Duty-Free, Quota-Free
access for the 50 Least-Developed Countries (LDCs).

The primary objective of the GSP is to contribute to the reduction of poverty and the
promotion of sustainable development and good governance. Tariff preferences on the EU
market enable Developing Countries to participate more fully in international trade and
generate additional export revenue to support implementation of their own sustainable
development and poverty reduction policy strategies.’

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New China Textile Agreement

The following two articles appeareRd IoSn tKhe fMibreA2fashion.com website:

South Africa: Textile export contract with China to bring relief

June 29, 2006

Gus Mandigora, a Tralac Researcher, comments on South Africa's textile export restraint
agreement with China.

The Chinese Premier, Wen Jiabao, recently completed a visit to South Africa, in which a
number of agreements and undertakings were initialed and/or signed between their
respective governments.

For South Africa’s beleaguered textile industry, the most important of these agreements
was a voluntary export restraint agreement that will seek to restrict Chinese textile exports
to South Africa. While this move has been welcomed in some quarters, some commentators
have expressed concern over the lack of transparency and enforceability of this agreement.

Concern has also been expressed over the potential of other low-cost textile producers such
as Bangladesh and India to simply fill the gap left by the Chinese and leave the South African
industry in the same predicament as before.

Finally, given the fact that South Africa’s textile industry had several years to respond to the
impending expiry of the Multi-Fibre Agreement (MFA) and failed to do so, it seems unlikely
that a voluntary agreement with China will enable the industry to adjust this time round.

This raises the following question: Will the export restraint agreement with China actually
bring any relief to South Africa’s textile industry?

Restriction on Chinese imports likely to end soon

December 06, 2008 (South Africa)

Reportedly, South African Government will not extend quota restriction on Chinese apparels
beyond December 31 this year.

Cheap imports of Chinese textile and apparel products had been troubling South African
manufacturers for quite some time. Thousands of workers lost their jobs in one of South
Africa's biggest manufacturing sectors, which was struggling to improve competitiveness in
the face of declining exports.

In order to avoid negative impact of the same, South Africa, on January 1, 2007, introduced
quotas to restrict Chinese textile and clothing imports in last year.

Mr Tshediso Matona, Director General in the Department of Trade and Industry, while
speaking to reporters, Said, “We don't have any applications from anyone (to extend the
quotas) and so my expectation is that if we don't get any, they will expire.”

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According to Matona, even though there has been a reduction in imports from China, the
impact of restrictions needs to be measured.

However, once restriction ends, cRlotIhSinKg reMtailAers in the region, will be relieved that now

they can purchase cheaper products from China to compensate losses due to sharp decline
in demand.

4.4. A list is made of the top 15 major export and import commodities from and to South Africa
by sea for the purpose of illustrating South Africa`s trading activities

Before we plunge into this topic let us first have a look at the whole picture of South Africa’s
international trade environment which will put these figures into perspective otherwise they
will be meaningless.

To start with, it is irrelevant to look at and identify a “top” trading partner or a “top” exported
commodity or a “top” imported commodity unless the reason for doing so is established. The
figures need to be interpreted to tell their story. As an arbitrary example let’s just say the USA
never imports wheat. If the whole of The USA has a crop failure for wheat in the year 1998
then it stands to reason that wheat will be a major import commodity that year. Then the
following year the wheat crop is a success and there is no need to imported wheat.

So, to look at the statistics for the year, 1998 and to say that the USA is a major importer of
wheat is not entirely correct: it is only a major importer of wheat in 1998 and not necessarily
in any of the other years.

Statistics are not static – they are dynamic and they fluctuate from one year to the next. It is
of paramount importance to understand this. Japan may be South Africa’s top export partner
one year and the next year it may be China who is South Africa’s top export trading partner.
Therefore, it is of no use to learn any of the rankings such as which country is ranked where
in which year. The criterion here is to learn to identify who and what is ranked where.

