South Africa reacts to trade threats made by US president Donald Trump
South Africa’s already muddied trade waters with the US turned even murkier over the weekend following new statements from president Donald Trump.
Trump revealed that he is cutting funding to South Africa due to the country’s policy of “confiscating land”.
The statement caused consternation in South Africa, with the country’s international relations and cooperation minister Ronald Lamola toeing a diplomatic line in response.
Minister Lamola said he hoped Trump’s advisors would attain a full understanding of South Africa’s policy frameworks.
“We trust president Trump’s advisors will make use of the investigative period to attain a thorough understanding of South Africa’s policies within the framework of a constitutional democracy,” said Lamola.
Media reports suggested South African president Cyril Ramaphosa had slammed Trump’s statements and moved to suspend aid.
While the fresh produce sector is staying out of the argument at present, further escalation could be extremely worrying.
President Trump reportedly said he was only targeting South Africa, and not the rest of the continent. At this stage it also seems to be focused on the country’s land policy.
South Africa is a major beneficiary of the US Growth and Opportunities Act which has recently – in terms of South Africa’s participation – been extended for another year.
However, trade with the US only represents 2 per cent of total South African exports. In terms of some export products though, the trade is significant.
The recent signing of the new land act by the South African president, which will grant the government powers to expropriate land without compensation, is aimed at promoting land transformation in the country.
It has caused a great deal of controversy. The new law was passed prior to the June elections by the ANC-controlled government.
Since the signing the action has triggered new rifts for the new South African Government of National Unity, in operation since June last year.
Various initiatives to challenge the law are currently underway, including initiatives by the organisation Agri Forum.
Meanwhile, South Africa’s Reserve Bank has warned that the Trump trade wars could have a huge effect on the South African economy.
Governor Lesetja Kganyago said that the South African currency could slump to a rate of R21.00 to the US Dollar.
It is now at R18.00 – and inflation could rise above 5 per cent again.
