This graph shows why the latest US trade review of South Africa is a big problem
The US plans to review South Africa’s eligibility to participate in its Generalised System of Preferences (GSP), the largest and oldest American scheme to allow duty-free imports from less developed countries.
The office of the United States Trade Representative said in an announcement on Friday (25 October), was based on ‘intellectual property protection and enforcement concerns’.
In an explanatory note put out by the African Growth and Opportunity Act (AGOA) information group, the group noted that the review is based on South Africa’s domestically controversial draft updates to copyright legislation, most notably the Performers Protection Amendment Bill and the Copyright Amendment Bill.
“A great deal of the debate on the draft laws is centred on the idea of ‘fair use’, which could effectively exempt some intellectual property from copyright payments – including the likes of expensive textbooks.
“That is one of the central complaints of the International Intellectual Property Alliance (IIPA), an umbrella organisation of American organisations, which lodged the complaint that led to the review,” it said.
Impact on trade
Trade in goods and services between South Africa and the U.S. was $18.9 billion in 2018, according to US government data.
The GSP is designed to promote economic development by allowing duty-free entry into the United States for 3,500 products from the 119 designated beneficiary countries and territories.
To remain eligible for these advantages, beneficiary countries must comply with 15 statutory eligibility criteria that are important to US interests, including taking steps to afford internationally recognised labour rights, providing adequate and effective protection of intellectual property rights, and assuring equitable and reasonable access to its markets.
The IIPA has now complained that South Africa is not meeting its obligations in protecting intellectual property, and so must be kicked out of the scheme.
While this means that South Africa will still be able to trade with the US, the loss of preferential treatment could mean that the country loses billions of rands in trade deals.
Data provided by AGOA shows that South Africa’s exports to the USA have far outweighed imports in recent years.
The trade balance between the two companies has also steadily increased in recent years, with an estimated trade balance of $2.95 billion (R43 billion).
Read: Here’s why the US is reviewing its dealings with South Africa
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