TRALAC - Trade Law Centre

South Africa: Government and business leaders need to lobby for United States to extend AGOA

Thursday, 27 June 2013 Published: | Webber Wentzel (South Africa)

Source: Webber Wentzel (South Africa)

AGOA has benefitted South Africa and Sub-Saharan Africa enormously since its introduction in 2000. The imminent arrival of US president, Barack Obama, on a state visit to South Africa is a perfect opportunity for government to discuss its extension when it expires in 2015.

South African government and business leaders need to maximise the effectiveness of their lobbying in a concerted effort that will result in the U.S. government’s African Growth and Opportunity Act (AGOA) being extended when it expires in 2015.

This is the view of Webber Wentzel partner and international trade law specialist, Meluleki Nzimande, who believes that the preferential trade legislation has considerably assisted several South African business sectors over the past 13 years.

“Our motor vehicle manufacturing industry is a prime example of an industry sector that has benefitted significantly from AGOA. It would be a blow for the industry if AGOA is not extended again,” said Nzimande, stressing the need for intensive negotiations and consultation to take place during and after President Barack Obama’s visit to South Africa in order to increase the likelihood of the legislation being extended. This is particularly important in light of the belief held by some in the U.S. that South Africa, being a middle income economy, should be excluded from AGOA. A clear message needs to be communicated to U.S. decision makers, particularly the U.S. congress, that it is in the interest of the U.S. and South Africa for AGOA to be extended.

When it came into effect in October 2000, AGOA (as it is colloquially known) originally covered an eight year period until September 2008, but amendments signed into law by former U.S. President George W Bush in July 2004, extended AGOA until 2015.

South Africa is one of around 40 Sub-Saharan African countries that benefit from AGOA which was designed to build on the Generalised System of Preferences (GSP) programme, providing duty-free access to U.S. markets for a wide range of goods and products.

Around 7,000 product tariff lines are covered by AGOA/ GSP preferential provisions including items such as apparel, footwear, motor vehicles, agricultural products, chemicals and steel.

According to AGOA.info, a website that specifically deals with facts and figures relating to AGOA, In 2012, South Africa’s trade with the U.S. showed a positive balance for South Africa to the value of $US 1.6 billion. In 2010, the positive trade balance was $US 2.9 billion and in 2011 it was $US 2.6 billion, indicating the cumulative extent of the benefit for South Africa and several industry sectors.

Demonstrating how important AGOA is for Sub-Saharan Africa, in 2011 the positive trade balance for the African countries included in the programme was $US 512.8 billion with exports to the U.S. of $US 71.1 billion far outweighing imports of $US 19.3 billion.

“President G.W. Bush extended AGOA by seven years, so it would be hugely beneficial for South Africa and all the other benefitting Sub-Saharan African countries if the legislation can again be extended for a similar period,” said Nzimande, adding that AGOA also has several benefits for the U.S.

“While Sub-Saharan Africa countries are the major beneficiaries of AGOA, it is not one-sided. The U.S. benefits from enhanced trade between itself and Africa, causing it to be seen as a good partner and opening the doors for U.S. manufacturers to access markets on the continent.”

In addition, Nzimande said the conditions attached to AGOA advance U.S. efforts to promote political pluralism on the African continent, the protection of intellectual capital and the protection of human and workers’ rights.

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