US commerce body goes to bat for South Africa
The American Chamber of Commerce in SA has travelled to Washington DC twice in recent months to meet leaders of the US Senate and House of Representatives, asking them to lend support to the renewal of the African Growth and Opportunity Act (Agoa) for SA.
AGOA allows more than 98% of South African exports to enter the US duty-free, the chamber says. It was approved by the US Congress in May 2000, to assist the economies of sub-Saharan Africa and to improve economic relations between the US and the region. Initially, the legislation was to expire in 2008 but Congress passed the Agoa Acceleration Act of 2004, which extended it to 2015.
US trade data show that SA’s exports to the world’s largest economy were worth $3.6bn last year. The US is the second-largest destination for South African exports after China, accounting for 7% of all exports. It is by far the largest destination for SA’s automotive manufacturing sector, making up 21% of all vehicle exports and 42% of car exports.
The US is also SA’s largest portfolio investor and the country’s third-largest trading partner after the European Union and China.
The chamber’s executive director, Carol O’Brien, says the body met members of the US Congress, the House of Representatives committee on ways and means, the special assistant to the president, the office of senators, House foreign affairs committee, and think-tank the Brookings Institution. "We also met SA’s ambassador to the US, Ebrahim Rasool," she says.
"The chamber is very supportive of having Agoa renewed for SA, even though American companies don’t benefit from it directly. To ensure that it gets renewed … we want to show the US that SA is giving something back to the US that will benefit American business," Ms O’Brien says.
It is mainly German car brands exported by SA that benefit from Agoa. "The quid pro quo is that the servicing and spare-parts market of these exports employs about 100,000 persons in the US," Ms O’Brien says.
She says the chamber will conduct a survey among member companies to see how they benefit indirectly, to add strength to their lobbying efforts.
In US visits, the chamber discussed what is perceived as impeding doing business in SA. "Like the ownership element of black economic empowerment, local content requirements, labour laws (more specifically, strikes) and lack of policy cohesiveness among different government departments," Ms O’Brien says.
US ambassador to SA Patrick Gaspard said last week at a forum in Sandton on US-Africa trade and investment that the relationship between business, labour and the government in SA appears to be rooted in the past.
"SA sometimes seems to be 40 years behind the times when it comes to labour relations," Mr Gaspard said, saying that workers in the platinum mining industry agreed to essentially the same terms that were offered two weeks into their five-month strike.
Mr Gaspard said there was often a "dialogue of the deaf" during strikes in SA, and the government was slow to get involved in resolving them.
Ms O’Brien says that should Agoa be renewed, and SA be included, the length of the renewal "will be the variable". "Business needs five-plus years to plan, and any period that caters for less than this time will impact investment decisions.
"Unfortunately, we cannot predict what Congress is going to do, but the persons we spoke to understand that should Agoa not be renewed for SA, it could result in a shift in trade patterns as the manufacturing input in the region comes from SA."
Jeff Nemeth, the chamber’s president and CEO of Ford Motor in SA, says SA is the manufacturing hub of the continent and Agoa promotes regional trade, which feeds into the global value chain. The chamber in SA is affiliated to the US Chamber of Commerce, the world’s largest business federation, representing about 3-million American businesses of all sizes. It is based in Washington DC.
Scott Eisner, the vice-president of African affairs in the international division of the US Chamber of Commerce, says SA needs foreign direct investment (FDI) but some government policies may impede this, including new legislation for oil and gas development and regulations impeding the import of critical skills.
"We are asking how domestic policies are going to shape or impede FDI." He says investors worry about investment protection, the possible expropriation of land and the fracas around SA’s security industry. "Put that together, it’s the perfect storm and can be perceived as a very protectionist (economic) model."
Read related news articles
South Africa walks a tightrope on US relations
South Africa has been conducting a high-wire act in its relations with the United States (US). It is maintaining friendships with Washington’s enemies like Russia, Iran and China while trying to avoid disrupting its economic relations with America. Tensions came closer than ever to breaking point this month as the US House of Representatives’ Committee on Foreign Affairs passed the US-South Africa Bilateral Relations...
28 March 2024
Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship
As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country. I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...
13 March 2024
South African president Ramaphosa meets with US congressional delegation
South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...
21 February 2024
US congress receives Bill to review South Africa relations
A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...
09 February 2024
Fitch research unit expects better AGOA deal for South Africa
Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...
09 January 2024
South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities
Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...
20 November 2023
US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa
President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...
09 November 2023
US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility
Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...
07 November 2023
AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]
Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...
06 November 2023
South Africa pins its hopes on an early 2024 US Congress renewal of AGOA
South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy. This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...
05 November 2023
SA trade minister Patel expresses confidence at media briefing about South Africa’s continued inclusion in AGOA
Ahead of South Africa hosting the US-AfricaTrade and Economic Cooperation Forum – also called the AGOA Forum – from November 2 to 4, Trade, Industry and Competition Minister Ebrahim Patel on October 26 briefed the media on the state of readiness for the forum, expressing confidence that the South African government’s relations with the US were strong. Various South African stakeholders have been motivating for...
26 October 2023