TRALAC - Trade Law Centre

Exports to US Continue to Ride the Commodities Rocket

Thursday, 14 December 2006

Source: Business Report (South Africa)

The commodity price boom continues to boost South Africa's exports to the US, as well as those of major energy exporters such as Nigeria and Angola.

In the nine months to September, South Africa exported $5.6 billion (R39.3 billion) worth of goods to the US, almost as much in value as total exports in 2005. The pace of growth over the comparable period last year accelerated to 30 percent from 29 percent in the eight months to August and 25 percent in the six months to June.

Only $1.3 billion of local exports were imported into the US under the African Growth and Opportunities Act (Agoa).

Designed to liberalise trade with 37 sub-Saharan countries, Agoa removed US import duties from about 7 000 products, expanding the benefits available only under the generalised system of preferences programme. It will run to 2015.

The biggest South African export was "minerals and metals", worth $3.9 billion in the nine months, compared with $2.9 billion. And much of the growth came as a result of higher commodity prices.

Roger Baxter, a Chamber of Mines economist, said that major exports to the US within that category were "diamonds, platinum group metals and probably specialised metals like titanium, which is used in alloys". He said the US made up more than half the global market for gem diamonds.

Prices for diamonds are not readily available. But an indication of the price effect comes from the production-weighted basket of platinum group metals. "The average price for 2005 was $768, compared with $1 096 in the first six months of 2006," said Baxter.

Another indication is the gold price, which rose from an average $445 in 2005 to $591 in the first half of this year.

Baxter said prices since had remained at similar levels.

Another sector showing strong growth is transportation equipment, though the proportions are much smaller: 67 percent growth to $471.9 million.

The "motor vehicle and parts" subsector did even better. Eckart Naumann, an economist and associate of the Trade Law Centre of Southern Africa, describes the $392 million worth of exports in the nine months as "excellent - exceeding comparative figures for 2005 by 84 percent and even full-year 2005 figures by 36 percent".

However, not all sectors flourished. Exports of "textiles and apparel" shrank from $81 million to $64 million, although around "half of these products benefit from duty-free access under Agoa", said Naumann.

According to Naumann, countries whose textile and apparel exports have benefited most are Lesotho, Kenya, Madagascar and Swaziland.

South Africa's relatively poor performance is because the rules of origin relating to these products are stricter for South Africa than for countries that are classified as "less developed". Concessions allowing them to source fabric from anywhere in the world give them a competitive advantage.

A crucial piece of legislation extending these concessions to 2012 has just been passed by the US senate and House of Representatives, paving the way for it to be signed into law by US President George W Bush.

In the reporting period, Nigeria was by far the region's biggest exporter to the US - with $21.9 billion - almost entirely comprising energy-related products and almost all of it under Agoa.

The Agoa.info website says: "Nigeria, mainly through its oil exports, accounts for over half of all exports shipped under this trade programme."

Naumann said: "Nigeria was followed by Angola, with $8.7 billion, also almost entirely energy-related and under Agoa.

"Of the 37 Agoa beneficiaries, South Africa's exports to the US are by far the most diversified," he said.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of South Africa’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.