South African Trade and Poverty: Lessons and Policy Recommendations

South Africa is currently engaged in various trade negotiations at the multilateral, regional and bilateral level. The net impact of the resulting trade reforms should be to contribute to growth, employment and raising average incomes. But this net impact conceals a range of differential effects: the benefits of reform do not accrue automatically and equally to all households or communities, and in some cases poverty and unemployment may rise. More recently, the rapid depreciation and then appreciation of the rand have introduced a new source of change which has exceeded movements in tariffs. Policy makers need to be aware of these different effects and implement trade reforms in a way that maximizes the benefits for the poor.