THE director-general of the Department of Trade and Industry, Lionel October, says that while the public endorsement of an extension of the African Growth and Opportunity Act (Agoa) by US Secretary of State Hillary Clinton this week was "very helpful", South Africa will now have to turn its attention to lobbying the US Congress after the US election later this year.
South Africa is pushing for full inclusion in Agoa, amid a hardening of attitudes with sections of the US economy reportedly arguing that, as a mid-income country, South Africa should be excluded.
"It is the first time we have had a full public statement and that really helps to know we have the Democratic Party on our side. We now need a full, vital lobbying campaign for congress when it reconvenes next year after the election," Mr October said following this week’s meetings.
As well as an extension of the agreement, which expires in 2015, South Africa wants benefits to be further extended to scrap restrictions on rules of origin in the case of clothing and apparel.
At present, the agreement allows for certain products manufactured here to be imported duty-free into the US. The biggest beneficiaries are the automotive sector, automotive components, steel and some processed agricultural products.
In the case of clothing and apparel, only goods in which both the raw material and finished product originate in South Africa, qualify under Agoa.
A nonrenewal of Agoa would be disastrous for South Africa’s automotive industry. Half of BMW’s exports are to the US, while it is the sole destination for exports of South Africa-built Mercedes-Benzes.
Xavier Carim, deputy director-general for trade and economic development, said a number of opportunities for engaging with the US Congress and administration were anticipated. A bilateral meeting with the US on the trade and industry framework agreement was scheduled and an Agoa forum, which brings together all the beneficiary countries, is planned for June 2013.
South African ambassador to Washington Ebrahim Rasool would play a key role in networking with beneficiary countries and in engaging the US administration. "Through that process, we start to identify which congressmen and women are supportive," Mr Carim said.
He said that while the new Congress would decide Agoa’s future, it was encouraging that "there is widespread support and the US sees the arrangement as being in their national interest".
"It is a mutually beneficial, virtuous arrangement. It benefits our exports but it also benefits the US because it gets competitive imports and consumers benefit from that."
Also working in South Africa’s favour is the established relationship that has developed between officials in both administrations, who have now worked co-operatively for a long time.
"The administration has got very good at understanding South Africa’s history. So they recognise the importance of policies such as black economic empowerment and policies to build a broader industrial base," he said.
The question of political risk, which has begun to be raised as a concern by some US-based ratings agencies, was not raised at all, he said.
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