Investors interested in the American market should acquaint themselves with the recently ratified Better Utilization of Investment Leading to Development (Build) Act as it may help to assuage fears about the African Growth and Opportunity Act (Agoa).
According to Robert Kayihura, a special adviser with law and policy firm Covington & Burling, in terms of the act passed on October 5 the US Congress has earmarked $60bn “to essentially shore up incentives that were put in place by Agoa”.
Speaking at a Select USA event hosted by the Johannesburg Chamber of Commerce and Industry last week, Kayihura commented: “The Build Act is intended to continue in the spirit of Agoa and although it’s a broad piece of legislation that has a fair amount of complexity it’s worth examining more closely because if anything it will amplify what Agoa means.”
In the meantime fears about Agoa remain in light of US President Donald Trump’s protectionist policies. But for the time being, faced by diplomatic and oil-trade pressures elsewhere, he appears to have softened his stance on tariff-driven protectionism that could harm South African exports to the States. Addressing delegates at the event aimed at fostering investment in the US, Pamela Ward, regional senior commercial officer in the office of the US Consulate General, said investors shouldn’t be concerned.
“Agoa is a fantastic agreement and the administration continues to support it.” Kayihura added that the Build Act appeared to be safeguarding existing tarifffree incentives although “things are at a sensitive point” seeing as the US is currently reviewing South Africa’s Agoa status.
It was furthermore indicated that the annual review was just a formality, a view that seems to be supported by the National Association of Automobile Manufacturers of South Africa (Naamsa). In a statement released prior to the review period getting under way, Naamsa director Nico Vermeulen said that “it is anticipated that the status quo in respect of Agoa is likely to remain in place until May 2019.
“It remains our view that growing trade, investment and business relationships benefit both parties.” He also used the opportunity to express his support for the negotiation of a specific bilateral trade agreement between South Africa and the United States in the near future.
Commenting on the Section 232 threats that local manufacturers faced earlier this year, specialist automotive journalist and regular FTW contributor, Ed Richardson, said “things have gone quiet. “But you never know what America will do if Trump is aggravated.”
The Build Act is worth having a closer look at because if anything it will amplify what Agoa means. – Robert Kayihura
Robert Kahiyara at last week's Select USA event in Johannesburg.
