Abstract
Export trade provided for under tariff rate quotas (TRQs) is an important contributor to improving South Africa’s export access to European markets. The performance of exporter-administered TRQs has not received much research attention in the context of the below par market access utilisation of a given opportunity. The present study analysed how the country performed in terms of utilising its TRQ for canned pears, apricots, and peaches provided by the European Union (EU) for the period 2010 to 2019. The permit allocation system for TRQs in South Africa is described for further understanding of aspects of the TRQ system likely to affect quota fill. Performance was assessed in terms of yearly quota utilisation rates as well as welfare measured in equivalent variation calculated in a computable general equilibrium (CGE) trade model. The analysis found that the canned fruit TRQ exhibited a fill rate average of 61% for the past 10 years (2010–2019) and 49% for the period 2015–2019, thus falling far short of the goal of achieving full market access availed by the EU within the protocols of liberalised trade. The welfare effects of trade liberalisation confirmed the underutilisation of the TRQ indicated by a welfare loss, considering the difference in gains of an underutilised quota (USD 2497) and a fully utilised quota (USD 2530). The study highlights the importance of full utilisation of preferences.
Highlights
Open and fully liberalised trade is crucial for the South African fruit industry given its reliance on exports
The rules for notifying the WTO of tariff rate quotas (TRQs) do not require exporters (South Africa) to report TRQ administration. Could this be a shortcoming of the notification requirements? Whereas the TRQ administration system on the importer side is predisposed to hinder quota fill as a way to protect the domestic industry, exporter-administered TRQ permit systems may indirectly lead to quota fill inhibition when not managed properly
equivalent variation (EV) are presented for all three regions in the model, but the main conclusions were drawn for South Africa, which is the region of focus in this paper
Summary
Open and fully liberalised trade is crucial for the South African fruit industry given its reliance on exports. Noted that the fruit sector contributed the largest value share in the country’s agricultural exports and that 90% of fruit production was exported internationally. Of the total fruit production in South Africa goes to processing, as noted in van Lin et al. 80% of canned fruit is exported annually by South Africa and the European Union (EU) market is reported among South Africa’s major export destinations (Bertelsmann-Scott and Markowitz 2018; Research and Markets 2021). Scope exists for value addition in the sub-sector of canned fruits targeted for exports. Though the EU is among the major export destinations, processed fruit products face stiff entry barriers and this has been identified in studies such as Bertelsmann-Scott and Markowitz (2018), noting how African exporters are impacted by developed countries’ trade policies
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