TRALAC - Trade Law Centre

SA trade surplus with US grows by a 'sterling' 80%

Monday, 14 February 2011

Source: The New Age (South Africa)

South Africa’s trade surplus with the US grew by 80.7% in 2010 to $2.58bn (R18.83bn) from $1.436bn in 2009. That is according to the latest data from the US Bureau of Economic Analysis.

This sterling performance was due to a 39.6% rise in South African exports to the US to $8.2bn, while South African imports of American goods increased by 26.4% to $5.6bn.

Trade between the US and South Africa has expanded dramatically since the passage of the African Growth and Opportunity Act (AGOA) in 2000, which significantly enhanced access to the American market for sub-Saharan African (SSA) countries. The Act originally covered the eight-year period from October 2000 to September 2008, but amendments signed into law in July 2004 further extended AGOA to 2015.

Duty-free access to the US market covers about 7000 product tariff lines, including the roughly 1800 product tariff lines that were added by the AGOA legislation.

Notably, these include items such as clothing and footwear, wine, certain motor vehicle components, a variety of agricultural products, chemicals and steel.

American exports to South Africa far exceed US exports to any other country in the SSA, emphasising the importance of US access to the South African market.

In terms of SSA exports to the US, South Africa’s exports rank third after those of Nigeria and Angola which are mainly oil, whereas South Africa’s exports to the US are widely diversified.

The main export items were cars and minerals. Total South African new vehicle exports to all countries in 2010 were 239456 units, a 36,9% rise on 2009, helping manufacturing production to grow by 4.9% in 2010, the strongest annual increase in the past decade.

The manufacturing sector added 70000 jobs in the fourth quarter of last year. The government has set itself a target of creating five million new jobs in the next decade.

Manufacturing is one of the sectors expected to provide some of these jobs, as the government helps with incentives under the Industrial Policy Action Plan 2. These include R20bn in tax allowances for investments that help expand manufacturing capacity.

Mining production also benefitted from American demand for our minerals and increased by 6.5% in 2010 after four consecutive years of declining mining production. The improvement in volumes and prices is reflected in the rise in the value of mineral sales from R19bn in January to R27bn in November 2010.

This helped South Africa to a R32bn swing in its foreign trade balance to a R5bn surplus in 2010 compared with a R27bn deficit in 2009, according to figures from the South African Revenue Services (SARS).

Conventional wisdom is that a strong rand constrains exports and boosts imports, but the evidence shows that higher export growth than import growth resulted in a stronger Rand as exports rose by 14.9% in 2010 to R590bn, while imports grew by only 8.1% to R585bn.



“ 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.