SA may be required to submit a revised trade agreement to the US to align with the Trump administration’s new trade framework, which is set to guide future American engagements with Sub-Saharan African nations.
The template outlines new trade terms and is part of Washington’s push for more reciprocal trade relationships in the region.
SA has, however, not yet seen the template as it is yet to go through approval process within the US administration, according to the department of trade, industry & competition.
“In this regard, we are of the view that SA may need to resubmit its framework deal in accordance with the new template. It is thus expected that the deadline may be shifted,” trade, industry & competition minister Parks Tau said in a statement. “We urge the SA industry to exercise strategic patience and not take decisions in haste and government will continue to use every avenue to engage the US government to find amicable solution to safeguard SA interests in the US market.”
The US and SA signed a trade and investment framework agreement in 2012, which amended the agreement originally signed in 1999. Trade and investment framework agreements provide strategic frameworks and principles for dialogue on trade and investment issues between the US and the other parties. This is in addition to SA’s beneficiary status of preferential access through the African Growth & Opportunity Act (Agoa).
Nullified
Recent US tariffs have effectively nullified some benefits of Agoa, affecting key SA export sectors such as agriculture and automotive manufacturing. This has prompted the SA government to seek alternative markets for its exports in a bid to reduce reliance on the US.
Earlier this year, Trump raised tariffs on steel and aluminium imports to 50%. He also introduced new “reciprocal” tariffs on several countries, including SA, but put them on hold for three months.
The 31% tariff implemented by the US administration takes effect on July 9.
In a statement on Tuesday, SA said it had joined other African countries in requesting a 90-day extension “to enable countries to prepare their proposed deals in accordance with the new template”.
The request was reiterated by deputy trade, industry & competition minister Zuko Godlimpi to Connie Hamilton, the assistant US trade representative responsible for Africa, on the sidelines of the United States of America-Africa Summit in Luanda, Angola, in June.
The previous trade proposal submitted to the US in May before the Oval Office meeting between US President Donald Trump and President Cyril Ramaphosa included deals on energy and electricity, critical minerals and other exports, including cars and agricultural products.
“The framework deal addresses US concerns relating to, among others, non-tariff barriers, trade deficit, and commercial relations though two-way procurement or import of strategic goods,” the department of trade, industry & competition said. “It aims to also resolve long-standing market access issues of interests to both sides and to promote bilateral investments in a mutually beneficial manner,” the department said.
Exempted
SA is also seeking, through the framework deal, to have some of the key export products exempted from the section 232 duties, including cars and car parts, and steel and aluminium through tariff rate quotas, it said.
“SA is also seeking the maximum tariff application of 10%, as a worst-case situation. The framework also seeks exemption for small and medium enterprises, counter-seasonal products and products that the US does not have productive capacity for,” the department said.
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