DA calls for debate in Parliament over cost of AGOA exclusion

1 June 2015

I have today written to the Speaker of the National Assembly, Ms Baleka Mbete, requesting that she schedules a debate of public importance, in terms of Rule 103 of Parliament, to debate the imminent prospect of South Africa being excluded from the African Growth and Opportunity Act (AGOA). 

The Act, which was first extended to South Africa in 2000, gives sub-Saharan African countries preferential access to the US market by allowing the duty-free export of goods to the US. 

South Africa's continued benefit under AGOA is under threat. Protracted and fraught negotiations over chicken imports has aggravated the US-SA trade relationship to the point where the AGOA renewal Bill that is currently before Congress includes a compulsory review of South Africa within 30 days of its passing. 

Parliament must debate how AGOA was allowed to come to this - where the prospect of exclusion, and the job losses associated with that, is imminent. The Minister should have the opportunity, in the context of a full debate, to explain why the government allowed this crisis to develop, and what he plans to do now to turn it around. 

Exclusion from AGOA must be avoided at all costs, as negative ramifications on jobs and our economy will certainly follow. The special treatment South Africa receives as a result of AGOA has greatly benefitted many sectors of our economy, and has led to increased production, increased international trade and job creation. 

Last year, the US was South Africa’s second biggest automotive trading partner, with exports totalling R17.14 billion. Under the Act, exports to the US have almost quadrupled, growing from R4.7 billion in 2001 to R17.1 billion in 2014, according to the National Association of Automobile Manufacturers of South Africa (Naamsa). Furthermore, the local vehicle manufacturers industry employs 30 000 people, with component manufacturers employing a further 83 000. Both export levels and jobs will be negatively affected in the event of an exclusion from AGOA.

It is not only the automotive industry that will be adversely affected. According to estimates from the Citrus Growers’ Association of Southern Africa, exports to the US have amounted to R8.57 billion to date, or an average of R735 million a year. In 2014 alone, South African oranges worth R502 million and citrus juice worth R710 million entered the US. The Association estimated that the development of the US market for summer citrus has generated 5 000 new, permanent jobs and 3 000 temporary positions supporting 25 000 dependents.

If South Africa is excluded from AGOA, export costs will necessarily increase, meaning jobs will be shed. Swaziland was excluded from AGOA in June last year, which has to date resulted in 2 500 jobs in the textile industry being lost. 

It is thus of utmost importance that Parliament debates this matter in order to arrive at the best possible option.

With Sub-Saharan African economies predicted to grow at 4.6% on average in 2015, and SA at less than half of that at 2.1%, the prospect of exclusion will further damage our already fragile economy, causing thousands of job losses.

While 8 736 000 South Africans are unable to find a job, being excluded from a preferential trade agreement with the world’s largest economy is something we simply cannot afford. 

Statement issued by Geordin Hill-Lewis MP, DA Shadow Minister for Trade and Industry, June 1 2015