When the United States establishes another round of tax warfare and disrupts the international trade system, “how to keep an eye on itself and do things itself” has become more and more concrete opinion of various African countries. President William Ruto Kenya recently said Africa firmly believes that its economic fate depends on trade and cooperation between African countries, with South African President Cyril Ramaphosa stating that developing countries are still in the lowest international value chain, and this must change.
Although the President Donald Trump He has announced a moratorium on tax raising measures for some countries, the so -called “equal” tariff will still be maintained by 10%. This also means that the African Growth and Opportunity Act (AGOA), a treaty aimed at promoting trade and investment between the United States and Africa, has essentially died before its expiry. The treaty, which has been implemented for more than 20 years, has allowed African countries to sell more than one thousand goods to the United States without taxation, but has now been abused by “equal tariffs.” In this regard, Standard Bank’s chief economist Jeremy Stevens, suggested that AGOA’s death would destroy industrial development and employment in Africa. For example, the South African automotive industry has shown signs of the transfer of supply operations, and Lesotho’s textile industry is facing the possibility of laboring many workers.
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At the same time, as a result of the US “tax war” causing the global economy to deteriorate, the decline of foreign demand and rising tariffs can plunge African countries into revenue and payment. The cost of government borrowing and high foreign debt has risen, and the decline in commodity prices will increase financial risks, which could lead to a decline in currency and rise in inflation in African countries.
The biggest impact is shaking in a developmental style. For decades, many African countries have been developing the economy by relying on exports based on commercial policies with the United States. This style is now facing challenges, exposing the major weaknesses of the African economic structure. However, turmoil also produces opportunities. US “tax war” could be an important opportunity to promote African economic reform and develop its own hybrid strategy.
First, to further promote the implementation of the African free trade agreement (AFCFTA) to facilitate the real life of the continent. Currently, the agreement has been approved by 48 member states, marking the historic opportunity for the African trade. The World Bank has predicted that the agreement will help 30 million people overcome poverty and generate revenue of $ 450 billion by 2035.
Second, strengthen cooperation with emerging economies and building relations with balanced external. In his recent response about US “tax war, the African Union did not engage in negotiations on specific tax rates, but instead called for strengthening cooperation with the southern countries of the world and jointly protecting the multi -sided trade system. China has become an important African supporter in implementing a hybrid strategy. Due to the “one -way, one -way” procedureChina has not only expanded the importation of agricultural products from Africa, but has also helped industrial improvement through infrastructure construction. At the same time, countries such as South Africa and Ethiopia are also strengthening cooperation with the BRICS countries in search of new growth positions.
Third, accelerating the invention of industrial policy and promoting a local value chain. East African countries are working to strengthen their agricultural commodity processing capabilities, the South African government plans Nigeria It promotes improvements to its oil industry … Although these measures are just a response, they can develop a more effective economic structure.
Currently, US and African trade contributes to only 1% of US international trade. Trump’s administration of tariffs on African countries on the basis of “resolving business lack” is exactly absurd. This not only has shown that the current US government is ignoring economic principles, but also exposing the American dictatorship. Therefore, the true solution is not in search of the so -called tariff preference from the United States, but in stopping long -term dependency and exploring ways to seek sustainable development independently, then the true meaning of this tax war will be clear. In any case, the rights to seek development are always in our own hands.
Source: TUKO.co.ke
