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Aug 17, 2012

SA’s Brics status not a ‘stigma’, US says as it weighs Agoa’s future

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South Africa’s member- ship of the Brics bloc, whose other members are Brazil, Russia, India and China, should not prejudice its future inclusion as a beneficiary of the market-access benefits that would flow from any extension of the Africa Growth and Opportunity Act (Agoa) beyond September 30, 2015, a senior US government official has insisted.

Department of State Undersecretary for Economic Growth, Energy and the Environment Robert Hormats said Agoa had been extremely valuable, that he was strongly in favour of extending the benefits beyond 2015 and that the extension should be for longer than a period of three years.

But, speaking on the sidelines of the inaugural US-South Africa Business Summit, in Johannesburg, Hormats stressed the administration could not extend Agoa in its present form and that it was, thus, important to begin a conversation with US lawmakers on how to extend Agoa and firm up the countries that should be covered.

T

he future status of the Act, which extends duty-free access to African products on 6 400 tariff lines, should also be confirmed well ahead of the deadline to create certainty.

Hormats argued that South Africa’s partici- pation in Brics held “no stigma” for the US government, which believes that the country had “every right” to participate in inter- national partnerships.

For its part, South Africa is keen for Agoa to be extended intact for a period of up to ten years.

However, South Africa’s ambassador to the US, Ebrahim Rasool, has warned that South Africa should not be complacent in anticipating Agoa would be extended automatically.

He has also cautioned that the key sectors, such as South Africa’s automotive industry, which exports vehicles and parts to the world’s largest economy, would be disadvantaged should the county fail to safeguard an extension of Agoa and secure its own future role as a beneficiary.

In 2011, South Africa exported $9.5-billion to the US and imported $7.3-billion in return. Total bilateral trade rose to a record $16.8- billion.

Speaking at the summit, South Africa’s Trade and Industry Minister, Dr Rob Davies, stressed that the country hoped that Agoa would be extended and expanded after 2015.

He said that, while Africa had benefited directly from the Act, it had also generated “goodwill” towards the US at a time when a number of other “dynamic” companies and countries were increasingly taking note of the economic opportunities the continent had to offer.

It would also complicate trade relations, Davies added, if a country such as South Africa were excluded, while remaining a member of a regional bloc, such as the Southern African Development Community, that included Agoa beneficiary countries.

Secretary of State Hillary Clinton said the US was alive to the opportunity that Africa’s growth presented for its citizens, as well as American businesses.

She said the US would seek a sustainable partnership in Africa that would add value rather than extract it.

To achieve that goal, public–private partnerships were critical, while ties would need to be strengthened between American and African businesses.

It was a global economic “imperative” for the US and South Africa to work together on the creation of jobs “in both countries”.

Edited by: Martin Zhuwakinyu
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