SA banks on continued US trade access
But the extension of concessions by the US Congress is not a foregone conclusion, writes Brendan Boyle
SOUTH Africa hammered home its case for the extension of a crucial US trade concession during President Barack Obama’s visit last week. Rob Davies, the minister of trade and industry, said in an interview that the government touted the benefits of the Africa Growth and Opportunity Act (Agoa) in meetings with Obama’s delegation. They included the recovery of bilateral trade to levels recorded before the 2008 recession and a near balance in the value of trade between the countries of about R61-billion a year in each direction.
But Davies said South Africa would have to up its game to ensure that the US Congress voted to extend the 13year-old concession before it expires in 2015.
“As with a lot of these events at summit level, Obama’s visit was an opportunity to emphasise the importance of the relationship we have,” Davies said.
“But it probably cajoled us into accepting that we need to do more than we were already planning in the debate on Agoa,” he added.
Davies said Obama was positive about a third extension of the 2010 agreement, which allows 39 African countries, including South Africa, to export thousands of designated products to the US without paying duties.
“He didn’t say there were any conditions, but he pointed out that there were things we would have to convince Congress about,” he said.
Davies is scheduled to lead a delegation to the US later this year to lobby the members of Congress for a further extension that will include South Africa.
Several countries, including the Central African Republic, have been granted access to Agoa, but they have then seen it cancelled because of deteriorating conditions.
The act offers easier access to US markets for African countries deemed to have established — or to be pursuing — market-based economies, the rule of law and political pluralism. Other conditions for access include marketfriendly legislation, the protection of intellectual property and credible anticorruption measures.
South Africa comfortably meets most of the conditions, but many US legislators believe the country is advanced enough to do without special access.
Conservative US businessman Donald Trump criticised Obama’s announcement of a plan to promote access to electricity in Africa. “Every penny of the $7-billion going to Africa as per Obama will be stolen — corruption is rampant,” he said in a message on Twitter.
Davies said Obama warned South Africa that it would have to persuade US representatives that American business would be able to compete against other countries in South Africa on a level playing field.
He said there could be concerns about concessions offered to European countries under a free trade agreement signed before Agoa was enacted.
“I think we would want to argue that we have a pretty level playing field, with the US able to export to us in the same way that we are able to export to them,” he said.
Davies declined to speculate on the likely cost to South Africa if it lost access to the Agoa concessions. “We are not thinking of any option other than the extension of Agoa,” he said.
He said he had been encouraged by his discussion with US trade representative Mike Froman, who travelled with Obama.
However, Froman told reporters after Obama’s meetings with South African officials that Agoa could be reviewed and adapted to tilt the agreement away from natural resources towards manufactured exports.
“As we’ve reached the period of time where we want to renew Agoa, we’re going to take a hard look at what has worked well, what hasn’t worked well and how to improve on our experience with Agoa so that we can increase the non-oil-related trade between the US and sub-Saharan Africa,” Froman said.
Davies said Obama had used the trip to promote Africa as a future growth point and as a developing market for US manufactured exports.
“The president wanted to signal to US business and the world his confidence in Africa as a centre of global growth. That was a very, very important message,” he said.
“The landscape is beginning to change.”