Trump sounds mad but his trade war makes sense, says Mchunu
An increase in customs tariffs might be what South Africa needs to ward off an influx of foreign imports that are threatening the survival of local industries, says ANC national executive committee member Senzo Mchunu.
In an interview with the Mail & Guardian, Mchunu raised concerns about what he termed South Africa’s lazy approach to protecting any of its local industries as the country’s economy continues to shed thousands of jobs.
Until recently, the ANC had ignored repeated calls to increase tariffs to save jobs in a number of industries including steel and clothing. These have come from its alliance partners, the labour federation Cosatu and the South African Communist Party, as well as trade unions, such as the National Union of Metalworkers of South Africa.
But in what appeared to be a change of heart, Mchunu, who is the ANC’s organising and campaign chairperson, said South Africa could learn a lesson from United States President Donald Trump’s approach to protecting local production.
“Trump may sound mad but he is hitting the correct note to say, if you don’t protect your industries, they will fall because they will be taken over by imports and so on,” Mchunu said. “We [South Africans] behave like people who do not want to defend any industry.”
Since early this year Trump has launched a trade war with various countries, starting with China, when he imposed steep tariffs on imported steel and aluminium. South Africa is among the countries on the receiving end of Trump’s policies. In May, the department of trade and industry made submissions for an exemption against the steel hike but was unsuccessful.
One industry that has been heavily affected by poorly regulated imports has been the sugar industry. The South African Sugar Association says it has lost 25% of its market to foreign sugar imports.
Last month, sugar cane farmers marched to the trade and industry department’s offices in Pretoria demanding that a higher customs tariff be enforced on sugar imports to regulate the influx.
Mchunu agreed with this call and said it was also necessary in other sectors, including manufacturing.
“All we need to do is to really confront those sectors that still remain to say, look, we are increasing tariffs within what is reasonable,” he said.
“These are the things we need to sit on and become much more emphatic. Your manufacturing industry … we can’t be smiling gentlemen either within Brics [the Brazil, Russia, India, China and South Africa bloc] or in the nations of the world while our industries are being taken over by foreigners,” he added.
The clothing industry, which employs 95 000 people, is another industry that has been vulnerable over the years to a flood of cheap imports, particularly from China.
Tariff hikes in industries such as clothing manufacturing are likely to draw criticism because they may result in higher prices for consumers. Added to this, an increase in tariffs might deter international companies that want to make new investments in South Africa.
Mchunu said the system of customs tariffs to protect local industry was already widely used globally and that South Africa could not be held hostage by the threat of losing popularity.
“If you fold your arms and say ‘I am afraid that people will turn against us’, you are not going to do anything except to open gates in your country for other people to take advantage of that,” Mchunu said.
The department of trade and industry said it would not consider calls made directly to it for tariffs to be increased because industry roleplayers knew all complaints first had to be directed to the International Trade Administration Commission for investigation before the minister could intervene.
“They need to lodge a complaint with [the commission]. Then it will do investigations and involve everybody in the industry,” said the department’s spokesperson, Sidwell Medupe. “After the investigations they make recommendations to the minister to say ‘our finding is that it’s true there is this dumping [of imported goods in South Africa] and you must introduce an antidumping duty and increase tariffs to this percent’.”