Secondly, the customs declaration (the SAD) such as the export declaration or the import
declaration has a column where the statistical unit is recorded. This information is processed
by SARS and by the Department of Trade and Industry and the statistics are spewed out into
reports. These reports can take many months (or years) before they are published. Some
commodities require a statistical unit of “KG” and other commodities require “NO.” This
means that if you look at a report for exports from South Africa to Argentina for the month
of May 2001 and try to identify the top exported product by weight (e.g. tonnages shipped)
then those commodities with the statistical unit of “NO” on the customs declarations will not
be in the report and the report will not be accurate. Let us just say for example that the
commodity exported from South Africa to Argentina the most is the “vuvuzela” and this item
is statistically recorded on the customs declaration as “NO” (number). The exported
commodity to Argentina which only comes a distant second is ear-plugs and these are
recorded statistically on the customs declaration as “KG.”

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If you look at a report simply based on tonnages shipped it will be the ear-plugs which will
top the list and that would be inaccurate. You need to compare apples with apples and

lemons with lemons to get an accuraRteIrSepKortMandAif one commodity is quantified as “number”

and another as “kilograms” it will not be possible to compare them. You cannot send a crate
of oranges for which you have the weight and a box of watches for which you have only the
number of units but no weight, and then try and compare the two based on tonnage or
weight.

The best way is to compare commodities is based on value because for all commodities their
values (FOB values) are recorded for export or import purposes. This will provide an equal
platform upon which to make a comparison.

The third issue is that some of these reports are based on the item’s 2-digit tariff heading (the
first two digits of the heading) and this only provides a wide description and not a detailed
commodity description.

For example, Chapter 71 covers “Pearls, precious stones, metals, coins etc.” so if you wanted
to see which of either gold or platinum was the biggest export you would have search a report
which identifies commodities up to 6- or 8-digits of the tariff heading.

Other reports cover whole areas, such as Europe or Asia or North America (North America
includes Mexico, USA and Canada). In a report which covers an area or a region it is not
possible to see the quantity of exports to a single country such as Switzerland, for example.

The SARS’ website and the website of the Department of Trade and Industry have drop-down
lists which make it possible to select a certain HS (Harmonised System tariff heading) number
to or from a certain country or region for a certain time period such as one month or one
year. This provides a report which can be very specific.

Therefore, instead of a report that shows the total quantity of ALL plastic (Chapter 39) goods
exported from South Africa to Mexico in the month of January 2005, a report can be printed
which shows the total quantity specifically of ALL plastic toilet seats (heading 3922.20)
exported from South Africa to Mexico in January 2005.

Amongst South Africa’s main exports are commodities such as gold, diamonds, other metals
and minerals, machinery and equipment.

South Africa’s major imports are commodities such as machinery, foodstuffs and equipment,
chemicals, petroleum products and scientific instruments to name but a few.

South Africa has rich mineral resources. It is the one of the world's largest producers and
exporters of gold as well as platinum. Another major export commodity is coal. In the year
2000 platinum overtook gold as South Africa's largest foreign exchange earner. South Africa’s
diverse manufacturing industry is a world leader in several specialized sectors, including
motor vehicles and parts, railway rolling stock, synthetic fuels, and mining equipment and
machinery.

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South Africa’s major agricultural crops include citrus and deciduous fruits, corn, wheat, dairy
products, sugarcane, tobacco, wine, and wool. South Africa has many developed irrigation

schemes and is a net exporter of foRodI. SK MA

South Africa is a member of the World Trade Organization (WTO).

South Africa has done away with most import permits except on used products and products
regulated by international treaties. It also remains committed to the simplification and
continued reduction of tariffs within the WTO framework and maintains active discussions
with that body and its major trading partners.

South Africa’s economy is inextricably connected to that of the southern African region, and
its success is linked to the economic recovery of the continent through the New Partnership
for Africa’s Development (Nepad).

The Southern African Development Community (SADC) comprises Angola, Botswana, the
Democratic Republic of Congo (DRC), Lesotho, Madagascar, Malawi, Mauritius, Mozambique,
Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.

During the SADC Summit, the Free Trade Agreement (FTA) was launched. The theme of the
SADC FTA is SADC FTA for Growth and Wealth Creation. The FTA provides preferential space
towards regional business and its citizens by opening up opportunities for investment through
reducing market risk and transaction costs, and creating a network of regional businesses
interconnection. The FTA is a vital stepping stone towards a SADC Common Market, where
the movement of people would be unrestricted and free. Freeing trade in the region will
create a larger market, releasing the potential for trade, economic growth and employment
creation.

