South Africa announces its big plan to help businesses hit by US tariffs
The Departments of International Relations and Cooperation and Trade, Industry, and Competition have announced a more detailed response to the United States’ imposition of a 30% tariff on imports from South Africa.
In a joint statement, the departments signalled a multilateral response to the tariffs, including ongoing diplomatic talks with the US and outreach to other trading partners, while implementing a host of other measures for businesses back home.
While President Cyril Ramaphosa mentioned initiatives like the “Export Support Desk”, the general response from the government has until now been vague and nondescript.
The departments have gone into a bit more detail on South Africa’s response plan, but remain without detail, talking more to medium- and long-term measures, rather than short-term relief.
According to the government, the first response is diplomatic, with continued negotiations with the United States at the top of the agenda.
“South Africa is committed to a principled approach, and we will continue to use all available diplomatic channels to negotiate a mutually beneficial trade deal with the United States,” it said.
The departments said that South Africa will continue to pursue a trade deal that “respects our national interests while advancing our longstanding partnership”.
South Africa has made more than two attempts at formulating a trade deal as part of talks with Washington, but nothing so far has managed to cut the 30% tariff down.
The departments said they are working with local industries to see how the deal can be modified further, with the goal of promoting trade predictability.
Another long-term goal that has been previously stated and also vaguely alluded to is the expansion of South Africa’s export markets.
Here, the government said it targeting markets across Africa, as well as in Asia, Europe, Middle East, and Americas.
The departments pointed to a R90 billion investment package signed with the European Union earlier in the year, while it is opening markets in China and Thailand, securing vital protocols for products like citrus and others.
They added that China is a significant $200 billion market where South Africa can expand its reach, while inroads are being made in the UAE, Qatar, and Saudi Arabia.
“We have also developed a number of Trade and Investment Packages with a number of countries, including Japan, that aim to unlock new market access opportunities,” they said.
What the government is doing for businesses now
Aside from the long-term goals, the departments also outlined what is being done right now to cushion the blow for businesses hit by the tariff.
This revolves around a broader “Economic Response Package” which includes:
Export Support Desk
This desk will serve as a direct point of contact for all companies affected by the US tariff, the departments said.
“The aim of this support measure is to support the diversification of export markets for increased resilience and facilitate the entry into alternative markets for affected exporters,” they said.
The Desk will provide updates on developments and tailored advisory services to exporters on alternative destinations, guidance on market entry processes, insights into compliance requirements and linkages to South African Embassies and High Commissions abroad.
This has already launched.
Company assistance
As has been the case since the tariffs were confirmed, direct company assistance is still being developed, with the departments promising that the details will be finalised and communicated “shortly”.
However, the departments noted that the measures will assist companies to absorb the tariff and “facilitate long-term resilience and growth strategies to protect jobs and productive capacity.”
This is still to be determined.
Localisation Fund Support (LSF)
This measure forms part of a national effort to support South African companies impacted by the imposition of the 30% import tariffs.
In collaboration with the Department of Trade, Industry and Competition, the IDC and other agencies – LSF will issue an open call from firms operating in affected value chains, with the aim of providing some kind of competitiveness and efficiency support.
This is still to be determined.
Export and Competitiveness Support Programme (ECSP)
The departments said they will look at developing an ECSP, which will include a working capital facility and plant and equipment facility to address short to medium-term needs across all industries.
This is still to be determined.
Job protections
The departments said they are working with the Department of Labour on measures to mitigate potential job losses, using existing instruments within its entities that can be adjusted to respond to the current challenges.
It has been suggested by business lobbies that programmes similar to the Temporary Employer/Employee Relief Scheme (TERS) used during the Covid-19 pandemic be initiated.
This is still to be determined
Competition block exemptions for traders
The departments said that the diversification of markets that will be required following the introduction of additional tariffs on South African goods may require exporters to coordinate their activities.
This may result in developing joint infrastructure for exports, sharing of market information and coordination of activities to achieve economies of scale and efficiencies that enable them to be competitive.
Because these activities may contravene the provision of the Competition Act, the minister has introduced a Block Exemption for Exporters to enable collaboration and coordination by competitors.
“A draft Block Exemption will be published by the end of the week so that the process can be concluded expeditiously,” it said.
Loading ...