TRALAC - Trade Law Centre

SA hopes for expanded AGOA coverage, but prioritises extension

Wednesday, 29 August 2012

Source: Engineering News (South Africa)

Besides seeking an extension of the Africa Growth and Opportunity Act (Agoa) beyond its current expiry date of September 30, 2015, and ensuring South Africa’s continued inclusion under any new arrangement, the Department of Trade and Industry (DTI) has also identified a list of products that it would like to see covered by the non-reciprocal trade agreement.

At present, about 43% of South African exports to the US enter under the Agoa programme.

In response to a Parliamentary question, Trade and Industry Minister Dr Rob Davies says it is working with domestic industry to expand Agoa’s coverage to include canned apricots, which face duties of 29.8%; canned peaches (17%) and electrolytic manganese metal powder (14%).

It is also engaging with the US on the removal of non-tariff barriers, relating primarily to food safety standards that affect the export of South African-grown subtropical fruits, such as litchis, avocadoes and mangoes.

However, Davies has indicated previously that, while expanded coverage would be first prize, South Africa’s main aim was to ensure that US lawmakers were convinced that Agoa was worth extending and that South Africa remained a beneficiary.

Government took advantage of the recent visit by the US Secretary of State Hillary Clinton to reiterate its call for the US administration to work to ensure there is an early announcement of the extension of Agoa.

“We argued that it in the interest of South Africa, the US and the Southern African region that the programme retain its current architecture and that an early announcement would avoid the uncertainty that could undermine the confidence of exporters and investors who take advantage of Agoa,” Davies has written.

Under Agoa, South African exports to the US increased from $3.5-billion in 2001 to $5-billion to 2011. Government estimates that the Act’s contribution to South African manufacturing gross domestic product and employment in 2010 was 2.78% and 11% respectively.

The autmotive sector accounts for 42% of total exports, followed by iron and steel (22%), chemicals (12%) and beverages (2%).

However, South Africa’s ambassador to the US Ebrahim Rasool has warned that the extension of Agoa and South Africa’s continued inclusion is not a certainty and has called for a broad-based lobbying effort to highlight the Act’s benefits to the US, as well as Africa.