The impasse in talks towards a trade deal between SA and the US was inevitable. Our negotiators appeared to have badly misread the room in Washington. Now our government has woken up to the nightmare of punitive tariffs by the US.
Pretoria confirmed last Thursday that its trade offer, including investments in the US economy and buying American natural gas, had failed to appease the US government. Simultaneously, US President Donald Trump confirmed that come August 7, SA exports to the US will attract a 30% tariff. He further threatened additional tariffs for countries associated with the Brics bloc.
Our negotiators seemed too concerned with Trump’s voodoo calculations of the tariffs rather than his real demands. His real demands have nothing to do with trade and economics. They have everything to do with politics, and SA has no plan to assuage him.
Trump wants US companies to be exempted from BEE, land expropriation without compensation to be scrapped and the banning of the “Kill the Boer” chant.
In addition, he wants SA to denounce the Brics bloc — the bloc including Brazil, Russia, India, China and SA and new members — which he sees as anti-American. He is also against SA’s warm relations with Iran, which he bombed a month ago.
To add salt to injury, Trump has also threatened to boycott the November summit of the G20 — President Cyril Ramaphosa’s pet project for this year.
All the Brics countries have attracted the highest tariffs from the US regime.
Last Thursday, Parks Tau, the trade, industry & competition minister, and his boss, Ramaphosa, promised measures to cushion SA exporters. Among others, the government wants exporters to explore other markets for their goods, and is setting up an export advisory desk.
Though welcome, these measures are unlikely to yield any positive outcomes in the short term. It takes years to develop new markets.
The pain is mostly self-inflicted.
For years, SA had no ambassador in Washington, and when relations deteriorated our government expended its efforts in saving our exporters’ participation in the African Growth & Opportunity Act, which has been upended by Trump’s tariffs.
Six months into Trump’s second term, we still don’t have an acceptable ambassador to the US. Mcebisi Jonas, the president’s special envoy to the US, hasn’t set foot there.
Since his visit to the White House, at Trump’s invitation, Ramaphosa doesn’t seem to have maintained contact with Trump. This is unhelpful.
Worse, the government’s negotiators have largely been working alone in cobbling the Trump appeasement offer. Critical role players, such as the sectors most affected by Trump’s tariffs, have not had a meaningful role.
As with most state departments, the department of trade, industry & competition has also lost capacity to the private sector over the years. Countries facing similar challenges such as China and India have developed “war councils” to deal with the trade challenge. If we are serious about fixing things, we need to build similar capability, fast. The private sector can help. So too can retired trade diplomats such as former trade ministers Alec Erwin and Rob Davies.
The private sector will also be key to talking to its counterpart in the US. Tariffs hurt both ways. Ultimately, however, they hurt consumers who pay more and are deprived of choice. Up until now, the US economy and consumers have taken the pain well. It’s unclear how long for though. At some point they will have to speak to their government.
The government’s support to affected industries must be well considered. Some of these sectors, such as the motor industry, are already mollycoddled by the state. Dishing out subsidies would be counterproductive, and will attract countermeasures.
Even if the ANC still had a parliamentary majority, it wouldn’t roll back BEE or the milder version of land expropriation.
What is required is old-fashioned diplomacy. Ramaphosa cannot wish the problem away. He needs to lead from the front.
Leadership also means nominating an ambassador to the US. The delay is bordering on recklessness.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.