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Obama expresses support for extension of AGOA

US President Barack Obama this week expressed his support to extend the African Growth and Opportunity Act (AGOA) beyond 2015. AGOA provides for the duty-free access of thousands of products from designated African countries into the US market. It was first signed into law in 2000 and initially covered a period of eight years, but it was subsequently extended in 2004 until 2015.

AGOA expands the (duty-free) benefits previously available only under the US Generalised System of Preferences (GSP) programme to qualifying African countries. In total GSP and AGOA provides duty-free access to the US market for approximately 7 000 product tariff lines. This includes products such as clothing and textiles, wine, motor vehicles and components, various agricultural products, platinum and diamonds, iron and steel products and many others.

AGOA is very important for South African exporters. According to the South African Chamber of Commerce and Industry (SACCI) the US market represents 8.7% of South African exports by value, and more than a quarter (27.5%) of South African exports for high value added items such as motor vehicles. South Africa exported more than R16 billion worth of motor vehicles to the US last year.

While the support from the US President is a welcome signal for South African exporters, the ultimate decision unfortunately lies with the US Congress. Certain elements within the US Congress feel that South Africa should be graduated out of AGOA due to the competitiveness of some of its exports. Trade and Industry Minister Rob Davies has however indicated that South Africa's lobbying will continue in Washington later this year where DTI officials will engage directly with congressmen, senators and lobbyists for the extension.

Niel Joubert
© Trade Law Chambers 2013

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