Exports to US leap as firms use Agoa

Posted On Monday, 09 June 2003 02:00 Published by eProp Commercial Property News
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US trade envoy Robert Zoellick's says SA's 45% rise last year outperformed continental average of 10%

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Trade and Industry Editor

SA EXPORTS to the US under the African Growth and Opportunity Act (Agoa) jumped 45% last year, according to a new US administration report on the preferential trade access programme.

This shows that SA exporters are beginning to take real advantage of the Agoa programme, which offers tariff-free and quota-free access for thousands of products from SA and dozens of other African countries into the US market.

"SA increased its total Agoa exports from $923m in 2001 to 1,3bn in 2002, a 45% increase," according to the report, which was compiled by US Trade Representative Robert Zoellick.

"Agoa exports constitute 32% of total SA exports to the US."

The Americans said that the automotive sector "continued to lead the pack" in SA Agoa exports.

BMW SA is the most successful exporter to the US under Agoa, with the tariff savings under the US programme enabling it to sell its cars from SA more cheaply into the US market.

The export of SA transportation equipment to the US rose by 81% to 544m last year. Exports of SA apparel and textiles trebled, while exports of agricultural goods rose by more than half.

SA outperformed the African average, which saw an increase in exports under Agoa of just 10% to 10,2bn. Thirty eight sub-Saharan African countries are eligible for Agoa, with 19 eligible to receive Agoa's textile and apparel benefits.

"Agoa continues to foster new trading opportunities and investment, create new jobs and promote economic development," the report said. "It supports the efforts of those sub-Saharan African countries undertaking difficult economic, political and social reforms, and provides an incentive for countries considering such reforms."

The report also notes that the US is sub-Saharan Africa's largest single-country export market, accounting for 26% of all exports from the region in 2001.

"As a result of Agoa, substantially all imports from sub-Saharan Africa are eligible to enter the US duty free. Last year, 94% of US imports from Agoa-eligible countries entered duty-free. US imports of Agoa products are growing, with imports of nonfuel goods gaining the most."

The report went on to say: "The US imported $9bn in merchandise duty-free under Agoa last year, a 10% increase from 2001 despite the general decline in imports from the region and the overall decline in global trade."

The document also noted that negotiations were under way on establishing a free trade area between the US and the Southern African Customs Union and said such an agreement "will complement the administration's continued efforts to advance its trade policy in the region".

Most exports from sub-Saharan Africa qualify for Agoa tariff-free treatment, but the exceptions include most textile articles, certain steel products, canned peaches and apricots, and dehydrated garlic.

The report says that in SA, Agoa has helped to encourage the upgrading of automotive plants, with increased production, and investment of over $20m. "SA cotton producers have geared up cotton production to supply the increased demand from African manufacturers due to Agoa," the report noted.

"In Swaziland, Chinese and Taiwanese investors have invested over 30m in denim fabric mills and other facilities."

A new coffee processing plant has been built in Uganda to serve the US market. A garment factory in Beira, Mozambique has attracted Mauritian investment, and is planning to hire another 320 workers.

In Mauritius itself, "Chinese, Indian and Mauritian firms have invested over $100m in new spinning mills".

In Ghana, a sock factory has been refurbished with imported US machinery and is exporting its products to the US.

Deloitte & Touche trade expert Francois Dubbelman said that the latest Agoa figures show there is still a "huge" trade imbalance between sub-Saharan Africa and the US, "but this is being addressed by the US".

"The main reason would be that as a result of Agoa, (the US) is slowly becoming aware of the advantages and opportunities that exist in this region," he said.

 

Last modified on Thursday, 17 April 2014 12:35

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