African Growth and Opportunity Act (AGOA) boosted bilateral trade between the United States of America and South Africa, and the impact of the Act on the country’s balance of trade
FOR WRITTEN REPLY
QUESTION NO: 232 (NO2421E)
PUBLISHED IN QUESTION PAPER NO: 7-2013 OF 21 AUGUST 2011
MR E. SULLIMAN (ANC) TO ASK THE MINISTER OF INTERNATIONAL RELATIONS AND COOPERATION:
a) How has the African Growth and Opportunity Act (AGOA) boosted bilateral trade between the United States of America and South Africa – and (b) what impact has the Act had on this country’s balance of trade?
a) There are significant tariff reductions for the wide range of products covered by AGOA and South Africa is able to take up the opportunities offered by AGOA due to the diversified nature of our economy. Manufactured goods are one of the beneficiaries of AGOA, most notably automobiles. Our exports to the USA are different from those of other developed country markets in that a significant proportion is manufactured goods.
In 2012, major AGOA-beneficiary sectors in South Africa included vehicles (accounting for 56% of total exports), mineral and metals (23%), chemicals (12%), and agricultural products (7%). Collectively, these sectors accounted for 98% of total South Africa’s AGOA/Generalised System of Preferences (GSP) exports in 2012.
AGOA is due for renewal in 2015 and it is our view that it would be important for South Africa to be included in that renewal, given the very significant benefits that it offers us.
a) Trade with the USA is currently evenly balanced, with exports totalling R83.4 billion in 2012 and imports totalling R61 billion in the same year. Were it not for AGOA, that balance would be skewed in favour of imports, since the tariffs that would then be applicable to our exports, especially our manufactured exports, which would tend to discourage those products. Two-way trade was valued at R122.7 billion in 2012, up 4% from R118 billion in 2011. This indicates that bilateral trade has recovered and is now 1% below the level of R123.7 billion in 2008, at the onset of the global financial crisis.
The issue is a complex one and I would refer the honourable Member to a study by the Trade and Industrial Policy Strategies (TIPS) for a very detailed (135 page) study called “Benefits of AGOA to South Africa”, published in 24 April 2013, for a detailed examination of the issue.