Bid to keep trade policy status with US ahead of Clinton tourPosted on Tuesday, August 7th, 2012 by Parker, Alexander (BDlive, Johannesburg) in News
South African negotiators were scrambling ahead of US Secretary of State Hillary Clinton’s visit this week to ensure South Africa remains a beneficiary of the US African Growth and Opportunity Act (Agoa) after it expires in 2015.
If South Africa were to be excluded from the act, it would have serious implications for players in the local motor and motor components industries, among others.
Under the act, African countries have been granted tariff-free access to the US market, with widespread implications for apparel manufacturers on the continent. Locally, companies exporting cars and car parts to the US have also fallen under the act.
Both Trade and Industry Minister Rob Davies and director-general Lionel October confirmed on Friday that elements within the US Congress were questioning South Africa’s continued involvement in the act. “They think we’re too developed,” Mr October said, and the fact that “the World Trade Organisation classifies us as industrialised” was not helping the cause.
Mr October said South Africa’s ambassador in the US, Ebrahim Rasool, was working hard to ensure the positive story of the act in South Africa was being told.
Peter Draper, of the South African Institute of International Affairs, said “there have been rumblings over the years concerning whether South Africa should be part of Agoa. South Africa’s economy is much more diversified and the scheme was devised for the very poorest and some argue we should graduate from it.”
Prof Draper said there “have also been rumblings from US industrial and agricultural groups who want certain products excluded, or South Africa totally out” of the act. He said the view that South Africa was “anti-US and pro-China” was “gaining currency”.
Mr Rasool was quoted by Sapa as saying the “consequences for our companies and our country would be enormously unfavourable” should the act, and South Africa’s participation in it, not be continued after 2015.
He said South Africa’s membership of the Brazil, Russia, India, China, South Africa (Brics) group was problematic. “There is a feeling that South Africa, having joined Brics, is in another league and does not qualify.”
Mr Davies said on Friday there was “still a lot of time” for discussion. “Africa is on the cusp of a wave of industrialisation. It is the next growth frontier, and the US has lots of goodwill as a result of Agoa.”
The implications of South Africa being excluded from the act could be significant for the motor industry. US ambassador Donald Gips said South Africa exported more than $2bn worth of cars to the US last year.
BMW SA MD Bodo Donauer said South Africa’s exclusion “would mean we would need to reconsider our export strategy to the US”. “Seeing as this market accounts for 50% of our total volume it would have a significant impact on our business.”
Communications manager Guy Kilfoil said the company’s business with the US was “worth 30,000 cars a year”.
Mercedes-Benz SA exports left-hand drive models to the US.
Roger Pitot, of the National Association of Automotive and Component and Allied Manufacturers, said on Friday the extension of the act “is very important”. Mr Pitot said 11%-12% of South Africa’s component exports went to the US.