By: Meluleki Nzimande

The US Africa Growth and Opportunity Act (Agoa) has benefited South Africa and sub-Saharan Africa enormously since its introduction in 2000.

The South African government and business leaders need to maximise the effectiveness of their lobbying in a con- certed effort that will result in the Agoa being extended when it expires in 2015.

This piece of preferential trade legis- lation – which is due to expire in 2015 but for whose extension the South African government and business leaders must lobby – has considerably assisted several South African business sectors over the past 13 years.

Our motor vehicle manufacturing industry is a prime example of an industry sector that has benefited significantly from Agoa. It would be a blow for the industry if Agoa is not extended. There is an urgent need for intensive negotiations and consultation to take place following US President Barack Obama’s recent visit to South Africa in order to increase the likelihood of the legislation being extended. This is parti- cularly important in light of the belief held by some in the US that South Africa, being a middle-income eco- nomy, should be excluded from Agoa. A clear message needs to be communicated to members of US decision-makers, particularly the US Congress, that it is in the interest of the US and South Africa for Agoa to be extended.

It was encouraging to see that the Department of Trade and Industry used the occasion of Obama’s visit to lobby for the extension of Agoa. Trade and Industry the Minister Rob Davies has said that this lobbying will continue in Washington later this year, when officials from the department plan to engage directly with members of the US Congress, Senators and lobbyists.

When it came into effect in October 2000, Agoa covered an eight-year period – to September 2008 – but amendments signed into law by former US President George W Bush in July 2004 extended Agoa to 2015.

South Africa is one of about 40 sub- Saharan African countries that benefit from Agoa, which was designed to build on the Generalised System of Preferences (GSP) programme, providing duty-free access to US markets for a wide range of goods and products.

About 7 000 product tariff lines are covered by Agoa/GSP preferential provisions, including items such as apparel, footwear, motor vehicles, agricultural products, chemicals and steel.
According to AGOA.info, a website that deals with facts and figures relating to Agoa, in 2012, South Africa’s trade with the US showed a positive balance for South Africa – to the value of $1.6-billion. In 2010, the positive trade balance was $2.9-billion and in 2011 it was $2.6-billion, indicating the cumulative extent of the benefit for South Africa and several industry sectors.

Demonstrating how important Agoa is for sub-Saharan Africa, in 2011 the positive trade balance for the African countries included in the programme was $512.8-billion, with exports to the US totalling $71.1-billion far outweighing imports of $19.3-billion.

Bush extended Agoa by seven years, so it would be hugely beneficial for South Africa and all the other bene- fiting sub-Saharan African countries if the legislation is extended for a similar period.

Agoa also has several benefits for the US. While sub-Saharan African coun- tries are the major beneficiaries of Agoa, it is not one-sided. The US benefits from enhanced trade between itself and Africa, causing it to be seen as a good partner and opening the doors for US manufacturers to access markets on the continent.

In addition, the conditions attached to Agoa advance US efforts to promote political pluralism on the African con- tinent, the protection of intellectual capital and the protection of human and workers’ rights.

Nzimande is a partner in the mergers and acquisitions practice at Webber Wentzel and is chairperson of the law firm's transformation committee. He specialises in international trade law.