The government is offering the motor vehicle and agricultural sectors alternative markets and possible Treasury-backed tax incentives, a two-pronged contingency plan to keep production lines humming if the US raises a 30% tariff wall on SA exports on Friday.
“As it stands, if a 30% trade tariff from the US is imposed, we have put in place alternative mechanisms, so we are able to avert a crisis,” trade, industry & competition spokesperson Kaamil Alli said in an interview with Business Day on Wednesday.
“This includes providing businesses with alternative markets and possible tax incentives from the National Treasury. We have begun a conversation with the Treasury. It is ongoing, but nothing is confirmed yet,” Alli said.
His comments come a day before a 30% tariff on SA exports to the US comes into effect unless a trade deal is struck. At stake is billions of rand in export revenue from manufacturing stalwarts such as BMW, Toyota and Ford, tens of thousands of jobs and SA’s geopolitical positioning.
Still, SA’s first prize remains a negotiated settlement. Earlier this week, trade, industry & competition minister Parks Tau unveiled a remedial package he said was tailored to US needs. Under the package, Pretoria has committed to binding trade and investment terms that include $12bn in a liquefied natural gas import programme, $91m in agricultural concessions and $3.3bn in SA outbound investment targeting US industries.
“We have not received any correspondence on the new trade offer we sent to the US last month, not even a template or them telling us if there is a red line, which makes the finalisation of a trade deal before Friday difficult,” Alli said, adding that industry bodies had expressed a preference to maintain US access.
“We are still working on a number of different angles. We remain committed to fostering a strong bilateral trade agreement with the US. It is an important trading partner for SA. Ours, though, is to maintain some level of professional conduct, but I can confirm that market access to critical minerals, including energy, is part of what we have offered the US.”
Postponement
With no feedback from Washington on Pretoria’s offer, the pressure could soon escalate to the highest level. Officials have not ruled out a direct call between President Cyril Ramaphosa and US counterpart Donald Trump, asking for a postponement of the implementation.
“We will remain engaged through various diplomatic and engagement processes to ensure that we reset our trade and diplomatic relationship with the US. In this regard, diplomacy is not a sprint but a process,” Ramaphosa’s spokesperson, Vincent Magwenya, said.
The trade and diplomatic standoff comes at an inopportune time for SA. In March, Ebrahim Rasool was expelled as ambassador to the US after controversial remarks about Trump, while Mcebisi Jonas, a special envoy, has been denied a visa. In response, Ramaphosa is reportedly considering appointing a senior Afrikaner figure, with Roelf Meyer, Marthinus van Schalkwyk and Andries Nel among those shortlisted.
Neither the presidency nor the department of international relations & co-operation would comment.
Meanwhile, Reuters reported on Tuesday that Trump might send someone else to represent the US at the G20 leaders’ summit in SA in November.
“I think maybe I’ll send somebody else because I’ve had a lot of problems with SA. They have some very bad policies,” Trump told reporters aboard Air Force One.
Trump has repeatedly criticised SA during his second term in office, promoting claims that white farmers are being targeted. The US has also been critical of SA’s BEE laws and a land expropriation law signed in January.
The SA government has responded by saying that should Trump fail to attend, it would make it difficult to hand over the G20 presidency to the US in November.
“Ideally we would have wanted Trump to attend the leaders’ summit. It does make it difficult to hand over when the US leader is not physically present. As SA we will continue work to ensure Africa is at the centre of the world’s developing economy,” Alli said.
With Thando Maeko
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