SA happy to keep US ties
AGOA: GOVT HOPES FOR EXTENSION TO ACT Officials plan to meet American counterparts to discuss trade relations.
South Africa is apprehensive about striking a new trade deal with the US and would rather maintain existing relations with the world’s largest economy, the nation’s top trade official said. SA is party to the Generalised System of Preferences (GSP) and the African Growth and Opportunity Act (Agoa), which together allow most sub-Saharan African countries duty-free access to the American market for almost 7 000 products.
Agoa is due to expire in 2025, while Richard Neal, the chairman of the House of Representatives’ Ways & Means Committee, has called for the GSP – America’s oldest and largest trade-preference programme for the world’s poorest economies – to be updated.
“We are hoping we can keep the current unilateral agreement in place,” Lionel October, the director-general of the department of trade, industry and competition, said in an interview last week.
“We are working more on continuing GSP preferences, hopefully getting an extension to Agoa, even though we might have to give some concessions. But rather that than a full-blown trade agreement” that may take four to five years to negotiate.
Trade in goods and services between SA and America was valued at $17.8 billion (now about R257 billion) in 2019, while $2 billion of exports from the country were cleared under the GSP and Agoa, according to US government data.
SA officials plan to meet their American counterparts early next month to discuss trade relations under President Joe Biden’s administration, according to October.
“We are planning to put a lot of effort into our relationship with the US,” he said.
While Kenya is negotiating a bilateral trade deal with the US, a country-to-country deal isn’t an option for SA because it is part of a regional customs union with Botswana, Lesotho, Eswatini and Namibia.
The government also fears that any new accord could be accompanied by conditions that would prejudice local industry, October said.
Here are other key issues addressed by October:
Local manufacturing
The government will need to maintain some form of protection for SA manufacturers if it is to build up local production capacity and create employment.
“We have been relying on our mining and finance sector to drive growth,” said October. “Countries only become successful if they have manufacturing and agriculture. That is where the high-paid jobs are; it is where the mass employment is.”
Automobile industry
Africa’s largest auto-making nation is experiencing an investment boom, with the world’s biggest vehicle producers adding to manufacturing capacity.
Expansion plans being implemented by Ford will generate investment totalling R33 billion and see the construction of 13 new factories and the overhaul of a rail link between Pretoria and Port Elizabeth by 2025.
Toyota is ramping up production of its hybrid cars, while Isuzu is reviving an old General Motors plant in the south of the country.
Government is now reaping the fruits of a 20-year effort to build up the industry, which generates almost 15.5% of the nation’s exports and employs more than 100 000 skilled workers.
Steel production
The steel industry lies at the heart of SA’s industrialisation drive and a master plan to encourage output will be announced soon. Demand has already been picking up, driven by an infrastructure development and an expanding mining industry, with investments being made in furnaces and plants being modernised.
Government wants to substantially increase local participation in the steel industry, including taking up a bigger stake in ArcelorMittal SA unit.
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