India and Sacu likely to finalize very limited agreement

India is South Africa’s sixth-largest trading partner with trade last year amounting to nearly R50bn. Barriers to trade in India and the sensitivity of some of the products it has proposed for preferential treatment are the main stumbling blocks to concluding a trade agreement. The negotiations between India and the Southern African Customs Union (Sacu) to provide a legal and institutional framework have been going on for nearly two years.

It is now likely that a very limited agreement will be finalized, covering only a small percentage of goods included in the Sacu tariff book. This would undermine the achievement of one of the objectives of the Brics (Brazil, Russia, India, China and SA) association to promote south-south trade. Most of SA’s Brics partners are more competitive.

Department of Trade and Industry chief director of trade negotiations Niki Kruger told members of Parliament’s economic development committee that great difficulties had been experienced in finalizing the India-Sacu offer.

A lot of concerns have been raised by both business and labour in terms of the nontariff barriers in the Indian market. It is very difficult to penetrate the Indian market as each of the different regions has different processes in place. So it is not easy for some products to move across the country because the different provinces have their own regulations.

The other problem is that India’s list of requests is in very sensitive sectors like clothing and textiles, chemicals, plastics and some agricultural products. So they are having difficulties in agreeing on the offer that they can make to India which has been holding up negotiations.
Ms Kruger said that they are now looking at an early conclusion of the negotiations but at a reduced level of ambition.

India requested preferential treatment for three lines of fish; processed agricultural products such as coffee, tea, pasta and other grain products; canned vegetables, fruit juices, and tobacco products.

Its list includes chemical products, perfumes and cosmetics, herbicides and fungicides, plastics, rubber and rubber products, leather products, cotton, synthetic yarn, woven fabrics, textiles, metal and automotive products.