The American Chamber of Commerce in South Africa (AmCham) has reiterated its support for the extension of the Africa Growth and Opportunity Act (Agoa) beyond the September 2015 expiry date and is also advocating for South Africa’s continued inclusion as a beneficiary of the preferential trade arrangement.

However, the organisation, which has some 250 members, is also finalising a draft letter of concerns that will be delivered to Trade and Industry Minister Dr Rob Davies. The letter outlines areas it feels should be addressed to “level the playing field” for US companies operating in Africa’s largest economy, as well as to improve the country’s status as a key gateway for American business interests into the rest of the continent.

Encouraged Reporting back following a recent Agoa-supporting mission to Washington DC, which took place in mid-September, AmCham president Jeffrey Nemeth said the delegation had been encouraged by its reception, as well as the level of access it had gained to key US lawmakers, government officials and influential think-tanks.

However, the Ford Motor Company South-ern Africa president and CEO also indicated that these engagements had been primarily with individuals supportive of Agoa’s extension and who were alive to the opportunities being opened up as a result of Africa’s economic revival.

Nevertheless, even these individuals had flagged possible issues of concern in relation to the current composition of Agoa and whether it was meeting its objectives. Questions were raised about whether or not South Africa should be graduated from the programme, owing to its development relative to the intended beneficiaries of the unilateral trade measure, which was signed into law on May 18, 2000.

AmCham would address a number of these issues in its formal letter to Davies, the contents of which were debated at AmCham’s October 2 board meeting.

Nemeth confirmed that the concerns included issues such as inferior market access for US products when compared with those entering South Africa from Europe, the uneven treatment of equity equivalents in South Africa’s broad-based black economic empowerment scorecard, and worries over local-content stipulations, intellectual-property protection and prevailing restrictions governing the free movement of individuals employed by US firms in South Africa and Africa.

There are currently about 600 US firms operating in South Africa, with a recent survey of the 80 largest US companies showing that they collectively employed 150 000 people and had combined revenues of R233-billion.

However, Nemeth also stressed that AmCham remained convinced that Agoa, and its extension, remained good for Africa’s growth and development and, by extension, US companies hoping to tap into new growth markets.

The 14 AmChams operating across Africa would further consolidate their support for the extension at a meeting scheduled in Accra, Ghana, later this month.

In addition, the South African chapter was planning follow-up missions to the US in 2014, during which it would seek to make contact with those lawmakers that might be more hostile to Agoa so as to convince them of the virtues of the proposed extension.

Final Decision

The final decision rests with the US Congress and the Senate, which is why AmCham spent much of the September mission meeting with members of key subcommittees, including the House Subcommittee on Africa, the Ways and Means Committee and the Foreign Affairs Committee.

President Barack Obama had already expressed his support for the continuation of Agoa. However, even he made an appeal during his June visit to South Africa for trade nego-tiators from both countries to “have a serious conversation about how we get a win-win formula”.

For its part, South Africa was paying much attention to sustaining the preferential market-access arrangement, with the US accounting for 8.75% of the country’s total exports. At present, 98% of South African goods enter the world’s largest economy duty free, with Agoa accounting for 27% of that total – the balance enters duty free under a Most Favoured Nation arrangement (58%) and the Generalised System of Preferences (18%).

Two-way trade, which recovered to $15.1-billion in 2012, is relatively balanced, with exports to the US rising to $7.6-billion last year and imports to $7.5-billion.

During a recent visit to the US, Davies also held a series of meetings with lawmakers, think-tanks and with officials from the administration, during which he reinforced the importance of Agoa to Africa and South Africa.

Besides the balanced nature of trade flows, Davies also highlighted the importance of preferential market access to addressing poverty, supporting industrialisation and facilitating regional integration. He also emphasised the security and good-will dividends that flowed to the US as a direct consequence of Agoa.

“Our main message is that Agoa is good for Africa and if American businesses are participating in Africa, then it’s good for American business,” Nemeth outlined, adding that most US firms manufacture and distribute goods that benefit directly from a growing middle class in Africa.

“We believe that Agoa helps develop that emerging middle class,” he concluded.