Minister of trade, industry and competition Parks Tau says South Africa is making progress with finalising a bilateral investment treaty to open up greater opportunities for exports to the Middle Eastern market, including auto components.
Speaking to MPs in a National Assembly plenary on Wednesday, Tau said that while South African companies have access to the Saudi market from an investment and trade point of view, a treaty would allow for smoother access to the market on both sides.
“We are engaged in a bilateral investment treaty discussion with the Kingdom of Saudi Arabia, which would govern tariff concessions and issues with regard to sanitary and phytosanitary regulations in as far as agricultural products would be involved.”
He said the two countries are also collaborating on setting the standards required for the purpose of being able to export to that market.
“We are at that point of the discussions with the Saudis about finalising the bilateral investment treaty that would open up greater opportunities.”
The original question came from IFP MP Thokozani Langa, who asked the minister about the Outward Selling Mission to Riyadh and the expansion of South Africa’s industrial footprint.
He asked about the measures in place to track tangible economic outcomes such as export growth and job creation. He also asked how the mission would be leveraged to broaden industrial and investment partnerships with Saudi Arabia beyond the agro-processing and health sectors.
Tau said the mission was part of an implementation plan from a joint commission with Saudi Arabia earlier this year, which resolved to pursue economic engagements and commitments between the two countries to expand markets for South African producers into the Middle East.
“Trade relations between South Africa and Saudi Arabia are premised on complementary capabilities and shared interests. Broadening industrial trade and investment partnerships is part of ongoing activities.
“South Africa prioritised traditional value added sectors such as infrastructure and engineering, capital equipment, automotive and chemicals ... as they align with South Africa’s own industrial development priorities.”
Part of what is happening in Saudi Arabia is that they are evolving and developing an automotive sector, which is still at somewhat of a nascent stage in terms of its development.
— Parks Tau, minister of trade, industry and competition
The engagement was part of plans to broaden market access for South African value-added products and services in Saudi Arabia as the country looks to make itself the Gulf country’s “traditional gateway into Africa”.
Langa asked how this cooperation will lead to growth and job creation. Tau replied that South Africa could be a strategic partner for Saudi Arabia as an automotive component producer in the kingdom’s mission to become an automotive powerhouse.
“I have indicated the sectors that we are targeting, but I am going to choose one … Part of what is happening in Saudi Arabia is that they are evolving and developing an automotive sector, which is still at somewhat of a nascent stage in terms of its development.”
ANC MP Mzwandile Masina asked if the minister allocated time to look at concrete investment flows and localisation of South African productivity. Tau said South Africa was negotiating a treaty with Saudi Arabia, which could set up opportunities ahead of next year’s meeting of the joint economic council.
“We have agreed with the Saudis that the next joint economic council would focus on reviewing the process of implementation. And we agreed to this because a lot of our interface has been somewhat haphazard and not particularly organised, so individual businesses identify opportunities and get into the Saudi market.”
Asked by Bosa MP Nobuntu Hlazo-Webster how the treaty aligned with South Africa’s mission to broaden its pool of strategic trade partners amid global trade fragmentation and realignment, Tau said South Africa was in a process of engaging with the Gulf Cooperation Council, including talks with Qatar and the United Arab Emirates.
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