Opening South Africa's Market
President Nelson Mandela's government plans to open key industries rapidly to global competition, sharply reversing the former socialist leanings of Mandela's African National Congress. Trade & Industry Minister Trevor Manuel proposes to slash textile tariffs to half the levels allowed by the General Agreement on Tariffs & Trade within eight years while lowering duties on autos to 30%, instead of the 45% sought by carmakers. He also vows to cut export subsidies for manufactured products such as steel.
Manuel warns that drastic industrial restructuring is needed to make South Africa's economy competitive after decades of state intervention, partly designed to counter sanctions against the apartheid regime. However, Manuel is risking clashes not only with industrial lobbies but with the ANC's labor-union backers. The textile workers' union is threatening widespread protests if the government does not back restructuring plans devised last year by the union and employers. That blueprint calls for $1 billion in state aid--far more than the government is willing to provide.