TRALAC - Trade Law Centre

US firms lobby for South Africa to stay in AGOA

Wednesday, 02 October 2013 Published: | MAX GEBHARDT

Source: Business Day (South Africa)

The South African chapter of the American Chamber of Commerce (AmCham South Africa) has joined in the lobbying for South Africa to be included in the next round of the African Growth and Opportunity Act (Agoa), which is set to expire in 2015.

There have been talks in Washington as to whether South Africa should be included in the next round of Agoa should its extension be approved by Congress. South Africa’s continued participation is being questioned, as it is no longer deemed a poor country but a middle-income economy.

President of AmCham South Africa and CE of Ford Southern Africa Jeff Nemeth said calls for South Africa to be excluded will negatively affect the strides the country has made and would limit the access that US firms have to Africa’s network.

In 2011, US goods imports from sub-Saharan Africa under Agoa and the related programmes totalled $70.6bn, up 59% from 2010.

This is more than five times the amount in 2001 when the act was first signed into law by former US president Bill Clinton.

South Africa’s inclusion into a new round of Agoa was given a boost earlier this year when President Barack Obama gave his support for the country to remain part of it. "The support of the White House is very important, but ultimately it is Congress and the Senate that will make the decision," said Mr Nemeth.

AmCham South Africa, along with Trade and Industry Minister Rob Davies, were recently in Washington to lobby for South Africa’s continued inclusion in the workings of Agoa.

But Peter Draper, senior research fellow at the South African Institute of International Affairs, said Mr Davies was pushing for a stay of execution as this debate will come around again in a unilateral decision by the US.

"(The) bottom line (is that) Agoa is not going to be there forever," Mr Draper said.

He said Agoa was seen as a stepping stone to a free trade agreement. Under Agoa and the Generalised System of Preferences, South African companies receive beneficial access to the US market, and South Africa reciprocated for US companies.

Mr Nemeth said there were concerns in the US about what is being traded between Africa and the US. "A large component of what has been traded under Agoa is oil and manufactured automobiles."

He said, however, that Agoa remained important as it had improved trade between South Africa and the US, and allowed the US to expand its presence and influence in sub-Saharan Africa. "Secondly, with the emergence of new key players in global economics and business, maintaining seamless trade relations with South Africa reduces the possibility of US’s influence and trade on the continent being supplanted."

Mr Nemeth said that American firms did, however, face a number of "challenges" in South Africa. "These regulatory challenges include the issuing of work permits; the implementation of black economic empowerment; intellectual property rights; and regional free trade."

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