Trade relations with Europe, particularly with the European Union (EU), are pivotal to South
Africa’s economic development. The Trade, Development and Co-operation Agreement with
the EU forms a substantial element of South Africa’s reconstruction and development efforts.

The USA is one of South Africa’s leading trade partners. South Africa is a beneficiary of the
USAs Generalised System of Preferences, (GSP), which grants duty-free treatment to over 4
650 products.

At the same time, South Africa is one of 38 beneficiaries of the Africa Growth and Opportunity
Act (AGOA), which was promulgated in May 2000. In terms of the AGOA, 1 783 more products
were added to the existing GSP products for duty-free treatment.

Although the AGOA was initially due to lapse in 2008, the USA Government met African
countries requests for it to run until 2015 under what is called the AGOA 111 amendments.
The AGOA also allows duty-free entry of clothing and selected textiles into the USA, subject
to certain criteria and policy reforms.

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Another significant trading partner in the Americas is Canada. Since the lifting of sanctions in

1994, bilateral trade between South Africa and Canada increased from R904 million in 1993

to R6.6 billion in 2006. South AfricRa iIs Sa KbenMeficAiary of Canada’s General Preferential Tariff

(GPT). GPT rates range from duty-free to reductions in the Most Favoured Nation rates.

South Africa’s major trading partners in Latin America are Brazil, Argentina, Paraguay and
Uruguay, which are members of the MERCOSUR (MERCOSUR = Southern Common Market)
trade bloc. Most trade is with Brazil and Argentina. A framework agreement, committing
South Africa and MERCOSUR to an FTA, was signed in 2000. However, as a first step towards
achieving this goal, the parties signed a preferential trade agreement (PTA) in December
2004. Upon ratification by all signatories, the PTA will offer businesses from both sides
preferential access to a broad range of product lines.

Bilateral trade with south-east Asia, particularly the Association of South-East Asian nations
(ASEAN = Association of South East Asian Nations) members, increased rapidly from a low
base in 1990. ASEAN presents South Africa with a potential market in excess of 520 million
people. Within the region, key partners for South Africa include Singapore, Thailand,
Indonesia, Malaysia, Vietnam and the Philippines.

Bearing all of the above in mind, let us now take a look at South Africa’s top five trading
partners and identify them by means of tonnages shipped and value. The year I have taken
for all examples is 2006. If you source information and statistics off the internet always be
very careful to check the values and the decimal places because sometimes values are given
in US Dollars. Also check whether the value is stated in millions of dollars or even billions.

The figures for the statistics below were obtained from the South African Department of
Trade and Industries’ website (www.dti.gov.za). There are other sites which also provide
figures and statistics, such as The International Trade Centre (www.intracen.org), The World
Trade Organisation (www.stat.wto.org) and the South African Revenue Services – SARS
(www.sars.gov.za). The figures of any one site are not always exactly the same as any other
site but the differences are negligible, so the final outcome is still the same.

Exports (all commodities) based on value: 2006

S.A. RAND

1 Japan 41,315,988,851

2 United States of America 41,157,762,979

3 United Kingdom 31,717,872,943

4 Germany 26,867,126,752

5 Netherlands 18,068,443,892

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From the above statistics, we can see that Japan was South Africa’s top export trading partner
in 2006, with the United States of America a very close second. China came a very close sixth

with exports to that country totalliRngIRS14K,01M9,86A1,211. The year before – 2005- exports to

China amounted to R8,763,191,086 (almost half), and in 2000 exports to China amounted to
only R2,410,801,243.

If that rate of increase is maintained it is just a matter of time until China becomes the number
one export destination.

Notably, three of these in the top five were European countries – the United Kingdom,
Germany and Netherlands.

Exports (all commodities) based on volume: 2006

S.A. RAND

1 China 15,039,144,464

2 United Kingdom 13,546,535,364

3 Japan 11,479,895,836

4 United States 4,912,056,322

5 France 4,494,714,678

Israel came a close sixth with South African exports to that country totalling R4,470,890,676
and then came India in seventh spot, with R4,237,703,293.

