South Africa is apprehensive about striking a new trade deal with the US and would rather maintain existing relations with the world\u2019s largest economy, the nation\u2019s top trade official said.<\/p>\n
South Africa is currently party to the so-called Generalized System of Preferences and the African Growth and Opportunity Act, or AGOA, which together allow most sub-Saharan African countries duty-free access to the American market for almost 7,000 products.<\/p>\n
AGOA is due to expire in 2025, while Richard Neal, the chairman of the House of Representatives\u2019 Ways & Means Committee, has called for the GSP – the US\u2019s oldest and largest trade-preference program for the world\u2019s poorest economies – to be updated.<\/p>\n
\u201cWe are hoping we can keep the current unilateral agreement in place,\u201d Lionel October, the director-general of South Africa\u2019s Department of Trade, Industry and Competition, said in an interview last week.<\/p>\n
\u201cWe are working more on continuing GSP preferences, hopefully getting an extension to AGOA, even though we might have to give some concessions. But rather that than a full-blown trade agreement that may take four to five years to negotiate,” he said.<\/p>\n
Trade in goods and services between South Africa and America was valued at $17.8 billion in 2019, while $2 billion of exports from Africa\u2019s most-industrialized economy were cleared under the GSP and AGOA, according to U.S. government data.<\/p>\n
South African officials plan to meet their American counterparts early next month to discuss trade relations under President Joe Biden\u2019s administration, according to October.<\/p>\n
\u201cWe are planning to put a lot of effort into our relationship with the US,\u201d he said.<\/p>\n
While Kenya is negotiating a bilateral trade deal with the US, a country-to-country deal isn\u2019t an option for South Africa because it is part of a regional customs union with Botswana, Lesotho, Eswatini and Namibia.<\/p>\n
The government also fears that any new accord could be accompanied by conditions that would prejudice local industry, October said.<\/p>\n
Here are other key issues addressed by October:<\/p>\n
Local Manufacturing<\/strong><\/p>\n The government will need to maintain some form of protection for South African manufacturers if it is to build up local production capacity and create employment, according to October.<\/p>\n \u201cWe have been relying on our mining and finance sector to drive growth,\u201d he said. \u201cCountries only become successful if they have manufacturing and agriculture.<\/p>\n That is where the high-paid jobs are, it is where the mass employment is. We need protection when it is needed. Obviously you can\u2019t become uncompetitive.\u201d<\/p>\n Automobile Industry<\/strong><\/p>\n Africa\u2019s largest auto-making nation is experiencing an investment boom, with the world\u2019s biggest vehicle producers adding to manufacturing capacity.<\/p>\n Expansion plans being implemented by Ford Motor Co. will generate investment totalling R33 billion ($2.3 billion) and see the construction of 13 new factories and the overhaul of a rail link between Pretoria, the capital, and the southern coastal city of Port Elizabeth by 2025.<\/p>\n Toyota is ramping up production of its hybrid cars, while Isuzu Motors Ltd. is reviving an old General Motors Co. plant in the south of the country.<\/p>\n The government is now reaping the fruits of a 20-year effort to build up the industry, which generates almost 15.5% of the nation\u2019s exports and employs more than 100,000 skilled workers, according to October.<\/p>\n Steel Production<\/strong><\/p>\n The steel industry lies at the heart of the country\u2019s industrialization drive and a master plan to encourage output will be announced soon.<\/p>\n Demand has already been picking up, driven by an infrastructure-development drive and an expanding mining industry, with investments being made in furnaces and plants being modernized.<\/p>\n The government wants to substantially increase local participation in the steel industry, including taking up a bigger stake in ArcelorMittal SA\u2019s South African unit, October said.<\/p>\n Trade Relations<\/strong><\/p>\n A new continental\u00a0free-trade accord that came into effect this year will increase African countries\u2019 market access, encourage regional trade and promote industrialization – a goal that has been beyond the reach of most small African nations, October said.<\/p>\n South Africa intends to step up trade with Kenya, Ghana, Nigeria and Egypt, and work with them to make in-roads in the automotive sector.<\/p>\n
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