Tariffs run risk of entering ‘tit-for-tat’ territory
04 July 2024 - 18:24
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Tariffs (and other forms of protectionist trade and industrial policy) run the risk of entering “tit-for-tat” territory. If well timed, limited and supportive of industries or products that provide a real global competitive advantage and create skills and jobs, a case can be made for some measure of tariffs.
Crucially though, if tariffs are imposed underlying structural drivers of high costs (such as load-shedding, logistics bottlenecks, rigid labour markets and other administered prices) are not addressed, the government runs the risk of simply propping up uncompetitive players, and less-than-ideally priced goods.
A new 10% import duty — instituted on solar PV panels, cells and modules brought into the country, gazetted and signed by finance minister Enoch Godongwana on June 28 — forms part of a (then) mineral resources & energy department plan for the renewable energy industry. The plan aims to create 25,000 jobs by 2030 and foster R15bn in new investment.
The ultimate worth of a policy — in this case tariffs — should be measured not by its intentions (however noble) but by its effects. If higher costs and (a handful, if that many) uncompetitive players result, the tariffs and other areas of trade policy should be investigated and possibly jettisoned.
Should a tariff not bring imported panels to parity with locally manufactured products it will ultimately just be a pernicious device. Capital costs, infrastructural impediments, crime, business-friendliness; all these factors, and those mentioned earlier, affect local businesses’ ability to grow, innovate and provide competitive services and products.
If the new government does not make progress in at least some of these areas aggressive industrial policy is only of ultimate benefit to large players that can influence policy choices in their favour.
Chris Hattingh Centre for Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: Revisit trade policy
Tariffs run risk of entering ‘tit-for-tat’ territory
Peter Bruce’s most recent column (“Here’s hoping government sees the light over industrial policy”, July 4) refers.
Tariffs (and other forms of protectionist trade and industrial policy) run the risk of entering “tit-for-tat” territory. If well timed, limited and supportive of industries or products that provide a real global competitive advantage and create skills and jobs, a case can be made for some measure of tariffs.
Crucially though, if tariffs are imposed underlying structural drivers of high costs (such as load-shedding, logistics bottlenecks, rigid labour markets and other administered prices) are not addressed, the government runs the risk of simply propping up uncompetitive players, and less-than-ideally priced goods.
A new 10% import duty — instituted on solar PV panels, cells and modules brought into the country, gazetted and signed by finance minister Enoch Godongwana on June 28 — forms part of a (then) mineral resources & energy department plan for the renewable energy industry. The plan aims to create 25,000 jobs by 2030 and foster R15bn in new investment.
The ultimate worth of a policy — in this case tariffs — should be measured not by its intentions (however noble) but by its effects. If higher costs and (a handful, if that many) uncompetitive players result, the tariffs and other areas of trade policy should be investigated and possibly jettisoned.
Should a tariff not bring imported panels to parity with locally manufactured products it will ultimately just be a pernicious device. Capital costs, infrastructural impediments, crime, business-friendliness; all these factors, and those mentioned earlier, affect local businesses’ ability to grow, innovate and provide competitive services and products.
If the new government does not make progress in at least some of these areas aggressive industrial policy is only of ultimate benefit to large players that can influence policy choices in their favour.
Chris Hattingh
Centre for Risk Analysis
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Trade authority slaps 10% duty on solar panel imports
EDITORIAL: Tau has chance to turn around trade & industry
PETER BRUCE: Here’s hoping government sees the light over industrial policy
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
JONNY COHEN: SA’s foreign policy is poised to embrace changing landscape
HILARY JOFFE: After the euphoria, a dose of GNU reality settles in for the ...
NEVA MAKGETLA: Poor households also need their place in the sun
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.