South Africa and US agree to build trade ties
21 April 2015
South Africa and the United States have agreed to strengthen and deepen their
bilateral trade and investment relations following the Trade and Investment
Framework Agreement (Tifa) Council meeting in Washington DC.
The gathering was co-chaired by Trade and Industry Minister Rob Davies and the
United States Trade Representative, Michael Froman. The two countries signed a
revised Tifa in 2012. It is a key platform to address bilateral concerns and boost
bilateral trade and investment relations.
Davies and Froman had fruitful and constructive discussions on the Africa Growth
and Opportunity Act (Agoa), outstanding market access issues and the investment
climate, as well as on issues on the multilateral trade agenda.
Regarding market access, Davies said South Africa would work towards concluding
poultry discussions soon. Under the proposed deal, US chicken bone-in cuts exports
to South Africa would be restored to their
value prior to 2000 with a growth factor
that took into account current dynamics in the South African market.
The outstanding issue is for the poultry associations from both sides to agree on the
quantity of US chicken on which anti-dumping duties would be excluded.
The South African and US poultry associations met last week on the margins of
International Egg and Poultry meetings in Europe and the Department of Trade and
Industry expected the South African Poultry Association to table an improved offer
that may lead to a deal being finalised.
The Tifa Council meeting also noted growth in investment relations and committed
to work together in continuing to improve the business and investment climate in
the two countries.
Agoa extension
Following the council meeting, the Senate Finance Committee and the House Ways
and Means Committee introduced the AGOA Extension and Enhancement Act of
2015, proposing reauthorisation of
Agoa, including South Africa. It also proposes the
extension of the third country fabric provision for 10 years.
The bill is not final as it needs to be taken through Congress for approval and then
signed by President Barack Obama. The bill has also introduced conditionalities that
will allow the US to review the country's eligibility at any time.
The US is South Africa's third largest trading partner; their bilateral trade and
investment relations are guided by the Tifa, which was initially signed in 1999.
Agoa, a non-reciprocal preferential scheme, is the cornerstone of bilateral relations
between the US and sub-Saharan Africa. It provides the sole platform between the
US and the region to discuss ways and means to deepen trade and investment
relations.
The legislation was approved by the US Congress in May 2000 and it expires in
September this year. South Africa and other sub-Saharan African countries are
calling for a 15-year renewal
of Agoa for all eligible countries without
conditionalities. It provides duty-free market access to the US for qualifying sub-
Saharan African countries by extending preferences on more than 4 600 products.
The numbers
Total two-way trade between South Africa and the US increased from R56.7-billion
in 2001 to R141-billion in 2014. Bilateral trade recovered beyond the pre-crisis
figure of R127-billion in 2008 (which declined to R83-billion 2009).
South Africa's exports to the US grew from R30-billion in 2001 to R69.8-billion in
2014. US exports to South Africa grew from R26.6-billion to R71-billion in 2014.
Both exports and imports have recovered beyond their pre-crisis level.
South Africa's top exports were vehicles and associated transport equipment
(representing 27% of total exports to the US), precious metals (23%), base metals
(11%), mineral products (9%), and chemical or allied industries (16%).
The US's top exports to
South Africa were machinery and mechanical appliances;
vehicles, vessels and aircrafts; chemical products; plastics and optical and medical
equipment.
Sub-Saharan Africa Agoa exports increased from $12.4-billion (about R151-billion)
in 2000 to a peak of $79.7-billion in 2008. However, in 2012, exports declined to
$43-billion and again to $34-billion in 2013, largely as a result of a decline in oil
exports.
Source: Department of Trade and Industry
The US is by far the largest destination for South Africa’s automotive manufacturing sector. (Image: Brand South Africa )
