South Africa has proposed that the African Growth and Opportunity Act (Agoa) between the US and African countries be extended for a longer period of time to allow for investment in capacity building that would allow more countries and industries to take advantage of the benefits of the Act, Trade and Industry Minister Dr Rob Davies said on Monday.
The Act, which provided preferential access for imports from beneficiary African countries, would expire in 2015, while the third-country fabric provision under the Act would expire in 2012, said Davies.
He noted during a media briefing in Johannesburg, that South Africa had reinforced its position in terms of the Act during a visit to the US last week, saying that it was a significant and positive agreement for trade between the US and Africa.
However, there were questions as to what would happen once the Act expired.
There should be a long rollover of Agoa in more or less its present form, said the Minister, noting that the extension of the agreement beyond 2015 was very important, given that there were a number of potential investments in African industries, which benefit from preferences under Agoa, that would only go ahead if there was certainty around the Act’s future.
While an exact time period for the extension had not yet been proposed by South Africa, Department of Trade and Industry (DTI) director-general Tshediso Matona noted that it would not be opposed to an indefinite rollover of the Act.
Further, Davies noted it could also be beneficial if some proposed changes were made to Agoa.
This would include an extension of the product coverage, as many countries were only currently exporting apparel, or clothing, to the US. Product coverage was not “sufficiently diversified”, said the Minister.
South Africa had also proposed that it be given third-country status to allow its clothing industry to export its products on the same terms as those of other countries.
Davies pointed out that another important factor was the need for trade capacity building measures to be implemented to complement Agoa. This, he said, had been highlighted by the US through its government accountability office.
He noted that attention needed to be given to this aspect to become part of a process that would ensure that Agoa could become an instrument of economic development in Africa.
Further, the Minister and Matona highlighted that, in South Africa’s opinion, Agoa also had to take account of, and should not undermine, regional development and integration in Africa.
It had to be sensitive to regional trade, stated Davies.
Meanwhile, Davies said that the US seemed to understand South Africa’s specific issues with regard to the World Trade Organisation (WTO) and Doha trade negotiations.
South Africa had been classified as a developed country at the WTO, which, at current proposals, would take its levels of commitments under the Doha negotiations to “much greater” levels than what other developing countries would be subject to.
On the standard proposals for developing countries taking formula cuts, 23% of the country’s tariff lines would take cuts of 30% or more at applied rates, which meant that the cut into the applied industrial tariffs would be on a significant scale, said Davies.
He added that South Africa needed additional flexibilities, and while there had been some recognition of this at the WTO negotiations, the numbers had not yet been sufficient.
Davies noted that the DTI would also, in the near future, be putting a trade policy paper, which would outline the general direction it saw tariff policy moving, as well as outline the broader trade policy negotiations, in the public domain.
The DTI would continue, in terms of trade policy development, to inform itself on the basis of industrial policy considerations, said Davies, noting that it had already relieved tariffs on some upstream and mature industries.
It would be willing, on a case-by-case basis, to offer tariff increases to downstream industries, he added.
Further, South Africa would focus on establishing new trade relations with countries in the South, to continue boosting South–South trade. He noted that South Africa already had good political relations with many of the large developing countries that had significant economic growth throughout the global recession.
In addition, South Africa’s trade efforts would also continue focusing on regional integration.
Davies said that the Southern African Development Community (SADC) had already “de facto” agreed to prioritise a broader integration on the free trade level.
It wanted to broaden free trade agreements between SADC countries, as well as between the SADC, the Common Market for Eastern and Southern Africa members and other East African countries, which would expand the current free trade area to a population base of 700-million, compared with the current population base of 177-million.