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UPDATE 1-SAfrica sees South-South trade opportunities

* Increasing trade with China, Brazil, India

* EU, euro weakness will diversify trade

(Recasts with quotes, details, comments on Doha round)

GENEVA, June 9 (Reuters) - South Africa sees growing opportunities for trade with other developing countries as new economic powerhouses emerge and Europe is engulfed by economic and currency weakness, its trade chief said on Wednesday.

Trade and Industry Minister Rob Davies said the changing world economy meant South Africa could intensify trade ties with countries such as Brazil, India and China at the expense of links with traditional partners such as the European Union.

“We now see a huge number of possibilities from South-South trade and a lot of our effort is being deployed there,” Davies told a news conference.

The weakness of the euro and the European economy in general was encouraging this process, he said.

The European Union remains South Africa’s biggest trading partner but trade between the EU and many countries fell significantly in 2009, and continuing economic weakness and the depreciation of the euro would have ripple effects on its partners, he said.

“We do now have alternatives and that is we can diversify and there are other poles of growth, and that will be one of the real consequences of this situation,” Davies said.

Davies said South Africa was not looking simply for more trade with the big emerging nations, but for ways in which they could develop together by finding areas in which they complemented gaps in each other’s economies.

This approach marked a departure from a focus on global trade negotiations such as the World Trade Organization’s Doha round, traditionally seen as the best way for developing countries to defend their interests, he noted.

Davies said it was clear that the Doha talks, launched in late 2001, were not going anywhere this year, and attention was now turning to 2011.

But he said South Africa insisted that any outcome must be beneficial to developing countries.

He said it now appeared the negotiations were moving into “horizontal” discussions, in which members start to make trade-offs between the different areas, and include topics such as services, environmental goods and fisheries subsidies as well as the core themes of agriculture and manufactured goods.

South Africa was willing to engage in such talks, he said. But it must be clear that discussions on these other areas would not simply lead to a pay-off to rich nations for what they had already done on farming, but must also benefit poor countries.

Davies said South Africa’s approach to setting tariffs would be guided by industrial policy -- policies to ensure that infant strategic industries were able to develop. All developed countries had run industrial policies at some stage, he said.

In South Africa this would involve encouraging local manufacturing to develop from the country’s massive infrastructure spending, tackling structural problems such as high employment, and reforming development finance institutions to make more credit available for businesses.

South Africa intended to build up manufacturing capacity for capital and green goods and develop its agro industries while fostering industries with existing capacity such as automobiles, developing public transport vehicles and components, he said. (Reporting by Jonathan Lynn; Editing by Robert Evans)

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