Money and Markets

R35 billion in South African exports to the USA are at stake in a 'review' just triggered by SA's copyright reform efforts

Business Insider SA
Agoa in question
  • South African exports to the United States worth some R35 billion, including those under Agoa, are under a threat from a review launched by the Office of the United States Trade Representative.
  • The review is based on a complaint from American companies that South Africa is messing with intellectual property rights.
  • The process technically applies to a less-known set of duty-free rates, the Generalized System of Preferences (GSP) – but Agoa is predicated on being eligible for the GSP system, the US embassy in Pretoria says.
  • The review was triggered by complaints from American companies around South Africa's efforts to reform the local copyright system.
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South African exports to the United States worth some R35 billion last year will be at stake when the Office of the United States Trade Representative launches a review of SA's eligibility for duty-free imports under the US system known as the Generalized System of Preferences, or GSP.

The US federal government announced plans for the review on Friday.

The exports threatened include – but go beyond – exports to America under the African Growth and Opportunity Act (Agoa).

Agoa exports are predicated on participating African countries being eligible under GSP rules, the US embassy in Pretoria's spokesperson Robert Mearkle told Business Insider South Africa on Sunday.

That implies that should a review end in South Africa being ejected from the GSP, it will automatically be ejected from Agoa too.

"US imports from South Africa under GSP and Agoa equaled a combined total of $2.379 billion in 2018," Mearkle said.

That is the equivalent of R34.8 billion.

All those exports will not necessarily halt if they can no longer be sold in the USA duty-free, but they will become price-uncompetitive if any other countries can sell the same items while still benefiting from Agoa, or the broader GSP.

"During the review, there will no change to GSP participation or to benefits under the African Growth and Opportunity Act (Agoa)," said Mearkle.

"The government of South Africa will have the opportunity to participate in the review process," said Mearkle. 

South Africa's department of trade and industry believes that Agoa is so important for the local economy that, in 2016, SA caved in to US demands to allow cheap American chicken to imported into SA – to ongoing controversy and complaints from local chicken producers.

The administration of Donald Trump has used trade tariffs as a blunt weapon for several years, and South Africa has been collateral damage in some of its battles, with the SA automotive, and steel and aluminium, industries affected.

But the GSP review threatens not a subset of South African industries due to relatively small changes to duty-free rules, but South Africa's access to the entirety of American systems set up to encourage growth through trade.

Dates for the review process have not yet been set.

The review was triggered by a complaint from US movie, music, software, and book publishing companies that SA is not doing enough to protect intellectual property.

Amendment legislation on copyright, and the protection of performers, currently awaiting President Cyril Ramaphosa's signature will hamper the creative industry, says American umbrella body the Intellectual Property Alliance (IIPA) – and provide for insufficient protection for American movies and textbooks.

See also: The US just announced a review of SA’s place in its biggest preferential trade scheme – because its movie and music companies don’t like the controversial Copyright Bill

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