Shipping inquiry raises stakes for US-South Africa relations

A US policy expert has warned that the new US Federal Maritime Commission (FMC) inquiry launched last week could pose significant risk for US-SA relations via potential shipping sanctions, at a time when relations between the two countries were already at an all-time low.

The Federal Maritime Commission is gathering information about seven international maritime chokepoints to identify any regulations, policies, or practices that create unfavorable shipping conditions.The seven chokepoints being examined are: the Northern Sea Passage, the English Channel, the Malacca Strait, the Singapore Strait, the Strait of Gibraltar, the Panama Canal, and the Suez Canal.

Michael Walsh, a non-resident senior fellow at the Foreign Policy Research Institute, an American think tank based in Pennsylvania, said on Friday that although the Cape of Good Hope was not classified as a choke point, the inquiry still carried significant risks for US-South Africa relations on at least three fronts.

First, Walsh said the inquiry signaled that the US government was committed to investigating foreign governments who take maritime-related actions that harm US trade, including foreign governments that have imposed regulations, policies, or practices that undermine free competition.

Walsh said there were significant maritime linkages between what is happening in the Cape of Good Hope and at least three of the choke points that are now under study by the FMC.

“On those grounds, the examination could be easily extended to actions by the Government of South Africa and other South African entities,” Walsh said.

He said the FMC was currently investigating a separate matter involving the Government of Spain, which started under the Biden administration, as it determined that the Government of Spain was undermining US national security and foreign policy interests.

The case investigated by the FMC over Spain involves potential denials of port of entry to US and foreign flagged vessels engaged in US trade that were reportedly shipping security sensitive materials to Israel.

“The Government of South Africa will need to be mindful of the new examination by the FMC,” Walsh said.

This comes as trade tensions, particularly from the US imposing higher tariffs, are already weighing on investment and consumer confidence, while persistent inflation is expected to keep interest rates elevated. 

The Trump administration recently expelled South Africa's Ambassador to the US, Ebrahim Rasool, and declared him a "persona non-grata" for criticising President Donald Trump and for his continued support of the Palestinain cause. 

According to the Office of the US Trade Representative, South Africa’s exports to the US increased by 4.9% to $14.7 billion in 2024, up from $679.4 million from 2023.

Agriculture, particularly citrus and wine, manufacturing, mining, automobile assembly, metalworking, machinery, textiles, iron and steel, chemicals, fertilizer, foodstuffs, and commercial ship repair, are among the major export commodities from South Africa to the US.

Economists have warned that these global headwinds could dampen SA’s growth prospects through weaker external demand, higher inflation from supply chain disruptions, and increased financial market volatility,” said Momentum Group chief economist, Sanisha Packirisamy.

Meanwhile, Walsh also said the recent article co-authored by President Cyril Ramaphosa clearly raised the stakes in US-South Africa relations.

Leaders of three developing nations - Ramaphosa, Malaysian Prime Minister Anwar Ibrahim and Colombian President Gustavo Petro - in an article published in the Washington-based Foreign Policy magazine in February reiterated their determination to prevent Israel-bound vessels carrying weapons from using their ports, amid the regime’s ongoing genocide in the Gaza strip.

Walsh said that statement could cause considerable harm to the South African economy, whatever the moral grounds.

“That is because it provides clear evidence that the Government of South Africa is intent on undermining a competitive and reliable international ocean transportation supply system,” he said.

“From the perspective of US-South Africa relations, that is problematic because it provides the Federal Maritime Commission with strong grounds to take offsetting actions against South Africa. 

“Among other things, the Federal Maritime Commission could recommend that the US Government impose fines on South African-flagged vessels and limit cargo carried between South Africa and the United States. That includes items such as South African diamonds, oil, platinum, produce, vehicles, and wine.” 

BUSINESS REPORT