With President Trump back in office in Washington, South African businesses are waiting nervously to see whether he ends the country’s benefits under the AGOA trade preference system for African countries.
The AGOA deal is a piece of US legislation, so the US can extend it, alter it or end it at will. AGOA is up for renewal this year, and the hope is that African countries’ duty-free access to the US market will continue for another 11 years.
Whether that happens, and if so, whether South Africa is included, remains to be seen.
The export-dependent South African motor industry is a huge AGOA beneficiary, and the impact of losing those benefits were spelled out by Billy Tom, president of the motor industry umbrella body NAAMSA.
It would be “devastating”, Tom said in an interview with Business Times.
Exports to the US from South Africa increased 498% from the inception of Agoa in 2001 to 2023, he said.
“It’s our third-largest export destination with auto exports amounting to R24.1bn in 2023. Over and above the impact on individual auto manufacturers, it would be devastating for suppliers if these manufacturers could no longer export to the US.”
Hundreds of suppliers would go out of business with dire consequences for the industry and the economy.
AGOA has created 85,000 direct and 426,000 indirect jobs in South Africa, Tom said.
The South African motor industry was highly dependent on exports.
“For every three vehicles we manufacture two are exported. Without exports we don’t have a viable industry. Without our third-biggest market, the US, we’re considerably less viable.”
Being part of AGOA is one of the biggest reasons multinational vehicle manufacturers continue to have operations in South Africa, Tom said.
