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