The government was hard at work this week trying to convince us that though it accepted it would not escape the punishing 30% tariffs the US has imposed on imports from South Africa, intense negotiations have been under way to reach a deal.
Busy, busy. The department of trade, industry & competition announced it had established a help desk where companies hit by the tariffs could get advice on other export destinations. On Friday President Cyril Ramaphosa said: “The whole process of dealing with countries on a trade basis requires that we should be multidimensional. We’ve been encouraging our companies to export their products to various markets. It is too risky to focus on just one market.”
So your 20-tonne shipment of frozen berries is halfway to Baltimore, but as they will now cost American consumers 30% more, you figure to send them somewhere else. You call the export help desk and a deeply experienced trade official tells you there just happens to be growing demand for berries in Malaysia, so here’s a list of cellphone numbers of Malaysian berry buyers waiting for your call. And he doesn’t ask what percentage of your company is owned by black shareholders.
Facetious I know, but the notion that US President Donald Trump’s tariffs are not a catastrophe for our economy is downright dangerous. So is the notion that, as Ramaphosa was suggesting, “for us to grow our economy we need to be much more vigorous and robust ... to seek out many, many markets”.
Duh. So we redirect our manufactured and mineral and agricultural exports to the US overnight? With dozens of other countries — many with a much greater diversity of exports than us — also looking to do the same, we have almost no chance without paying a heavy price.
We are stuck in mud of our own making. Trump first threatened the tariffs three months ago. What did we do in the interim? Why was the “help desk” not established back then? Or 20 years ago? The fact is we have taken our exports for granted while the ANC has been hard at work on transformation. The ensuing unemployment of close to 33% of our fellow citizens is testimony to the ANC’s utter inability to run a complex economy.
South Africa has one of the biggest diplomatic corps in the world. Only a handful of countries have more embassies abroad than we do — but in none of them is there a diplomat specialising in trade and busy digging out export opportunities.
As a percentage of GDP, South Africa’s exports have grown handsomely since 1994, when they were roughly worth 20% of GDP. That ratio was nearly 32% last year, but the rise hides a deeper truth — the democracy dividend helped immensely, as has the falling value of the rand, which makes our exports cheaper to buy. But apart from a remarkable rise in agricultural exports the profile of what foreigners buy from us has not changed dramatically in the past 30 years.
The ANC is not to blame for Trump. He is an unalloyed threat to peace and stability in the world. But they should have seen him coming
They buy our minerals, but despite all its big talk the ANC has been unable to do anything about adding value to what we mine. In the past 10 years 34 of our 59 ferrochrome furnaces have been closed, and yet we have the world’s biggest reserves of ferrochrome — the basis of all stainless and corrosion-resistant steels.
But no-one in the ANC complained about the high electricity prices that drove the furnaces out of business. Now we send our ferrochrome ore, raw, to be processed in Asia.
The ANC is not to blame for Trump. He is an unalloyed threat to peace and stability in the world. But they should have seen him coming, and that we have not had a fully functioning embassy in Washington for seven years is entirely the ANCs fault. Now, when we need experienced hands there, we have nothing. Instead, much of the “intense negotiating” on trade that Ramaphosa was talking about on Friday isn’t with the Americans so much as with possible alternatives.
But trade is really hard. We have senior people talking to governments in the Middle East — the Emirates and Qatar among them — about deals. What the contents might be is unknowable, but spectacularly rich autocrats and royalty would be the target here. They don’t make anything we use, so in return for them picking up some of the slack from the US for consumption in their countries, we have two things to offer — land to relax on in private and minerals rights to exploit or trade.
All trade is a barter of sorts, a give and take. Whatever it is we do to replace the US trade, what we give in return is going to be important. My guess is it won’t be pretty, and we won’t know until it's done.
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