US trade wars hit South Africa

Recent developments in the global economy have put South Africa in the spotlight, particularly in light of the strained relations with the United States. Following President Trump's executive order to cut aid to South Africa due to concerns over the country's land policy and its genocide case against Israel at the International Court of Justice, the South African economy faces potential ramifications. The looming threat of losing preferential trade access under AGOA has raised significant concerns among experts and policymakers. Khulekani Mathe, CEO of Business Unity South Africa, weighed in on the situation during a recent interview on CNBC Africa. Mathe emphasized the importance of finding a diplomatic solution to the current challenges to avoid long-term negative impacts on the economy. He pointed out that while the executive order may not have an immediate impact on trade, the possibility of exclusion from AGOA could significantly affect sectors benefiting from the trade scheme. President Cyril Ramaphosa's response to the executive order was one of defiance, as he vowed not to allow South Africa to be bullied. Ramaphosa announced plans to send delegations to various capitals to clarify the country's stance and engage in diplomatic discussions to address the issues at hand. Mathe expressed support for the president's proactive approach, emphasizing the need for constructive engagement to resolve the challenges. One of the key points of contention between the US and South Africa is the expropriation policy bill signed into law by President Ramaphosa. The controversial policy, which allows for expropriation without compensation under certain circumstances, has drawn criticism from some Western partners, including the US. Mathe defended the policy, highlighting the extensive consultation processes and safeguards in place to prevent potential abuses. While acknowledging the need to address ambiguities in the legislation, Mathe expressed confidence in the existing mechanisms to ensure fair and transparent implementation. The interview also delved into the implications of South Africa's stance at the International Criminal Court against Israel, which is believed to be a contributing factor to the US's current disapproval. Mathe emphasized the importance of clarifying facts and improving understanding through diplomatic engagements to foster better relations with the US. With the US being South Africa's second-largest trading partner, maintaining a positive relationship is crucial for the country's economic interests. As the situation continues to evolve, the hope lies in productive discussions and mutual understanding to safeguard South Africa's trade relations with the US. The road ahead may be challenging, but with a concerted effort towards diplomacy and dialogue, there remains a possibility for positive outcomes in the face of ongoing trade wars and geopolitical tensions.