Responses to trade barriers in the South African chemical industry.

Abstract

ABSTRACT

The aim of the research was to identify the types of trade barriers that exist in the South African chemical industry, and to analyse the responses of companies in the industry to these barriers.

While the aim was to interview 20 participants, the researcher interviewed 23 participants. The criteria for selection were that each participant had to be working in the chemical industry, and have had some exposure to international and local trade.

Semi-structured interviews were conducted. The researcher conducted the interviews personally. All the interviews were recorded. The participants all requested to remain anonymous.

Most of the respondents were familiar with customs duty as a tariff barrier, whilst four could not answer the question. Regarding non-tariff barriers, Language and Logistics featured four times each, while four respondents were unfamiliar with non-tariff barriers.

Some of the participants mentioned that their companies had to do something different in order to remain competitive in the light of trade barriers. This included reviewing their costing models, using transport more effectively, improving technical service, exploring new markets, rationalising their product lines and changing their product mix. Two of the respondents in a highly specialised industry mentioned that they do not have to do anything differently because if they provide the best solution then they will get the business and the barriers are irrelevant.

Some of the respondents had engaged with the DTI to have barriers imposed, but mentioned that the process of engaging with the DTI was both time-consuming and costly.

The incentives for export were not clearly defined by the DTI, and this was itself seen as a barrier.

It was found that the Customs and Excise department was losing revenue due to the incorrect declaration of goods, where importers are avoiding the payment of the customs duty.

Barriers were in place for strategic reasons, and if they are removed or reduced then companies could close, or people could be retrenched.

Barriers were also seen to be good because they maintain standards within the industry.