It’s becoming clearer that there are few aspects of the world economy that haven’t been disrupted by US President Donald Trump’s America First policy. As the world braces for the August 1 tariff deadline, it’s worth considering how Africa responds in rolling back some of the damage.
This past week SA’s major trade union federations met on the margins of the G20 as part of Labour 20. After the meeting they issued a set of demands to the African Continental Free Trade Area (AfCFTA). Among other things, they wanted the Global North to deal with Africa as a bloc in future through the AfCFTA; they rejected austerity; favoured public ownership of transport, energy and health services; and declared their readiness to “shape Africa’s future not in the image of capital, but in the service of its people”.
All well and good. Not really. The unions, like most governments save for the EU, have been sleepwalking into the new trade order authored by Trump. Since he launched his tariff war he has shattered multilateralism. Bodies such as the UN, World Trade Organisation (WTO), AU and the AfCFTA itself have been rendered nigh on irrelevant.
But it’s not necessarily their fault. Trump has written the playbook for everyone. Nato caved in to all of his demands at its recent summit. It agreed to up members’ defence spending to 5% of GDP, in effect agreeing that they have been freeloaders, as per Trump’s constant refrain. This past weekend the EU, a core part of Nato, travelled to Scotland to seal another US-biased trade deal.
In September the UN will celebrate its 80th anniversary in a low-key event, thanks mainly to Trump-induced budget cuts arising from his disdain for the body.
The AU, a junior member of the G20, will be rubbing shoulders with Trump in November during the G20 leaders’ summit in Johannesburg. Its voice as a bloc is missing in all the critical conversations, its members being too busy cutting bilateral deals with Washington.
Rhetoric aside, there is no agreed framework for the new normal. The AfCFTA, a key continental trade pact, has been similarly marginalised. Its high-ups will be in attendance at the November summit but are unlikely to have bilateral talks with Trump’s administration as the labour union federations would have wished.
It’s probably too harsh to blame ill-resourced regional blocs to the way things have turned out. Trump has disrupted the entire global trade system. The WTO hasn’t struck a deal of significance in years. It’s also done little to adapt to a world where agriculture, mining, manufacturing and services no longer dominate world trade.
Not all damage can be blamed on Trump and his administration. Africans should have anticipated this moment. They did not. Six months into Trump’s second administration, this is a time for deep introspection.
This isn’t about petty squabbles over intra-African tariffs. While the labour federations’ statement comes out as predictably protectionist, it also reveals disturbing faultlines in the continent’s approach.
Trade policy follows — or should (ideally) follow — industrial policy. This hasn’t been the case with the AfCFTA. The pact assumes, erroneously, that productive capacity exists at country and regional level. It doesn’t.
A case in point is the Southern African Customs Union (Sacu), one of the world’s oldest customs unions, with a common external tariff regime and a four-nation monetary union. A common industrial policy has been sorely missing from the regional economic integration mix for decades.
It is embarrassing that Sacu members have been competing in motor assembly and the manufacture of clothing and textile items. Even a minimal co-operation agenda, say on small business development (core of Africa’s economies), cannot be agreed.
SA — the big sister in Sacu, the Southern African Development Community and the AU have been cursed with flip-flopping ministers of trade, industry & competition. In the past 15 years their pet projects have vacillated from the three strands, with suboptimal outcomes.
It is time Africa got its house in order. Without decent common industrial capacity there will be no decent trade deals.
• Dludlu, a former editor of Sowetan, is CEO of the Small Business Institute.
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