‘Tariff tide may be turning’ -- top trade expert
US trade negotiators appear to be warming to the idea of a revised bilateral trade deal, thereby raising hopes of an end to the 30% tariff on most SA imports into the US.
That’s according to multiple trade experts who sense a greater willingness to resolve the current trade impasse, rather than prolonging uncertainty.
“There seems to be some good news coming out of US-S Africa developments and progress on resolving trade and trade-related issues,” said Eckart Naumann from the Trade Law Centre.
However one potential sticking point the regional nature of tariff negotiations, which take place at the level of the South African Customs Union level. “South African can make few tariff-related concessions on its own to the US, apart from perhaps anti-dumping duties etc, which might get waived,” Naumann told Cape Chamber.
His comments echo similar sentiments out of the US, where South African officials have been actively negotiating for a better deal, according to recent media reports. Multiple sources reported an apparent willingness to renew the African Growth and Opportunity Act (Agoa), which officially expires today (September 30). It now appears likely that the trade legislation will be extended by a year at least, although the current US political turmoil has further complicated matters.
“There's significant support for a renewal of AGOA. Both chambers of Congress support it - the important people...i.e. Senate Finance leadership, the Senate Leader, the House Ways and Means Committee leadership, the speaker, the minority leader etc,” Naumann said. “For South Africa, the bigger issue is getting the country tariff of 30% reduced to something more palatable. I would imagine that 15% would be a good outcome, which in any case is the new US baseline tariff across the world, and would place SA at far less of a disadvantage.”
“There also doesn't appear to be major opposition to SA being part of a future AGOA, despite some misgivings in some quarters. At the end of the day, African countries, SA included, hardly feature on the radar in US import trade and certainly have virtually no impact on the US' large trade deficit.”
“The US cannot afford to cede more ground to its competitors in Africa, which would be the case if it ends AGOA. A later AGOA renewal would in all likelihood make provision for a clawback of any duties paid in the interim, as is common practice with these things,” Naumann said.
President Cyril Ramaphosa and Parks Tau, Minister of Trade, Industry and Competition, last week both expressed optimism about an imminent trade deal, although they have done so before. “Commercial ties between South Africa and the US have proven to be both durable and resilient,” Ramaphosa wrote in his latest online newsletter, published this week. “Both South African and US businesses can see the clear opportunities and commercial gains of investing in the other’s respective markets.”