The centrality of trade diversification to the US tariff saga in recent months is understandable, as there are immediate and notable implications for various exporting businesses. But the recently announced 30% tariff on SA goods imported by the US is not the end of the road. Negotiations continue between the two countries. Still, the lingering uncertainty and the fact that the tariffs are already in place are major concerns.
As SA navigates the tariff issue in the coming weeks, there will be an increasing need to allocate resources and intellectual capital wisely when it comes to trade matters in general. We are in a rapidly changing world, and the global trading system has been upended. SA must increase its efforts in two areas: retaining existing markets in various regions of the world and expanding access in new places.
This does not mean deprioritising the US, but adapting to the evolving world we live in. These processes involve both the effective deployment of the skill set available in the government and being open to new ideas from other stakeholders in society, such as business and academia.
Regarding the retention of markets, the approach may differ sectoraly. For example, in agriculture, the African market and the EU are vital, accounting for roughly two-thirds of annual exports. These regions also have minimal capacity to increase in the near term. Therefore, the key is to retain them through continuous interaction with the various embassies and active engagement in all established forums, so that SA’s interests are well entrenched.
The composition of the agricultural products SA intends to expand exports in for the coming years — mainly high-value fruits, red meat and wines — also means that in some African countries where incomes are still low, demand may remain constrained even if trade penetration is not a significant hindrance.
The countries where SA agriculture has enjoyed good access on the continent are mainly in Southern Africa. This means favourable relations with our neighbouring countries are vital for our agricultural export activity.
In the EU, markets are diverse, but comprise mainly high-value fruits and wines. This access is crucial for the domestic industries, so importers and diplomats must be among our priority contacts; they cannot be allowed to fall off the radar screen due to all the attention on the US.
Beyond Africa and the EU, the Middle East and Asia are among SA’s most significant agricultural export markets. In Asia, Japan, South Korea, Taiwan, Vietnam and China are among the key countries SA has access to, and where we could still increase exports. However, the immediate issue remains relatively high import tariffs and phytosanitary barriers.
This is particularly the case with China, where demand for agriculture is notable, amounting to more than $200bn in agricultural products a year. These imports are roughly of similar composition to SA’s range of agricultural exports, which reinforces the need to address the current barriers.
Engaging China practically and with speed about its proposal to lower tariffs, while guarding against costs to sensitive domestic industries, is an urgent priority.
In the Middle East, the likes of Qatar, the United Arab Emirates and Saudi Arabia remain crucial for export expansion in fruits, red meat, live sheep and grains. Beyond addressing the tariffs and phytosanitary measures that are in place, we will also require an increase in marketing efforts to boost demand for SA Inc. products in these markets.
Written for and first appeared in The Business Day.
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