Trade and Industry

Thursday, 01 December 2005

Working Paper 1 - 2005: The Market Disciplining Effects of Trade Liberalisation and Regional Import Penetration on Manufacturing In South Africa

  • Year: 2005
  • Organisation: TIPS
  • Author(s): Lawrence Edwards; Tijl van de Winkel
  • Countries and Regions: South Africa

Since the mid-1990s, South Africa has made considerable progress in opening ups its trade regime. In 1994 South Africa committed itself to reducing and simplifying its tariff levels and structure in accordance with it offer under the GATT Uruguay Round. As a consequence tariffs have fallen, although the number of tariff rates and types remains high. Some estimates suggest that average tariffs in manufacturing have fallen from close to 30% in 1990 to around 10% in 2002. However, the extent of the decline is highly dependent on the calculation of ad valorem equivalents for non-ad valorem tariffs (specific, mixed, compound and formula duties) and the choice of tariff measure (scheduled tariff or collection duties). The difficulty in measuring protection is reflected in the continuing debate on the extent to which the economy has liberalised its trade (Fedderke and Vase, 2001; Rangasamy and Harmse, 2003).

This study advances existing empirical work in a number of ways. Firstly, we use detailed sector level tariff data as one of our indicators of changes in openness. We calculate tariff levels for 26 manufacturing sectors between 1988 and 2002 using both scheduled tariff rates and collection duties. We thus test the robustness of the relationship between tariff liberalisation and mark-ups to different measures of tariff protection.