SA trade with North America
United StatesThe United States is South Africa's biggest single trading partner. Total trade between the two countries has been increasing steadily in recent years, with South Africa holding an increasing trade surplus since 1999. This amounted to just under $1.5-billion in 2001, growing slightly in 2002.
US exports to South Africa far exceed US exports to any other country from Sub-Saharan Africa (SSA), emphasising the importance of access to the South African market.
South Africa is beneficiary of the US's Generalised System of Preferences (GSP) which grants duty-free status to some 4650 goods. South Africa also signed the Trade and Investment Framework Arrangement (TIFA) with the US in 1999, which addresses private sector concerns requiring government interventions. Trade issues are also addressed at the SA-US Bilateral Co-operation Forum.
Trade with the US has been significantly boosted by the Africa Growth and Opportunity Act (Agoa) which allows duty-free access of exports – about 1 800 product lines - into the US. In July US President George Bush signed the Agoa Acceleration Act of 2004. The Act extends the deadline for the termination of Agoa benefits from 2008 to 2015.
For some the extension has come as a relief, after stalled negotiations for a free trade deal between the Southern African Customs Union (Sacu) and the US.
A free trade agreement would mean expanded market access for local brands into the US and have a significant impact on the country's exporters. The US market is valued at more than $9-trillion.
A wide range of South African industries stand to benefit from the agreement, in particular the textile, clothing, vehicle manufacturing and agricultural sectors.
Agoa
Exports falling under AGOA amounted to $1.3-billion in 2002, compared to $923-million in 2001.
At the signing of the Agoa Acceleration Act, Bush said: "There's a growing consensus in both Africa and the United States that open trade and international investment are the surest and fastest ways for Africa to make progress … For too many years, the world's efforts to promote Africa's development were focused on aid. Development aid is important … But as Uganda's President Museveni has said, 'By itself, aid cannot transform societies. Only trade can foster the sustained economic growth necessary for such transformation.'"
The first two SSA countries to be approved under Agoa were Mauritius and Kenya, followed by South Africa, Madagascar and Lesotho. However, the number of countries is continually changing as more are granted approval under the Act.
At present, one of the major benefits is that Agoa gives a major boost to the clothing manufacturing industry in South Africa. Various categories of duty-free access for clothing articles are provided for. These can be summarised as follows:
- Duty-free and quota-free access for clothing manufactured in SSA from fabric wholly formed and cut in the US from yarns wholly produced in the US;
- Duty-free and quota-free access for clothing manufactured in SSA from fabric wholly formed in the US and assembled from thread formed in the US;
- Duty-free access for clothing manufactured in SSA from fabric manufactured in SSA from yarn originating in the US or SSA, but subject to a quota equivalent to 1,5% in year 1, rising in year 8 to 3,5% of the value of total clothing imports into the US;
- Duty-free access for clothing manufactured in lesser-developed SSA countries, regardless of the origin of the fabric up until September 2004 and subject to the above quota;
- Duty-free and quota-free access for sweaters of cashmere or of 18,5 micron or finer wool, knit-to-shape in SSA;
- Duty-free and quota-free access for clothing manufactured from fabric or yarn not available in commercial quantities in the US; and
- Duty-free and quota-free access for hand-loomed, hand-made and folklore articles. Certain concessions are provided for in the case of the use of foreign origin interlinings, finishings and trimmings in the manufacture in SSA of clothing as long as the value of these items does not exceed 25% of the value of the clothing article.
Another concession is that non-US or non-SSA fibre and yarn is permitted in the manufacture of clothing up to 7% by weight of the garment.
Canada
Although as far as trade goes a minnow compared to the US, trade and investment with Canada has been steadily growing since 1994. In 2002 bilateral trade amounted to R4-billion per annum.
A Trade and Investment Co-operation Arrangement was signed in 1998 with the aim of enhancing bilateral trade and investment. South Africa is also the beneficiary of Canada's General Preferential Tariff (GPT). GPT allows duty-free or reduced rates for a number of exports to Canada, most notably clothing and textiles.
Mining is the key to the economic relationship, with trade in raw materials, mining equipment, technology and services predominating. New growth is being seen in the fields of agroprocessing and Information Communication Technologies (ICTs).
In support of Nepad, Canada scrapped tariffs for least-developed countries and created a C$500-million Fund for Africa. The fund is now fully allocated to specific activities and is well into its implementation phase.
The fund sees itself as responding to the need for more investment to spur economic growth, reduce poverty and support social programs throughout the continent.
Working closely with African institutions, governments, community organizations and private sector groups, and reflecting the "African priorities in agriculture, water and environmental management", the fund supports initiatives that deal with some of the most developmental critical issues: HIV/Aids, peace and security, good governance and poverty.
SouthAfrica.info reporter
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