TRALAC - Trade Law Centre

South African car export boom sharpens AGOA focus

Thursday, 27 August 2015 Published: | ED STODDARD AND DANIEL FLYNN

Source: Business Day (South Africa)

SA’s car exports to the US soared in value from $289m in 2001 to $1.4bn last year, making the country an African Growth and Opportunity Act (Agoa) success story.

SA could reap even more benefits from the exchange rate.

This highlights what is at stake if it were to be excluded from Agoa, which Washington renewed for a decade in June.

However, the US trade representative’s office is conducting an out-of-cycle review of SA’s participation, centred on the country’s draft intellectual property regulations and the access of the US beef and pork farmers’ market to SA, among other issues.

Trade and Industry Minister Rob Davies is in Libreville‚ Gabon, attending the 14th Agoa forum, where more than 30 sub-Saharan African states will thrash out how best to derive sustainable benefits from the preferential programme for nearly 6,400 tariff lines — including those stipulated in the generalised system of preference.

Mr Davies is also scheduled to hold talks with US Trade Representative Michael Froman, Congressional delegations and undersecretary for economic growth, energy and the environment Cathy Novelli.

On Wednesday, Mr Davies was at pains to stress that SA had made "tremendous progress in addressing issues that were raised by the US and, therefore, our country continues to adhere to the Agoa eligibility requirements".

"On June 24 2015, the Cabinet took a decision to lift a trade restriction on cattle and products of bovine origin from countries that previously reported bovine spongiform encephalopathy, including the US. Minister (Senzeni) Zokwana has written to his US counterpart, secretary Tom Vilsack, on August 6, to announce that SA has lifted trade restrictions on cattle and products of bovine origin from the US," said Mr Davies.

Washington hopes that the 10-year renewal, rather than the usual three years, will give investors the clarity and certainty needed to make long-term decisions such as building factories.

However, less developed economies on the continent may struggle to do so.

At the Libreville forum, the Gabonese employers confederation’s secretary-general bemoaned the fact that the central African state lacked goods manufactured to meet US standards.

A fresh US trade pact could provide relief to economies on the continent buffeted by the commodities slump, but a failure to reform has left many countries unable to profit from tariff-free access to the world’s largest market.

Under the deal, first signed in 2000, African exports to the US rose to $26.8bn by 2013, but more than four-fifths of that was oil.

But US demand for petroleum imports has fallen because of its shale revolution, and commodities prices across the board have been hit by China’s slowdown — the blow to African economies highlights their failure to industrialise.

The World Bank forecasts that gross domestic growth in sub-Saharan Africa will slow this year to 4.2%, down from an average of 6.4% during 2002-08.

Despite a decade of rapid growth, sub-Saharan Africa’s manufacturing sector remained weak. While exports more than quadrupled to $457bn in the decade to 2011, manufactured goods made up just $58bn.

Although it is the most industrialised economy on the continent, even in SA commodities accounted for about 57% of its exports last year.

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