South Africa: China's WTO outcome may affect South Africa

A COMPLAINT brought before the World Trade Organisation (WTO) against China over incentives to its local manufacturers to boost the use of local content in domestic production may have far-reaching implications for SA.

The complaint involves China's granting of tax refunds, reductions and exemptions to companies -- many of them state controlled -- that use local inputs in their production processes. Mexico contends the practice is incompatible with WTO regulations as it discriminates against foreign products beyond negotiated tariff concessions.

The measures also include conditions that enterprises meet certain export local performance criteria, which according to Mexico are tantamount to illegal subsidies.

With the Southern African Customs Union seeking a trade pact with China, this may see SA throwing open its market to subsidised products from China, with local manufacturers competing on an unequal footing.

Mathabo Le Roux
Business Day
Publication date: 
7 March, 2007