Pending 30% tariff on South African exports to the US requires calm, says Cosatu

The pending 30% tariff on South African exports to the United States (US) require calm, frank and honest leadership by government and key stakeholders.  They necessitate an understanding of the damage this will do to these exporters, their employees and their families.  

These require thoughtful interventions to address the causes and impacts of these tariffs.  The solutions will not be found in slogans, temper tantrums, hate speech or the avalanche of fake news on social media.

Cosatu like other sober organisations is deeply concerned about the devastating impact the tariffs will inflict upon an economy limping along at 1% annual growth since 2008, battling dangerously high unemployment of 43.1% and youth unemployment of 72%, entrenched levels of poverty and inequality as well as crime and corruption.

We fear the damage these tariffs by the world’s largest economy and our second biggest trading partner will cause to our agricultural, motor and other manufacturing sectors.  With unemployment so high, we cannot afford to see thousands of job losses from the citrus farms of Limpopo to the wineries of the Western Cape shed, nor the gutting of thousands of motor manufacturing jobs from Gauteng to KwaZulu-Natal and the Eastern Cape.

A decline in economic activity means less tax revenue needed to fund the public services that the working class, society and businesses depend upon.

This is a real problem and it needs to be fixed urgently.  The government must lead and be given the space to do so and as business, labour and society we need to provide the necessary support. 

There are three broad categories of issues that need to be addressed to ensure South Africa is included in what is now the new norm of US tariff duties, e.g. 15%.

First is diplomatic relations.  This requires the urgent appointment of a senior South African Ambassador and the capacitation and resourcing of our missions to the US.  In the longer term the reversal of the decision to close the Consulate in Chicago and the expansion of South Africa’s diplomatic presence to key states is also needed.  For now, we need an Ambassador on the ground who can begin the daily journey of fixing US South African relations.

Second is what constitutes a new trade agreement between the US and South Africa.  It needs to be mutually beneficial, support and create jobs and nurture fragile economic sectors in both countries.

Key elements to this include expanding agricultural trade, in particular for pork and poultry; addressing digital tax matters, reducing the trade deficit through complementary purchasing of goods that South Africa does not produce, e.g. gas, agricultural machinery and auto-motive components.  New opportunities need to be explored including joint ventures in mining and beneficiation in both countries and the continent, energy and logistics.  Closer coordination with South African companies investing in the US, from mining to gas, hospitality and consumer goods is critical and to communicate these already significant investments.

The second difficulty of the 30% tariffs on South African exports, is that our neighbouring states and economic competitors have been allocated a substantial advantage at 15% and lesser tariffs.  

To reduce South Africa’s to the new normal of 15%, the tensions in US South African relations need to be resolved.  They can and must be resolved in a mutually respectful manner based upon facts and in a way that respects each nation’s sovereignty and democratic choices. 

White genocide in South Africa does not exist, but crime affecting all South Africans, in particular in our townships and rural areas, and investors and tourists is a real problem.  Opportunities exist for support to be provided to South African law enforcement and judicial authorities in the forms of intelligence sharing on drug cartels and human trafficking, to forensic and investigative training, to resources for vehicles, drones, satellites and courts.  

With an economy battling high unemployment, we must do more to attract domestic and foreign investment, including reducing red tap and other administrative burdens.  

A far better job needs to be done to explain that Broad-Based Black Economic Empowerment provides various paths, including Employee Shareholder Ownership Programmes and Equity Equivalents where investors and companies commit to supporting local businesses, jobs and communities. 

Progress needs to be made finalising the Expropriation Act and its Regulations affirming and clarifying the comprehensive checks and balances, recourse to courts and protections for all parties.  

The government needs to expedite engagements with their US counterparts on these matters.  Workers cannot afford for the 30% tariffs to become the new norm.

While these take place, it is critical that the Department of Trade, Industry and Competition flesh out its relief package for affected companies.  This should include support from public and private banks.  

Efforts to expand and diversify trade relations from the Americas to Europe, Africa and Asia are long overdue irrespective of this crisis.  Efforts to roll out the African Continental Free Trade Area must be expedited.

Now is the time for the Department of Employment and Labour to finally resolve the long outstanding bureaucratic delays suffocating the Unemployment Insurance Fund’s Temporary Employee Relief Scheme.  Companies and workers simply don’t have the space to wait for its average 14-month turnaround time.

Our diplomatic missions across the world need to be repositioned to focus on promoting trade, investment, tourism, transport and education and less on diplomatic cocktails.

Investments in Home Affairs’ capacitation to deliver real time turnaround for visa applications must be accelerated.

Whilst democracy is noisy and must be tolerant of even those who offend us, it is time that society holds accountable the race baiters and fringe populist elements who’s spreading of fake news and hate speech and incitement to violence on social media, in the US and South Africa, have caused real damage to our social fabric, relations with the US and will now see workers, businesses and the economy pay the price.

Cosatu will continue to work closely with President Cyril Ramaphosa, government and business to ensure that South Africa is able to navigate these challenges. 

Cosatu General Secretary Solly Phetoe

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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