Abstract
M.B.A.
According to du Plessis et al., (1994:67), the history of protectionism in trade goes almost as
far back as that of trade itself. There are various arguments for the numerous benefits, which
can be gained from free trade such as, efficiency and welfare gains. But, despite these
benefits, governments have had counter arguments as to why protectionism is justified.
Examples of these traditional arguments for protection are, the infant industry argument, the
terms of trade argument, protection to increase employment in an industry, a tariff to offset
foreign dumping and a tariff to improve the balance of payments. All of these arguments
have important gains for the protected economy but could be considered beggar-thyneighbour
policies since they are at the expense of the unprotected economy. Various trade instruments are used by governments to intervene in its countries trading
activities. These trade instruments are categorised into, tariff, non-tariff barriers and export
taxes and subsidies. Both tariff and non-tariff barriers are used to interfere on the import side
of trade, whereas export subsidies and taxes are used to interfere with the free flow of
exports. Tariff barriers include specific tariffs, ad valorem tariffs, import subsidies,
preferential duties, most-favoured nation treatment and offshore assembly provisions. Nontariff
barriers include import quotas, "voluntary" export restraints, government procurement
provisions, local content provisions, administrative classification and restriction on service
trade (du Plessis et al.,1994:67-70). An example of a protected industry in South Africa is the motor industry. The initial
protectionist programmes used by the motor industry were characterised by local content
policies. These programmes resulted in a heavily protected motor and component industry. In
recent years, policymakers have attempted to reduce the level of protection in the industry
through the Motor Industry Development Programme (MIDP), in line with the General Trade
and Tariff Agreement (GATT). This programme is not only attempting to reduce the use of
trade instruments but, also to become globally competitive. This dissertation attempts to evaluate the effects that protectionism, in the form of the Motor
Industry Development Programme, has had on the Motor Industry's component suppliers.