| Summary: | Trade policies form the main economic âbufferâ between one national economy and
another, i.e. the general and specific elements of each nationâs trade policy interact directly
or indirectly with those of other nations in all economic transactions across international
borders. A nationâs trade policy involves specific actions to encourage and promote or
discourage foreign trade through the legal, financial and institutional environment within
which foreign transactions occur.
This study evaluates the trade policy applicable to the beef and maize sub-sectors in South
Africa. Issues that are investigated include whether trade policy provides more or less
protection than needed, whether it creates more openness for trade and the revealed
comparative advantage of beef and maize.
According to the RCA and RCA# the beef sub-sector in South Africa shows a revealed
comparative disadvantage for 17 out of the 22 years since 1980. The maize sub-sector, on
the other hand, shows a revealed comparative advantage for 18 out of the 22 years since
1980. It appears as if both the beef and maize sub-sectors have adjusted favourably since
the implementation of the Marrakesh Agreement and subsequent deregulation of the
domestic market. Favourably in this context means that both sub-sectors appear to have discounted the changing trade and regulatory environments into their respective supply
chains. It is however important to take note that the results do not show the real state of
competitiveness that exists in these sub-sectors. The reason for this is that the RCA
measures should not be used to make definite conclusions whether an industry, sector or
sub-sector in a country is competitive nor whether it uses scare resources in an efficient
manner. The RCA measures explain in more accurate ways, relative to a simple analysis
of export trends, how a country features in the context of word trade. Hence, one possible
application of RCA measures is to deduct the impact of changes in trade policies on an
industry, sector or sub-sector. Cognisance should also be taken that the RCA measures fail
to distinguish between a regionâs factor endowments.
The study also shows that the ERP calculation is lower than the NRP for beef and higher
for maize. This means that the protection for inputs is higher than that of the output in the
case of the beef sub-sector and vice versa in case of the maize sub-sector. The results from
the ERP calculations show that the beef sub-sector is taxed, whilst the maize sub-sector are
subsidized.
Furthermore, this study recommends the market niche should be exploited more. However
it is necessary to give attention to: (i) Small scale farmers (ii) Increased efficiency and (iii)
Considering issues such as food safety.
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