TRALAC - Trade Law Centre

SA takes lion's share of nonenergy exports under AGOA

Tuesday, 15 July 2003

Source: Business Day

SA is a major beneficiary of nonenergy exports to the US under the African Growth and Opportunity Act (Agoa), says economist Eckart Naumann.

He was giving at a presentation to the Trade Law Centre for Southern Africa.

He suggests that the response within Africa is "still fairly polarised", with SA having taken the lion's share of nonenergy and nontextile exports under Agoa.

"Agoa significantly liberalises trade between the US and 38 designated sub-Saharan African countries by removing import tariffs on approximately 7000 goods," says Naumann. "Notable exclusions from Agoa in the region are Zimbabwe and Angola.

"Agoa covers the eight-year period from October 2000 to September 2008 and thus lends a measure of predictability to Africa's access to the enormous US market." He says that since its inception in 2000, a growing share of Agoa-beneficiary countries' exports to the US had qualified for duty-free access.

"During 2002, this amounted to almost $9bn, or roughly 65% of all exports," says Naumann.

"But of the exports qualifying under Agoa, more than 75% consisted of substantially unbeneficiated exports from the energy sector, such as oil and gas, (predominantly) from Nigeria and Gabon. "Total nonenergy exports under Agoa amounted to $2,17bn in that year. "Clothing exports textiles are generally excluded under Agoa accounted for the largest chunk of nonenergy sector exports, amounting to almost 40%, or $803m.

"This is followed by Agoa-exports of transportation equipment with a 25% (544m) share, minerals and metals with 17% (373m) and agricultural products with 10% (212m)."

Naumann says it is important to look at those exports that qualify for the first time under Agoa, having not been eligible for previous access to the US under the earlier generalised system of preferences (GSP).

"Within these incremental exports, the clothing sector stands out (800m), having previously been excluded from coverage under the GSP," he says.

"Also recording substantial exports of incremental Agoa products is the automotive sector, with almost $500m worth of exports last year. "Next are minerals and metals, with $140m of new Agoa exports.

"Of all nonenergy related exports by beneficiary countries, only the clothing sector has managed to achieve substantial uptake under the Agoa regime across a range of countries.

"Although Agoa's apparel provision covers only clothing and a few textiles (for example, special hand-loomed, handmade, and folklore textiles), which are still subject to an annual quota, some of the industrial minnows' of Sub-Saharan Africa have achieved notable successes.

"Top of the list is Lesotho, whose clothing exports to the US far exceed those of SA.

"The transportation sector, another Agoa success story, is the second-largest export sector under Agoa besides clothing and energy-related products.

"Overall, a picture emerges of substantial market access opportunities for African countries, but a trade and investment response that is still fairly polarised.

"Apart from energy and clothing sector exports, SA has managed to take the lion's share of exports under Agoa.

"The country accounts for all Agoa exports in the transportation sector, and dominant shares of agricultural as well as mineral and metal exports."

Agoa and its future was a key economic topic for discussion last week when US President George Bush held talks in Pretoria with President Thabo Mbeki.