The Department of Trade and Industries website does not specify how they arrived at these
figures based on volume and whether they used kilograms as the statistical unit only, nor how
- or even if - they calculated those commodities exported with the statistical code of “NO”
(number).

In the table for exports based on value China was sitting at sixth place but now looking at the
export table based on volume China is sitting at top spot, and Japan has fallen from first place
to third. Please note that for all these statistics when China is mentioned it refers to China,
P.R. Mainland (The People’s Republic of China Mainland) and that Taiwan is separate and so
is Hong Kong separate.

Now we are going to look at the figures from the website of the Department of Trade and
Industry and identify the top five countries from which South Africa imports.

Imports (all commodities) based on value: 2006

S.A. RAND

1 Germany 57,844,239,913

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2 China 46,718,797,869

3 United States of America RISK M3A5,176,906,278
4 Japan 30,261,109,265

5 Saudi Arabia 24,544,791,797

From the above we can see Germany sitting in number one position. Remember, in section
5.1 above we saw that Germany was also in the top five of South Africa’s export trading
partners.

China, Japan and the Unites States of America all feature prominently once again - this time
as import trading partners.

Just edged out of the top five is the United Kingdom in sixth place with imports from that
country valued at R23,099,217,178, followed by France with R16,985,693,804 and then Italy
(R13,959,580.733) and India (R10,960,347,018).

The imports table for 2006 based on volume looks like this:

Imports (all commodities) based on volume: 2006

S.A. RAND

1 Saudi Arabia 8,207,737,951

2 United States of America 4,224,381,194

3 China 4,085,848,831

4 India 1,938,082,113

5 Germany 1,829,509,582

The above shows that South Africa imports the greatest volume from Saudi Arabia and a good
guess would be that this is oil. Germany is fifth on this table whereas it was number one in
the table based on imports by value. This means that the volume of imports from Germany is
not as great as the volumes from the United States of America, China or India, but the value
of imports from Germany is the greatest. Indonesia in sixth place follows Germany and then
comes Taiwan, United Kingdom, Italy, South Korea, Japan, France and Hong Kong, in that
order.

The above should give you a clear indication of South Africa’s top trading partners as well as

other countries which play an important role in trading with South Africa.

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Remember that from one year to the next these rankings can change.

As explained above, vaargeupeorttowdheictehrRmis IibnSaesKethdeoMnexaaAc2t-dnigaittutraeriofff heading (the first two digits of
the heading) is too that item or commodity. For

example, Chapter 71 covers “Pearls, precious stones, metals, coins etc.” and would be too

vague to classify “Ceramic imitation jewellery” which falls under heading 7117.90.00.

Also, as mentioned in section 5.1, the SARS’ website and the website of the Department of
Trade and Industry have drop-down lists which make it possible to select a certain HS
(Harmonised System tariff heading) number to or from a certain country or region (or
worldwide) for a certain time period such as one month or one year. This provides a report
which can be very specific.

However, to do thousands of reports by inserting tariff headings for each and every item
exported and imported over a period of time, would be far too time consuming. It is common
knowledge that South Africa’s main exports are commodities such as gold, diamonds, other
metals and minerals, machinery and equipment, and South Africa’s major imports are
commodities such as machinery, foodstuffs and equipment, chemicals, petroleum products
and scientific instruments but let us see if this is in fact so based on the figures and data from
the SARS website.

There are three tables below and all three show the top 10 exported commodities for a
particular month. By looking at 10 commodities you are of course able to see the top 5 but
also a broader picture over and above only those. The assessment criteria do not state the
report has to be an annual report so we will look at the reports of three individual months
instead and see the picture that is drawn from those. Once again, remember that
commodities and their place in the rankings change from one month to the next depending
on a multitude of factors.

