—-Over tariffs threatening textile sector
Mohloai Mpesi
THE government will meet with the United States Trade Representative (USTR), Ambassador Jamieson Greer, and his team next week to address the recent 50 percent tariff hike on Lesotho exports to the US.
This meeting, scheduled for April 24th in South Africa, will be an opportunity for Lesotho to convince the US to reduce the steep tariffs.
Minister of Trade, Industry and Business Development, Mokhethi Shelile, told the Lesotho Times last night, that Lesotho rejects the US claim that it imposes 99 percent tariffs on American goods.
In reality, Mr Shelile, Lesotho applies a 7.5 percent tariff on imports from the US, in line with the rates charged to all Southern African Customs Union (SACU) member states including South Africa, Botswana, Namibia and eSwatini.
Thus, Minister Shelile said that the government’s intention in the meeting, is to challenge the steep reciprocal tariffs, which have been justified by U.S. officials as retaliation to Lesotho’s alleged 99 percent levies on imported American goods.
The steep 50 percent US tariff hike is a major concern for Lesotho, as the textile industry is the country’s second largest employer, providing nearly 31,000 jobs thanks to the tariff-free access granted under the African Growth and Opportunity Act (AGOA).
Mr Shelile warned that the tariff could lead to the loss of around 12,000 jobs, a devastating blow to Lesotho’s economy. The jobs at risk equate to 42 percent of the Lesotho’s textile industry workforce.
“The US Trade Representative and his team have agreed to meet with us, and we are prepared to argue the unfairness of the 50 percent tariffs,” Mr Shelile said.
“We want to clarify that the tariffs imposed on Lesotho do not reflect the reality of our tariff system, which is substantially lower for US imports.”
President Donald Trump has implemented a 90-day freeze on the larger 50 percent tariff hikes to allow for negotiations.
Nonetheless, a 10 percent baseline tariff remains in effect for all countries exporting to the US
During the upcoming meeting, Mr Shelile said, Lesotho plans to strongly argue against the “unfairness” of the 50 percent tariff, given its own modest 7.5 percent rate under the SACU.
The government also intends to make the case that the US has little to gain financially from its trade relationship with the least developed, low-income country of Lesotho and its population of 2 million.
Mr Shelile emphasized that the government wants to establish constructive dialogue with the senior US officials about the potential of tariffs to hinder investment in Lesotho.
“We want to give the U.S. a chance to outline any perceived challenges they see in our investment environment, aiming for improvements that could benefit both parties,” Mr Shelile said.
However, the minister also highlighted the realities of Lesotho’s economic situation, reiterating that the U.S. should not anticipate substantial financial gains from trade with Lesotho, considering it is a least developed country with a population of only two million.
“It is not our fault that American products are not well-received in Lesotho; they often overlook us due to our size and perceived lack of marketability,” Mr Shelile said.
“While we seek to address the tariffs and barriers, we want a clear understanding that the U.S. will not profit significantly from our trade relations, given our economic status.”
Mr Shelile is hopeful that engaging directly with the US will yield a more favourable trade climate for the local textile industry and mitigate the adverse impacts of the current tariff situation.
Mr Shelile would, however, not disclose what Lesotho will be putting on the table as a sweetener to convince the US to lower tariffs.
World Bank encourages negotiations amid tariff uncertainty
World Bank Group President, Ajay Banga, has called for greater negotiations between countries over trade.
“Countries need to care about negotiating and dialogue. It’s going to be really important in this phase, and the quicker we do it, the better that will be,” he said.
Mr Banga predicted that global economic growth is likely to slow as a result of the uncertainty created by Trump’s tariffs, and investments were slowing. But he said it was unclear how long any slump would last.
“I don’t know how to predict how long it takes to get out, because most of this is caused by the current discussion on trade. If you get to good resolutions through that negotiation that I’m encouraging … then I think you could get through this relatively quickly,” he said.
African trade ministers
Meanwhile, African trade ministers will gather in Kinshasa, Democratic Republic of Congo (DRC), on Monday to address the 10% tariff Mr Trump slapped last week on US imports from all 54 African nations.
The meeting is being convened by the African Continental Free Trade Area (AfCFTA), whose secretary-general, Wamkele Mene, says the Trump tariffs should spur African nations to accelerate the creation of a continental free market area.
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