AGOA: Trade Response from African Countries

Transcription

1 AGOA: Trade Response from African Countries (+ focus on South Africa) Eckart Naumann Joint tralac WESGRO seminar 11 July 2003

2 Brief AGOA Overview Table of Contents Background, Country Eligibility, Product Coverage, AGOA and the GSP, Rules of Origin Trade and Investment Response under AGOA Africa s Exports under AGOA Regional Supply Responses (SADC) Sectoral Focus, South Africa Investment Patterns

3 AGOA The African Growth and Opportunity Act US Trade Act (2000) from Clinton era Covers 8-year period to September 2008 Extends the US General System of Preferences (GSP) AGOA s overt focus on trade, not aid But Not a negotiated agreement No independent dispute settlement Perhaps a US response to EU-ACP and EU-SA agreements?

4 AGOA Country Eligibility Covers Sub-Saharan African Countries 38 Countries qualified (incl. more recently Swaziland, Ivory Coast, DRC, The Gambia) GSP and AGOA eligibility criteria essentially overlap (although GSP eligibility does not imply AGOA eligibility) Country-eligibility subject to US conditions In SADC, notable exclusions are Zimbabwe, Angola (this has implications for supply chain linkages!) Special Rule for Lesser Developed Beneficiary Countries (LDBCs) regarding apparel (less stringent RoO one-stage transformation)

5 AGOA Product Eligibility - 1 AGOA extends GSP: GSP: 4,650 product categories (at HS 8-digit level) AGOA: Additional 36 energy product cts. Additional 622 apparel product cts. Additional 1,800 non-apparel non-energy product cts. TOTAL: 2,458 Incremental AGOA Product cts. Apparel products subject to Special Rule, Quotas and Dedicated Rules of Origin

6 AGOA Product Eligibility 2 Selected Examples of Products added under AGOA Dairy products Fruit and Vegetables Wine Chemicals Footwear Clothing (subject to visa requirements) Variety of iron and steel Motor vehicles and components (e.g. radiators, bearings etc.) Watches Fishing rods Pistols and revolvers

7 AGOA Product Eligibility 3 The Rules of Origin Rules of Origin: Non-apparel products 35 % min.value addition (cumulation possible with AGOA countries and US) Similar to GSP, except 35% had to originate within customs territory Must maintain accurate records for 5 years Rules of Origin: Apparel Subject to quota: 3% - 7% of total US apparel imports Subject to qualification under Apparel Rules (19 / 38 countries to date) Subject to use of inputs from local or other AGOA sources Subject to maximum 25% value from foreign trimmings & interlinings LDBCs exempted from these restrictions (except quota) until 2004

8 Trade Patterns 2002 Exports under AGOA (incl. GSP) Total exports under AGOA: US $ 9 billion Equivalent to 65% of all exports from AGOA countries to US AGOA covers products, yet SSA s qualifying exports mainly in energy sector (75% by value, mostly from Nigeria & Gabon; only South Africa s exports highly diversified) But, total AGOA exports in non-energy sectors: US $ 2.2 billion 40% exports were apparel 25% exports were transportation equipment 17% exports were minerals & metals 10% exports were agricultural products

9 Trade and Investment Patterns 2002 Exports under AGOA (incl. GSP) 6,000 5,410 5,000 US $ Million 4,000 3,000 2,000 1, ,343 1, Nigeria South Africa Gabon Lesotho Kenya Cameroon Mauritius Congo (ROC) Swaziland Madagascar Rest Source: Calculations based on data by U.S. International Trade Commission USITC (2003)

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11 1, Trade Patterns 2002 Exports under AGOA by Sector Incremental AGOA Exports by Sector (excl. Energy ) and % Compliance with AGOA Textiles and apparel Transportation Minerals and metals Agricultural Chemicals and related Miscellaneous manuf. Footwear Forest products Machinery Electronic products Source: US Dept of Commerce (2003) US$ Million (2000) Percent Incremental AGOA Exports 2002 % AGOA Compliance of Incremental Exports

12 Trade Patterns Extent of benefits under AGOA Real benefits of AGOA dependent on preference levels Since AGOA extends the GSP, main benefits of this Trade Act lie in incremental AGOA categories (+/- 2,500) AGOA (0% duty) vs MFN duty (various) AGOA incremental coverage 2002 Category No. Tariff Lines Average MFN duty AGOA Exports Energy 36 (HS8) 1.5% US$ 6,824 mill Apparel 622 (HS8) 12.8% US$ 803 mill Rest 1,800 (HS8) 9.4% US$ 1,364 mill Source: IMF(2002) Incremental AGOA Duty Benefit in 2002: US$ 330 million? Benefit for SSA Producers or Transfer to US Consumers?