Top 10 exported commodities August 2004

No Tariff Description Code Quantity Rand Value

R

1 7108.20.00 Monetary, Gold not stated 3,017,037,600

2 7110.19.00 Platinum KG 711,230 1,390,763,388

3 8703.23.90 Motor vehicles, NO 14,044 1,377,673,107
other

4 2701.12.00 Bituminous coal KG 4,693,350,00 1,249,993,628
0

5 7202.41.00 Ferro-chromium KG 144,062,605 587,073,038

6 8421.39.90 Filtering apparatus NO 585,728 503,184,777

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7 7601.10.00 Aluminium, not KG 25,576,479 453,859,342
430,553,543
alloyed 351,881,969

8 4802.69.90 Paper RISK KMG A 1,226,000 253,750,000

9 7110.11.00 Platinum, KG 49,396
unwrought or
powder form

10 8703.22.90 Motor vehicles with NO 1,750
cylinder capacity exc.
1000 cm3

Top 10 exported commodities November 2005

No Tariff Description Code Quantity Rand Value
R
1 7108.20.00 Monetary, Gold not stated 2,678,094,000
12,072 1,484,248,601
2 8703.23.90 Motor vehicles, with NO
a cylinder capacity
not exc. 3000cm3

3 2701.12.00 Bituminous coal KG 4,100,399,40 1,389,605,898
0 1,360,323,375
4 7110.11.00 Platinum, KG
unwrought or 47,174
5 7102.31.00 powder form

6 7110.19.00 Diamonds, CT 1,430,112 985,451,196
7 8421.39.90 unworked
8 7110.39.00 4,062 750,216,531
9 7102.39.00 Platinum KG 506,954 504,499,760
10 7110.31.00 758 453,085,854
Filtering apparatus NO 22,186 435,661,156
808 434,484.541
Rhodium KG

Diamonds, other CT

Rhodium, unworked KG

Top 10 exported commodities April 2006

No Tariff Description Code Quantity Rand Value

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1 7108.20.00 Monetary, GoRld ISK MA not stated R
2 7110.11.00 Platinum, KG 6,607 4,317,455,971
1,296,725,240
3 7110.19.00 unwrought or
4 7110.31.00 829,619,470
5 8407.10.00 powder form 717,560,979
6 7403.11.00 364,053,271
7 8802.40.00 Platinum, other KG 4,360 283,171,382
282,663,315
8 4907.00.10 Rhodium, unworked KG 1,690
135,491,718
9 4907.00.30 Aircraft engines NO 457
133,898,492
10 2401.20.00 Cathodes KG 12,111,207
104,438,405
Aircraft of un-laden NO 1
mass exc. 15000kg

Postage and revenue KG 670
stamps, banknotes

Travellers cheques KG 565
and bills of exchange

Tobacco, wholly or KG 3,709,121
partly stemmed

What does the above tell us? The most obvious fact is that gold is the number one export as
evidence by its first place in all three tables.

Platinum is not only exported as platinum but also as “unwrought or in powder form” so to
get a true look at the value of platinum to South African exports you need to combine
platinum under heading 7110.19.00 and platinum under heading 7110.11.00.

In August 2004 Platinum was the second biggest export but 15 months later in November
2005 motor vehicles with a cylinder capacity not exceeding 3000cm3 was in second spot and
platinum had fallen to fifth and sixth places.

Four months later in April 2006 platinum was back in second and third place. It seems like
there was just a very big shipment of motor vehicles in November 2006 to have secured
second spot on the listings.

Diamonds did not even feature in the placing for August 2004 and April 2006 but secured fifth
and ninth place in November 2005.

Rhodium appears in eight and tenth place in November 2005 as well as fourth in April 2006
but what is rhodium?

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Merriam-Webster’s dictionary defines rhodium as “a rare silvery-white hard ductile metallic
element that is resistant to acids, occurs native but is usu. obtained from nickel ores, and is

used esp. as a catalyst and in platinuRmIaSlloKys.”MIt iAs classified under a sub-heading of platinum.

If you take the value given on the tables and divide it by the quantity in kilograms as provided
there, it certainly has high value per kilogram.

Other surprise entries are “filtering apparatus” at number six spot in August 2004 and seventh
spot in November 2005; tobacco at tenth place in April 2006; that single aircraft at seventh
place in April 2006; and “cathodes” at sixth place in April 2006 (look it up in a dictionary).

Now that we have had a look at South Africa’s top exported commodities for the months of
August 2004, November 2005 and April 2006, what were we as South Africans importing in
those same months? Alcohol? Golf-clubs? Big-screen TV’s? Apparently not, because South
Africa’s major imports are commodities such as machinery, foodstuffs and equipment,
chemicals, petroleum products and scientific instruments but once again let us see if this is in
fact so, based on the figures and data from the SARS website.

