What is a trade agreement?
A trade agreement is a contract, agreement or pact between two or more nations that outlines how they will work together to ensure mutual benefit in the field of trade and investment. Such trade agreements may involve co-operation in the field of R&D, the lowering of import duties to be levied on the other partners’ exports, guaranteeing any investments made by the partner(s) in the home market, co-operation on the tax front, etc.
Trade agreements (also sometimes referred to as ‘trade pacts’) are usually bilateral or multilateral. Bilateral trade agreements – as the name suggests – are between two nations, while a multilateral trade agreement involves more than two nations.
China-South African agreements
The Government has signed 26 agreements worth R94 billion with China. A progress report outlined the goals achieved in the implementation of the strategic programme with specific reference to the six priority areas identified for 2015, including:
- alignment of industries to accelerate South Africa’s industrialisation process
- enhancement of co-operation in special economic zones (SEZs)
- enhancement of marine co-operation
- infrastructure development
- human resources co-operation, and
- financial co-operation.
Currently, main exports to China include iron ore, steel, manganese, chrome ore, tobacco, wool, granite, gold, copper, aluminium and motor vehicle spares. China’s main exports to South Africa include textiles, kidney beans, groundnuts, cotton seed cake, light electronics, capital equipment, paraffin wax and television sets.
More than 90 percent of South Africa’s top 10 exports to China are in raw materials while 100 percent of the country’s top 10 imports from China are manufactured products. China hopes to improve bilateral trade relations between the two countries by increasing their imports from South Africa.
What does this mean for importers?
The agreements between China and South Africa make the process of importing from China, firstly possible, and moreover cheaper and more efficient. China have opened a number of avenues to make it easier to import from China such as websites that facilitate the sourcing of credible suppliers to meet your specific needs as well as trade sourcing shows that bring Chinese exporters to South Africa for face-to-face meetings.
It’s easy to get intimidated by looking at starting the import process from China and seeing a lot of import laws. However, by understanding these bilateral trade agreements, Chinese importing becomes a lot easier to envision.