Govt announces proposed relaxation of rules for exporters as it submits new trade offer to US

The Money Show's Stephen Grootes is joined by economist Jannie Rossouw, professor at Wits Business School, and Sphesihle Nxumalo, director-designate in Baker McKenzie's Antitrust and Competition Practice Group.

Government has announced new rules to allow exporting companies to join forces amid the impact of the 30% tariff imposed by Washington on South African goods imported into the US.

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A statement from the Department of Trade, Industry and Competition (dtic) firstly confirms that Cabinet has approved the submission of a revised offer as a basis for trade negotiations with the US. 

Measures to assist local companies to absorb the tariff include a 'Block Exemption for Exporters' to enable collaboration and coordination by competitors. 

In terms of a draft document, South Africa’s exporters are set to gain a five-year reprieve under the government plan that will allow companies to jointly shoulder shipment costs, intelligence and infrastructure.

The draft will be published by the end of the week so that the process can be concluded speedily, the Department says.

While any attempt to ease the burden on our exporters we do have to welcome, says Professor Jannie Rossouw, he questions why it took a crisis to ease regulations that in fact made it difficult for local firms to export.

"Why is it when we have our backs to the wall that there's a realisation that our competition legislative structure is an obstacle to our export efforts - if we'd done this five or ten years ago, we could have had new markets open to us for the benefit of economic growth."

Prof. Jannie Rossouw - Wits Business School 

"I argued a long time ago that the Competition Commission is too much of a hindrance to economic activity in South Africa because they have too many objectives beyond simply ensuring competition in our economy, and this announcement bears that out."

Prof. Jannie Rossouw - Wits Business School 

Baker McKenzie's Sphesihle Nxumalo notes that the powers under which the DTIC took this action falls under what's called proactive measures by the minister himself.

This means that there would be no formal time-wasting application process for companies, but they would have to submit some sort of written arrangement to the Competition Commission for consideration.

"The Commission cannot stop this because the section of the Competition Act under which it's been issued, allows the minister to act in times of economic urgency, as he did during the COVID pandemic as well."

Sphesihle Nxumalo, Director-designate: Antitrust & Competition Practice Department - Baker McKenzie

The Commission is restricted to the power to being able to revoke a proposal if it ventures outside of he parameters as outlined in the block exemption, Nxumalo says.

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