President Cyril Ramaphosa is facing a moment of reckoning on Wednesday when he meets his US counterpart in a bid to restore relations with the world’s largest economy and South Africa’s biggest investor.
Some have likened the bilateral trade talks in Washington to walking into the lion’s den.
Another way to look at it is Ramaphosa as a tightrope walker, requiring fine footwork for a mutually beneficial balancing act that will take a fair amount of give and take to successfully cross the chasm below.
Donald MacKay, CEO of the XA Global Trade Advisors, has a far more succinct assessment of the all-important talks.
“Ramaphosa has quite the dilemma when meeting Trump on Wednesday, as Trump appears to want to punish South Africa, for whatever his reason might be.”
Last Tuesday, during the Nampo Harvest Day expo in the Free State, Ramaphosa had some harsh words about the first 49 “Afrikaner refugees” that landed at Dulles Airport in Virginia the day before.
In a way, the arrival of South African citizens ‘fleeing’ their own country set the mood not only for Nampo, but for the upcoming talks with Trump.
Attending the agricultural event in his personal capacity to buy farming equipment, Ramaphosa said the emigrés had forsaken the post-apartheid transformation project, labelling them “cowards”.
It’s brash utterances such as these, Greg Mills and Ray Hartley of the Brenthurst Foundation have written, that don’t stand Ramaphosa in good stead in the US.
In a piece penned for Currency, the director and research associate respectively, said it “relates to the manner in which South Africa treats its racial minorities.
“You cannot not condemn slogans such as ‘Kill the Boer’ and then be unhappy when some Afrikaners choose to leave for friendlier climes. Similarly, the government cannot say that settlers are undesirable and then be unhappy when they are critical of the government that doesn’t want them around.”
According to MacKay, “what is self-evident at the moment is that Ramaphosa is going to have to deal with the question of the Afrikaners that moved to the US,” whether or not they are farmers, which is almost immaterial.
He added that, at stake, too, was the African Growth and Opportunity Act (Agoa), the duty-free benefits of which was dealt a blow on April 2 when Trump announced 30% reciprocal tariffs on imports from South Africa, including agricultural shipments.
Days later, a “90-day pause” was announced, dropping tariffs down to 10% and giving South Africa a window of opportunity for some rapprochement with the US.
MacKay though, maintains that “the threat of losing Agoa is relatively trivial.
“The average value of Agoa is really only about three and a half percent. Even though we export a lot under Agoa, and the rand value of that trade is big, the duty-saving on that trade is very small.
“The much bigger problem is the Section 232 duties, particularly the automotive ones and, to a lesser degree, steel and aluminium.”
MacKay said the 10% duty South Africa was currently paying was much higher than the benefit under Agoa.
The threat of talks not going to plan, and appeasement between Pretoria and Washington failing, raises the prospect of the Trump Administration reverting to the initial tariff increase of 30% – a potential diabolical situation for local traders dealing with the US.
MacKay pointed out that it was hoped Ramaphosa had studied the contents of a document released by the US prior to the Liberation Day tariffs, so-called to emphasise that the duties are intended to re-spark the American economy.
Last week at Nampo, independent politics and economy analyst, JP Landman, said, so far the US economy had received a pounding through shrinking bond, equity and currency markets.
But it doesn’t change the writing on the wall – that the US is serious about certain policy issues: black equity requirements, the ANC’s friendly relationship with certain countries and causes, its perceived hypocrisy when it came to human rights, and of course “the Afrikaner issue”.
Mills and Hartley write: “While South Africa requires investment, including from Starlink (Elon Musk’s satellite connectivity enterprise), the government cannot demand ‘empowerment’ (read race-based) preferences for this and other investments based on South Africa’s apartheid history.
“Imposing such conditions on local investors some three decades after apartheid has ended is controversial enough. But asking foreign investors to pony up for another country’s past imbalances is lunacy. Investors, and Musk is not the only one, don’t like it and they stay away. The irony is that these lost investments delay our country’s economic progress, adding to the disempowering force of joblessness.
“It’s a schizophrenia between looking backwards and trying to manoeuvre forwards.”
The duo added that “it relates to the biggest elephant in the Oval Office: South African foreign policy”.
“South Africa has taken aggressive positions towards the United States and its allies, including accusing Israel, not Hamas, of genocide in the International Court of Justice, and reinvigorating its relations with Iran to develop commercial, military, and nuclear arrangements.”
Mills and Hartley write that if South Africa manages a foreign policy shift that possibly involves diplomacy with Jerusalem, a lot can be remedied with the US.
MacKay agreed, saying: “A big problem is how Ramaphosa deals with the Israel-Gaza issue, which at the moment seems like an intractable problem.”
He added that even if Ramaphosa found a way to tell that story of reconciliation with Israel, such as not renaming Sandton Drive to Leila Khaled Drive, saving the US from having its Gauteng embassy on a road named after a Gaza freedom fighter, could go a long way to repairing relations with Washington.
“If Ramaphosa gets a grip on his own ANC politicians that keep insulting the US, and himself becoming less publicly vocal about Israel, we might see that the US is probably a little less concerned about the actual case” – against Israel at the ICJ in De Hague – “than about the noise around it.”
Add into the equation a local willingness to relax sanitary and phytosanitary rules about the imports of US chicken and pork, including better access for American blueberries, as well as changes around equity ownership and the treatment of minorities, and Ramaphosa might just return home triumphantly.
But it’s a big ask, Mills and Hartley argue, as it essentially requires an end to an era of South African exceptionalism.
“That era is now over, perhaps permanently. It would be wise to act accordingly,” they said.