Top 10 imported commodities August 2004

No Tariff Description Code Quantity Rand Value

R

1 2709.00.0 Petroleum Oils, Crude KG 1,735,685,13 2,660,861,810
0 0

2 9801.00.3 Original Equipment, Motor KG 20,607,427 1,120,574,819
0 Vehicles

3 7108.12.0 Gold, unwrought G 16,104 607,263,919
0

4 8525.20.0 Transmission apparatus NO 581,240 570,435,305

0 incorp. reception

apparatus

5 8703.23.9 Motor Vehicles with a NO 6,838 555,889,474
0 cylinder capacity exc. 3000
cm3

6 9801.00.4 Original equipment, KG 9,044,526 468,253,769
2 402,878,471
0 transport vehicles 65,532 323,176,187

7 8802.40.0 Aircraft of un-laden mass NO
0 exc. 15 000kg

8 7102.31.0 Diamonds, unworked CT
0

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9 9801.00.4 Original equipment, goods KG 5,977,305 316,662,473
7 196,452,017
5 vehicles

10 8411.12.0 Turbo-jets of aRthIruSstKexMc. ANO

0 25KN

Top 10 imported commodities November 2005

No Tariff Description Code Quantity Rand Value
789,983,260 R
1 2709.00.00 Petroleum oils, Crude KG 2,117,515,748

2 7108.12.00 Gold, unwrought G 17,519 1,710,920,198

3 9801.00.30 Original equipment, KG 25,655,226 1,581,244,133
227,123,243 894,086,364
motor vehicles

4 2710.11.30 Distillate Fuel KG

5 8525.20.00 Transmission apparatus NO 1,023,563 767,716,065
9,226 745,721,272
incorp. reception 93,197 503,064,702

apparatus

6 8703.23.90 Motor vehicles with a NO
cylinder capacity not exc.
3000cm3

7 7102.31.00 Diamonds, unworked CT

8 8703.24.90 Motor vehicles with a NO 1,915 419,072,881
cylinder capacity exc.
9 9801.00.40 3000 cm3 8,070,914 407,467,328
10 9801.00.45 4,828,207 260,011,872
Original equipment, KG

transport vehicles

Original equipment, KG

Goods vehicles

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Top 10 imported commodities ApRrilI2S00K6 MA Rand Value
No Tariff Description Code Quantity R
3,478,015,337
1 2709.00.00 Petroleum oils, Crude KG 1,034,416,01
0

2 9801.00.30 Original equipment, KG 17,940,148 1,134,782,299
1,119,999 853,422,329
motor vehicles

3 8525.20.00 Transmission apparatus NO

incorp. reception

apparatus

4 8703.23.90 Motor vehicles with a NO 10,063 706,637,488
cylinder capacity not exc.
3 000cm3

5 7102.31.00 Diamonds, unworked CT 81,835 471,021,965

6 2710.11.03 Petrol, unleaded KG 100,760,379 380,188,375

7 9801.00.45 Original equipment, KG 5,655,450 326,068,423
8 8802.40.00 1 287,172,942
9 9801.00.40 goods vehicles 6,702,276 279,532,035
10 7108.13.00 2,480 257,698,867
Aircraft of an un-laden NO
mass exc. 15 000 kg

Original equipment, KG

Transport vehicles

Gold, other semi KG
manufactured forms

The first and most obvious fact from the above is that crude oil is the top imported
commodity. It is strange however that the statistical code for crude oil should be “KG” and
not “litres.” You should recall that in section 5.2 Saudi Arabia was ranked in the top five of
South Africa’s trading partners for imports.

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For both August 2004 and April 2006, the commodity ranked second is ‘Original equipment, motor
vehicles.’ Note that this is not actual motor vehicles but the equipment for motor vehicles, as in

equipment to assemble or construct a motRorIvSehKicleM. ThAe statistical quantity for this is ‘KG’ whereas

for motor vehicles it is ‘NO’.
Surprisingly, ‘Gold, unwrought’ and ‘Diamonds, unworked’ were among the top ten for all three
months.
Other top imports which featured in all three months were various motor vehicles, aircraft and
transmission apparatus.

THE END

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