A case for the liberalisation of trade in South Africa - Ayanda Zulu

Key topics:

• SA’s retreat from free trade is worsening stagnation and unemployment.

• New tariffs, barriers, and controls are harming growth and competitiveness.

• Urgent call to reverse protectionism and revive export-led growth.

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By Ayanda Sakhile Zulu* 

South Africa’s political transition in 1994 brought more than just the promise of democracy. It also raised hopes for a modern, globally integrated economy. Today, however, the country finds itself economically stagnant, with weak growth, stubborn unemployment, and eroding competitiveness. A crucial reason lies in its increasingly hostile posture towards international trade.

Free trade has long been recognised as a catalyst for growth, with virtually no economists disputing this fact. The ability to import and export across borders enables countries to specialise more efficiently, enhance productivity, and access goods they cannot produce at scale. It further drives employment and lowers costs for consumers, particularly in small economies like South Africa. 

Yet, instead, of embracing these advantages, the country’s trade policies have moved in the opposite direction.

According to the Economic Freedom of the World (EFW) index, the country's freedom to trade internationally has declined steadily over the past decade. This erosion reflects tangible policy choices, which include, new tariffs, escalating non-tariff barriers, and tighter controls on capital flows. As the global economy grows more interconnected, South Africa appears to be retreating inwards. 

This inward turn is especially troubling in a world where trade itself is under pressure. In the United States, President Donald Trump has reignited a full-blown trade war with China in his second term by imposing sweeping tariffs on key imports. While these developments may seem remote, they embolden protectionist instincts elsewhere and offer a cover for local policymakers to further shield the domestic economy.

Protectionism is nonetheless a dead end that is not only harmful, but a fool’s errand that cannot hope to rewind the clock of globalisation. It inflates consumer prices, distorts market decisions, and shelters inefficiencies. 

When governments use tariffs or subsidies to “protect” local industries, they merely shift the burden onto society at large, with the poor bearing the greatest burden given higher prices. With a narrow tax base and vulnerable consumers, South Africa cannot afford such distortions. Nor can it afford to repel investors by tightening capital controls or treating foreign competition as a threat.

Ironically, the country once benefitted greatly from liberalised trade. Post-apartheid integration into global markets helped drive the early 2000s growth spurt. It brought down inflation and attracted foreign capital. Today’s reversal of that progress is not merely the result of global headwinds; it is also largely self-inflicted. 

Ceaseless – exclusively political – complaints about “dumping” and the imperative of “protecting” our “infant industries” might be nice rhetorical flourishes, but when translated into policy by successive ministers against trade and industry, they come at a cost.

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It is important to be clear-eyed about what is at stake. South Africa’s unemployment crisis, which disproportionately affects its youth population, will not be solved through inward-looking policies. Economic dynamism requires access to markets, innovation, external competition, and foreign capital. Free trade enables all of these.

This is why the Free Market Foundation, through its Liberty First policy initiative (www.LibertyFirst.co.za) calls for an immediate reversal of recent tariffs and industrial subsidies that have delivered no measurable benefit. It also urges a moratorium on the introduction of new trade barriers, whether formal or informal, and the removal of regulatory measures that favour selected traders or impose artificial import quotas.

To guide this shift in direction, a dedicated trade liberalisation task team could be established within the Presidency or the Department of Trade, Industry, and Competition. Its core mandate would be to phase out distortionary policies, promote export-led growth, and secure entry into high-quality regional and global trade agreements. Any further tightening of capital controls by Treasury or the Reserve Bank should also be firmly ruled out. 

These are not radical ideas. They are pragmatic steps aimed at restoring competitiveness and aligning the country with global norms. More importantly, they affirm a basic truth: prosperity is not engineered through central planning, but through open markets that reward innovation and effort.

In the years ahead, trade will become even more central to economic success. Countries that embrace openness will advance while those that don't will be left behind. South Africa must now decide where it wants to stand: Will it deepen its isolation by giving in to short-term pressures and narrow interests? Or will it rediscover the spirit of openness that once fuelled the growth of its economy in the early 2000s? 

The choice is urgent and the consequences will be enduring.

*Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is an intern at the Free Market Foundation.