The African Growth and Opportunity Act (AGOA), established in 2000 by the USA, is a central element of the USA's economic interaction with sub-Saharan Africa. The current term, valued between approximately $1.3 billion and $1.9 billion, concludes in September, raising concerns for South Africa's automotive and agriculture sectors.
AGOA provides duty-free access to the USA for over 1,800 products from eligible sub-Saharan African countries, supplementing the Generalized System of Preferences program. South Africa's automotive sector exports vehicles, parts, and equipment, while the agriculture sector focuses on fruit and vegetable exports.
Neil Diamond, president of the South African Chamber of Commerce in the USA, expressed doubts about South Africa's prospects for AGOA renewal in an interview with eNCA. The agreement has supported the South African auto industry, with motor vehicles comprising 22% of exports to the USA, second only to precious metals.
Seven major automakers, including BMW, Ford, and Toyota, operate in South Africa, exporting globally. Billy Tom, head of The Automotive Business Council (naamsa), highlighted the employment of half a million people in the industry, noting the USA as the third-largest export market. Renai Moothilal of the National Association of Automotive Component and Allied Manufacturers warned of severe impacts on the supplier base and industry survival.
Dylan Petzer of the Tyre, Equipment Parts Association (TEPA) emphasized the potential threat to South African manufacturers. He mentioned the risk of reduced demand for local rubber and manufacturing equipment, leading to job losses and decreased tax revenue. TEPA members are exploring alternative markets such as the African Continental Free Trade Area and Europe, alongside opportunities in green manufacturing and electric vehicle components.
Source: Dealerfloor