TRALAC - Trade Law Centre

South Africa 'must be part of AGOA for sake of neighbours'

Monday, 03 December 2012 Published: | Business Day (South Africa)

Source: Business Day (South Africa)

South Africa needed to continue to benefit from the Africa Growth and Opportunity Act (Agoa) not only for its own sake, but also for that of neighbouring African countries, which supplied South African manufacturers exporting to the US, head of the Western Cape Growth Organisation (Wesgro) Nils Flataen said on Friday.

AGOA was introduced into law in the US in 2000 to give African exporters tariff and quota-free access to the US market.

The act expires in 2015 and Mr Flatten said there were rumblings in the US Senate and Congress that South Africa, as a middle-income country, should be excluded from the act because its economy was too large and too sophisticated.

But this view ignored the integration of the Southern African market and the close links between the economies of the different countries, he said. South Africa could not be excised without affecting other African economies, said Mr Flatten, who was speaking on Friday at a business function with the US trade delegation led by US undersecretary of commerce for international trade Francisco Sanchez.

Removing South Africa from the Agoa system would damage interregional trade, which was still at quite a low level in Southern Africa.

The motor and motor components industries in particular would be hurt by South Africa’s exclusion — South Africa exports the left-hand drive Mercedes Benz to the US and sources some of the materials for their manufacture from neighbouring African states, Mr Flatten said.

He also believed that South Africa could achieve a lot more in terms of its exports to the US.

The US government has committed itself to enhancing its economic ties with Africa and US acting secretary of commerce Rebecca Blank launched the Doing Business in Africa campaign while in Johannesburg last week to help US businesses take up export and investment opportunities on the continent.

Mr Sanchez told the business gathering that since the launch of Agoa in 2000, US-Africa trade had been "transformed".

He said that the US government believed there was even more growth potential in what was a very dynamic and fast-growing market.

Last year total US-SA trade amounted to $16.7bn, up from $13.9bn in 2010, while two-way trade with sub-Saharan Africa totalled $95bn, a 16% increase over 2010.

President Barack Obama reaffirmed the US interest in Africa when he issued the US Strategy toward sub-Saharan Africa in June.

Among other things, the strategy committed the US government to working with Congress to extend the preferences under Agoa beyond 2015 and those under the Generalised System of Preferences beyond next year.

Mr Sanchez was leading a delegation of US business people in the energy, transport, infrastructure, agriculture equipment and water sectors in South Africa.



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