[Letter] Trump tariff a chance to reform SA’s trade policies

It is always gratifying to hear more government support in favour of increased trade (Ramaphosa calls for boost in intra-Africa trade to combat US tariffs). It should not have required the repeated shocks to the global trade order emanating from Washington this year to spur action, but President Cyril Ramaphosa is correct when he says: “We must invest in the implementation of the AfCFTA [Africa Continental Free Trade Area]”.

The ongoing implementation and operationalisation of AfCFTA depends on African governments’ and businesses’ work in removing traditional barriers to trade, such as tariffs, as well as addressing substantive nontariff trade barriers (NTBs). These are issues such as inefficient ports and railways, onerous licensing and other documentation processes, high crime rates and in SA’s case localisation master plans and BEE.

NTBs have also been regularly cited by the Trump administration in various executive orders and other trade- and tariff-related decisions the administration has made. Addressing them will benefit not only trade in SA and across the continent, but also with trade partners such as a more transactional US.

After the US announcement updating various reciprocal tariffs, including the 30% line on SA imports that took effect this week, some of the initial rhetorical notes from the SA government have been positive. But notions such as that expressed by Ramaphosa in support of AfCFTA will ultimately come to nought should the government not approach trade policy and domestic trade infrastructure problems differently.

With SA exporters now dealing with a 30% US import tariff, will the government pursue domestic policy reforms that enable manufacturing and improve SA’s trade infrastructure? Will we see the end of protected monopolies in electricity, ports and rail? Could we see the radical reform and possible ending of policies that benefit the politically connected?

Or will the government stop at stopgap measures such as an “export support desk”, and subsidies and other forms of protection for select companies and industries, ultimately continuing the long-term decline of SA manufacturing and export competitiveness and growth?

SA, and indeed most of the wider region, has been afforded a rare opportunity — in the form of an external shock — to take stock and assess whether the respective trade environments encourage investment, job creation and economic growth, and if not, where substantive reforms can happen.

In this moment of global trade upheaval, African countries can benefit and attract shifting value- and supply-chains — if they get their domestic policy house in order.

Letter originally appeared here.