Mbeki mulls cutting tariffs on imports

PRETORIA – South African President Thabo Mbeki said yesterday his government may cut tariffs on some imported equipment and goods in a bid to boost the manufacturing sector and make it more competitive internationally.

In a briefing to discuss the outcome of a mid-year meeting of his cabinet and other senior officials, Mbeki said a healthier manufacturing sector was critical to the government’s efforts to narrow the country’s trade deficit. “We have to increase exports of manufactured goods,” Mbeki told reporters in Pretoria.”We will look at the tariffs that impact on things that need to be imported.”He highlighted manufacturers of chemicals, pulp and paper and pharmaceuticals as among those that could receive tariff relief.The proposal is the latest attempt by Mbeki’s government to address what it sees as a worrying trade imbalance, the result largely of a recent explosion in consumer spending and credit growth in South Africa’s booming commodity-rich economy.Heady demand for imports has become one of most vexing issues for South Africa’s central bank, which is battling rising inflation.It has raised interest rates in the past year in a bid to tame consumers’ appetites.South Africa’s trade deficit was N$2,7 billion in May, down from N$5,67 billion in April.Although welcoming the drop, economists say improving the nation’s competitive position is key to eliminating the deficit.Africa’s economic powerhouse has struggled to keep up with export-driven competitors, particularly China.The Asian giant is largely importing raw resources from African nations, while exporting finished goods to the continent.The result has been the virtual destruction of certain industries in Africa.”Textiles are getting killed by Chinese imports,” Mbeki said.Nampa-Reuters”We have to increase exports of manufactured goods,” Mbeki told reporters in Pretoria.”We will look at the tariffs that impact on things that need to be imported.”He highlighted manufacturers of chemicals, pulp and paper and pharmaceuticals as among those that could receive tariff relief.The proposal is the latest attempt by Mbeki’s government to address what it sees as a worrying trade imbalance, the result largely of a recent explosion in consumer spending and credit growth in South Africa’s booming commodity-rich economy.Heady demand for imports has become one of most vexing issues for South Africa’s central bank, which is battling rising inflation.It has raised interest rates in the past year in a bid to tame consumers’ appetites.South Africa’s trade deficit was N$2,7 billion in May, down from N$5,67 billion in April.Although welcoming the drop, economists say improving the nation’s competitive position is key to eliminating the deficit.Africa’s economic powerhouse has struggled to keep up with export-driven competitors, particularly China.The Asian giant is largely importing raw resources from African nations, while exporting finished goods to the continent.The result has been the virtual destruction of certain industries in Africa.”Textiles are getting killed by Chinese imports,” Mbeki said.Nampa-Reuters