Pretoria plays fast and loose with key trading partners
The economic stability of a country and the wellbeing of its citizens is of paramount importance, and it goes without saying that a responsible and caring government must always act in the best interest of the economy and its people.
It is in this context that the ANC-led national government’s inexplicable stance on the Russia/ Ukraine conflict raises concerns about its level of responsibility and care. Its stance on this contentious and polarising issue could sour trade relations with key trading partners and provide a knockout blow to an economy already on the ropes, amid rolling blackouts and inflation woes that threaten to worsen inequality, poverty and unemployment.
It is imperative that the national government urgently reconsiders its trajectory, for the greater good of the nation and its economy.
The nation stands at a critical juncture, where strong leadership and decisive actions are needed to safeguard trade relations with the US, including benefits under the African Growth & Opportunity Act (Agoa), to maintain good political and trade relations with our key trading partners and uphold its commitment to global solidarity.
Agoa, a preferential trade programme launched in 2000, was initially set to expire in 2008. It has since been extended and amended several times, providing an economic lifeline to many African countries, not least SA, Africa’s most advanced economy. The programme allows a range of products from eligible African countries duty-free access to the US, one of the largest consumer markets in the world. It has helped bolster SA’s economic development in recent years, facilitating job creation, foreign direct investment and the expansion of local industries.
Yet, instead of doing everything possible to ensure that our participation is renewed and the thousands of jobs from Agoa are protected, Pretoria’s actions are jeopardising our preferential access to the lucrative US market. It just doesn’t make economic sense.
Since the launch of Agoa, SA’s exports to the US have grown from $4.43bn in 2001 to $15.46bn in 2021. According to data compiled by Wesgro, the Western Cape’s official tourism, trade and investment promotion agency, 70% of SA’s agricultural exports to the US relied on Agoa in 2021. Five of the top 10 Agoa-qualifying products exported from SA to the US came from the Western Cape, with a share greater than 89% in 2021.
The Western Cape’s exports to the US grew from R2.06bn in 2001 to R16.08bn in 2022. In a recent Wesgro survey in which 44 exporters participated, just more than 60% of those that export to the US indicated that they use Agoa.
Two-thirds of respondents (micro, small, medium and large business) indicated that Agoa had a significant positive effect on the growth of their business.
In stark contrast, SA’s trade relations with Russia are almost insignificant. In 2022 it was SA’s 53rd largest export market, with exports to Moscow totalling R4.6bn, down from about R6bn in 2021. These numbers clearly show that a solid economic relationship with the US is in the national interest.
It is therefore also a concern that the national government is pursuing the deeply flawed Copyright Amendment Bill. While there is a need to strengthen copyright protections and remuneration for artists, performers and creators, this bill poses risks of arbitrary deprivation of property and may not pass muster when it comes to international treaty obligations.
COPYRIGHT
Under the US Trade Act one of the criteria for eligibility for the generalised system of preferences programme, a prerequisite for Agoa, is that the state “provide ‘adequate and effective protection’ of American copyrighted works and sound recordings”. The Copyright Amendment Bill, while failing to properly assess the economic implications of its proposals, does exactly the opposite.
This proposed legislation has been criticised by key trading partners for its potential limitations on copyright protection. XA Global Trade Advisors
CEO Donald MacKay points out that the EU, the world’s biggest economic bloc, accounts for 22% of SA’s exports, and the US, the world ’ s biggest single economy, for 9%.
Add the UK (7%), and SA exports 36% of everything it sells abroad to these three regions. Russia accounts for just 0.23%.
In today’s complex global politics, alliances and partnerships play a vital role. We should be fostering mutually beneficial trade relationships in the interest of job creation.
However, by leaning towards Russia the government jeopardises trust and confidence. This loss of trust could result in diminished investments in addition to trade barriers and restricted access to vital markets, dealing a severe blow to SA’s already struggling economy.
It is crucial for the ANC government to adopt a pragmatic approach to international relations, an approach that prioritises the interest of the nation and its economy. While fostering partnerships with diverse nations is essential, it should not come at the cost of alienating strategic allies.
A government’s duty is clear: prioritise the people’s wellbeing and drive economic growth that creates jobs. In the SA context the national government must reassess its stance on Russia and jettison the controversial Copyright Amendment Bill. By nurturing favourable trade relations and addressing concerns about intellectual property rights in a fair manner, SA can secure Agoa benefits, attract foreign investments and propel sustainable development.
Does the government care enough to take such decisive steps?