The Trump administration is changing a key exemption to America’s trade laws to make it easier to penalise about two dozen developing countries including China, India and South Africa.
The announcement means that South Africa has effectively been removed from a list of nations that can receive preferential trade benefits and is now likely to attract higher import duties and levies to the US market.
It may also see the manufacturing sector losing billions of rand in revenue.
Speaking to IOL, the National Association of Automobile Manufacturers of South Africa (Naamsa) said the move was a tragedy for the industry and economy as all preferential treatment was crucial.
“The US has been one of South Africa’s top export destinations and trading partners for the past three decades,” said Naamsa executive manager Norman Lamprecht.
“In 2019, a total of 12,437 vehicles were exported to the US along with automotive components to the value of R4.8 billion.”
Another blow incoming?
South Africa is also facing another US blow due to the draft Copyright Amendment and Performers’ Protection Bills.
The proposed legislation is a point of significant controversy because it could damage South Africa’s trade relations with the US as it is seen to violate terms of the Generalised System of Preferences (GSP) under the US Trade Act.
The Office of the United States Trade Representative is now holding public hearings in Washington D.C. on South Africa’s eligibility for the GSP programme.
The country’s eligibility for the GSP programme has been called into question as a result of the passing of the Copyright Amendment Bill in parliament last year.
If South Africa loses its GSP eligibility, the country will potentially lose up to R34 billion in export revenue, the Copyright Coalition of South Africa (CCSA) has warned.
The office of the United States Trade Representative said in October 2019 that it would review South Africa’s eligibility to participate in its GSP based on a petition it had received.
The GSP is the largest and oldest US trade preference programme.
It is designed to promote economic development by allowing duty-free entry into the United States for 3,500 products from the 119 designated beneficiary countries and territories.
To remain eligible for these advantages, beneficiary countries must comply with 15 statutory eligibility criteria that are important to US interests, including taking steps to afford internationally recognised labour rights, providing adequate and effective protection of intellectual property rights, and assuring equitable and reasonable access to its markets.
“Coupled with the threat of losing our Generalised System of Preference (GSP) over the Copyright Amendment Bill and the distinct possibility that the US Congress will not renew the African Growth and Opportunity Act (AGOA), South Africa is heading towards a perfect trade storm with the United States which will cost us billions of rands and thousands of jobs,” said the DA’s Dean Macpherson.