Extend Agoa, urges SA

Monday, July 28, 2014

Pretoria - South Africa wants the African Growth and Opportunity Act (Agoa) to be extended for a 15-year period.

“Our views as South Africa are very similar to the views of Africa, Agoa eligible countries. We believe that Agoa has been a useful platform for cooperation between Africa and the US, and we are calling for an extension for 15 years,” Trade and Industry Minister Dr Rob Davies said on Monday.

Briefing reporters ahead of next week’s United States–Africa Leaders’ Summit (USALS), Minister Davies said the summit will be held in two parts, with one aspect focusing on trade and investment and the other focusing on security and human development.

President Jacob Zuma will lead a delegation to USALS, which includes Minister Davies and International Relations and Cooperation Minister Maite Nkoana-Mashabane, among others. USALS will take place from 4 - 6 August and will include an Agoa ministerial meeting.

Agoa provides trade preferences for quota and duty-free entry into the United States for certain goods.

South Africa would like to see itself included in the rollover of Agoa, which expires in 2015.

The extension, said the minister, should be for a 15-year period as a shorter timeframe will create uncertainty.

“An extension of 15 years will allow certainty for investments that are going to be made in African countries to take advantage of the Agoa opportunities. We believe that a rollover for that period of time on more or less the existing architecture would be a mutually beneficial and developmental decision that could be taken by the US,” he said.

On a question of South Africa’s possible exclusion from Agoa because of its perceived middle income status, Minister Davies said government is arguing for South Africa’s inclusion.

“At this point in time, we are arguing for South Africa’s inclusion. One of the points we’ve made is that what will be the alternative if we are left out? As SACU [Southern African Customs Union] some years ago, we explored the possibility of a Free Trade Agreement (FTA) and we all decided, including the US, that that wasn’t really going to work, given the different levels of development and the non-existence of policies in some of our fellow SACU countries on some of the matters that the US was seeking commitments on,” he said.

The impact of South Africa’s exclusion from Agoa -- which was signed into law in May 2000 -- would not be a “train smash”, but there would be a jobs capacity in some parts of the South African economy that would be affected.

“We sometimes do confront the reality that people at the level of [US} Congress won’t look at this line by line and our approach has always been to suggest that people look at this holistically. The existing trading relationship with the US, including Agoa, has supported a growing, diversified and relatively balanced trading relationship.

When negotiating any kind of trade agreement, South Africa does so as SACU.

“We don’t do it as South Africa on its own. Our argument would be that this is big differentiation between us and will undermine the coherence of SACU if there are to be suggestions that we have a supposedly a bigger and stronger economy. We have an economy that is characterised by high levels of unemployment, poverty and inequality,” said Minister Davies.

Future of Agoa

At the summit, South Africa will be expecting to hear the US views on the future of Agoa, which is the decision of the US Congress.

Figures of bilateral trade between SA and the US have shown consistent growth. In 2009, the combined trade between the two countries was R88 billion and increased to R130 billion in 2013.

“It’s reasonably balanced. Our view is that this relationship has been underpinned by Agoa and therefore this is an arrangement that isn’t broken and doesn’t need fixing. It needs to be continued,” Minister Davies said.

There are about 600 US companies that are active in the South African market.

On the question of labour unrest in the country, Minister Davies said he doesn’t think the issue will directly be dealt with in Agoa.

“In terms of investments and not just US investors but other investors, it is an issue that we have to talk to from time to time. Mostly in the manufacturing space that we are involved and where we look at value added activities, I haven’t seen a single investor that has said that because there is a labour situation in South Africa, we are withdrawing,” said the minister.

His comments come on the back of the five-month-long strike in the platinum sector.

“That has not happened and instead, the pipeline has been increasing. We had one extraordinary strike in SA, in the platinum sector, [but] it doesn’t mean that when we have other strikes [they] are going to be five-month strikes. The government seeks to do what can be done to facilitate the conclusion of strikes. We are monitoring them,” he said.

The summit will include a Congressional Reception and a Business Forum culminating in the heads of state meeting. – SAnews.gov.za