Updade on SAUS Trade Relations and Developments with

PURPOSE • To provide an update on: – SA – US Trade Relations, and

UPDATE ON TRENDS IN SA – US TRADE RELATIONS • Since 2000, SA exports

UPDATE ON TRENDS IN SA – US TRADE RELATIONS • AGOA exports rose from

INCREASED IMPORT RESTRICTIONS AND MARKET ACCESS UNCERTAINTY IN THE US • Section 232 –

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Updade on SA-US) Trade Relations, and Developments with AGOA & GSP Presentation to the Teselico Sub-committee 20 July 2020 Mr Sandile Tyini Director: Americas Branch: Trade Policy, Negotiations and Cooperation

PURPOSE • To provide an update on: – SA – US Trade Relations, and – Developments with AGOA & GSP

UPDATE ON TRENDS IN SA – US TRADE RELATIONS • Since 2000, SA exports enter the US under the WTO-based most favoured nation (MFN) regime; the Generalised System of Preferences (GSP); and the African Growth and Opportunity Act (AGOA ). • SA exports under MFN accounted for 79% of SA total exports in 2001, dropped to 56% in 2013 and rose again to 74% by 2019. • Two-way trade with the US increased from $7. 1 billion in 2001 to a peak of $16. 3 billion in 2011, but steadily declined to $12. 3 billion in 2019. • SA exports to the US increased from $4. 3 billion in 2001 to $10 billion in 2008, and then declined to $7. 6 billion in 2019. • SA imports from the US increased from $2. 8 billion in 2001 to a peak of $7. 1 billion in 2012. Since then, SA imports have declined to $4. 6 billion in 2019. • Over the period 2001 – 2019, SA mostly enjoyed a trade surplus due to dominance of commodities in exports to the US (platinum, diamonds and gold).

UPDATE ON TRENDS IN SA – US TRADE RELATIONS • AGOA exports rose from 9% in 2001 to a peak of 31% in 2013, but declined to 16% of total exports in 2019. • Top exports under AGOA include: autos, iron & steel, fruit and nuts, organic chemicals, and beverages and spirits. • Top exports under GSP are: chemicals, iron and steel, precious stones, metals, machinery, plastics and automotive components. • The share of SA exports under AGOA & GSP (combined) was 20% in 2001; 44% in 2014 (the peak); and 26% in 2019. • Thus, we are seeing a decline in the value and share of value added manufactured products to the US under both AGOA and GSP. • Weak economic conditions, low demand protectionist US trade policy, as well as the growing uncertainty of preferential market access for South African exports to the US explain, to the greatest extent, the decline in SA exports to the US.

INCREASED IMPORT RESTRICTIONS AND MARKET ACCESS UNCERTAINTY IN THE US • Section 232 – national security restrictions on steel & aluminium; investigations on automotive imports; and vanadium imports; • Citing national security grounds, in March 2018 the US imposed WTO inconsistent additional tariffs of 10% and 25%, respectively on aluminium and steel imports; • At the same time, the US initiated an investigation on the national security impact of imports of auto products. In March 2020, the US initiated an investigation on imports of vanadium; • Since 2015, the US has increased its leveraging of its preference programmes to advance its trade and commercial interests: – In 2015, the US introduced an Out-of-Cycle Review of South Africa in the AGOA Extension legislation, citing concerns about SA antidumping duties (ADD) on US poultry. Under the threat of removal from AGOA, SA exempted from ADD an annual quota of 65 000 tons of US poultry imports ; – Early this year (2020), the US raised concerns about SA decision to increase the general tariff on imports of poultry in order to save the industry and jobs; – In October 2019, the US initiated a review of South Africa’s eligibility for GSP based on concerns of US companies about SA’s copyright & performers protection bills. It is envisage that President’s decision to returned these bills to parliament due to constitutional concerns will delay a decision on SA’s eligibility for AGOA.

INCREASED IMPORT RESTRICTIONS AND MARKET ACCESS UNCERTAINTY IN THE US • Section 232 – national security restrictions on steel & aluminium; investigations on automotive imports; and vanadium imports; • Citing national security grounds, in March 2018 the US imposed WTO inconsistent additional tariffs of 10% and 25%, respectively on aluminium and steel imports; • At the same time, the US initiated an investigation on the national security impact of imports of auto products. In March 2020, the US initiated an investigation on imports of vanadium; • Since 2015, the US has increased its leveraging of its preference programmes to advance its trade and commercial interests: – In 2015, the US introduced an Out-of-Cycle Review of South Africa in the AGOA Extension legislation, citing concerns about SA antidumping duties (ADD) on US poultry. Under the threat of removal from AGOA, SA exempted from ADD an annual quota of 65 000 tons of US poultry imports ; – Early this year (2020), the US raised concerns about SA decision to increase the general tariff on imports of poultry in order to save the industry and jobs; • – In October 2019, the US initiated a review of South Africa’s eligibility for GSP based on concerns of US companies about SA’s copyright & performers protection bills. The President has since sent the bills back to parliament due to constitutional concerns. GSP and AGOA expire in 2020 and 2025, respectively