13 Trade Patterns Supply Response from SADC Countries If excluding energy-related exports, Southern Africa has benefited the most under AGOA Exports of incremental AGOA cts from SADC: US$ 1.34 billion out of total of US$ 1.54 billion non-energy exports ( = 87% ) Main beneficiaries in Region (US$ 1.34 billion): Clothing South Africa (56% share) % Lesotho (23%) % Mauritius (8%) % Swaziland (5%) % Malawi (3%) % But with the exception of South Africa, SADC supply response highly concentrated in apparel categories (see % in right column)

14 Trade and Investment Patterns 2002 Exports of Incremental AGOA cts. (SADC) South Africa Lesotho Mauritius Swaziland Malawi Botswana Namibia Tanzania Mozambique Zambia Seychelles US $ Million

15 South Africa s Exports to the US by Sector and Compliance under AGOA , US $ Million Energy Textiles and apparel Transportation Minerals and metals Agricultural Chemicals and related Miscellaneous manufactures Footwear Forest products Machinery 23 7 Electronic products Total Exports 2002 AGOA Exports (incl. GSP) Incremental "New " AGOA Source: US Dept of Commerce (2003)

16 Top SA Export Products to US Rank Product AGOA/GSP Value of Exports (2002) (2002, ZAR) 2. Motor Vehicles 1500cc-3000cc AGOA R 3,669 mill 3. Titanium Oxides GSP R 1,595 mill 6. Aluminum Alloy GSP R 772 mill 9. Ferromanganese GSP R 543 mill 10. Ferrochromium GSP R 437 mill 11. Flat Iron / non-alloy steel (+600mm) AGOA R 371 mill 14. Silicon GSP R 354 mill 13. Ferro-silico-manganese GSP R 349 mill 14. Cotton T-Shirts AGOA R 342 mill 15. Precious metal jewelry GSP R 291 mill 20. Titanium dioxide pigments GSP R 210 mill 22. Mens cotton trousers and overalls AGOA R 190 mill 23. Unleaded petrol AGOA R 171 mill 24. Womens blouses and shirts AGOA R 169 mill 25. Leaded petrol AGOA R 162 mill 30. Un-fortified wine in containers <2L AGOA R 140 mill 31. Un-alloyed aluminum in coils AGOA n/a

17 Investment Responses in SADC Favourable market access for apparel main driver of AGOA-related investment in SADC SADC countries supply response mostly in apparel and (limited) textile manufacturing, and mostly in LDBCs Due to existing nature of industry Relaxed Rules of Origin until end-2004 provide window of opportunity Upcoming local textile shortages if LDBC Rule not extended post-2004 Effectively unconstrained by quota levels (+- 50%) Mobility of apparel industry AGOA apparel compliance levels very high among LDBCs (LS 100%, SW 83% vs ZA 43%, MU 42%) Source of investment flows: mainly Far East (esp. Taiwan and Hong Kong, some domestic in and from South Africa)

18 AGOA Investment Responses in SADC Botswana Lesotho Malawi Mauritius Mozambique Namibia South Africa Swaziland Tanzania Zambia Some investments in apparel manufacturing Significant investments in apparel manufacturing and to a lesser extent in textile manufacturing; mostly investments from Taiwan, followed by Hong Kong and South Africa. Some investments in apparel manufacturing, mostly from Taiwan Some textile and apparel investments (also from China and India), but apparel exports to the US have not been growing significantly under AGOA; some investment diversion from Mauritius to Madagascar, Mozambique, Tanzania and Senegal. Little known investment except from Mauritian investors in the apparel industry (Beira); evidence of minor investment in food processing (seafood). One large investment in the apparel industry from Malaysia. Investments mainly in the automotive industry, textiles and apparel. Also some investments in footwear, foodstuffs and agricultural sectors. Significant investment in apparel manufacturing leading to a three-fold increase in exports to the US between 2000 and 2002 No known investments except minor investment from Mauritius. No known AGOA-related investments.

19 SADC s Attractiveness for Future AGOA-induced Investment On a SADC-wide level, it is the apparel industry that has received most new FDI flows and internal investment Except for South Africa, this concentrated nature of trade and investment increases long-term vulnerability LDBC preferential terms for apparel industry due to end September 2004 Expected massive shortage of competitively priced textile inputs in region LDBC pref. terms has mostly not yielded hoped-for investments in textile manufacturing capacity (but rather in the more mobile apparel industry) MFA ends December 31, 2004; end to involuntary quotas Note: end to ATC no direct implication on AGOA as it merely relates to quota - free (not duty-free) market access.

20 Conclusions Considering Africa s supply response to AGOA, it is clear that the extensive benefits offered under the Act are yet to be fully utilised This is notwithstanding fact that product coverage is quite extensive, and the general Rules of Origin / value-added requirements not too onerous But unlike market access e.g. under Cotonou agreement, AGOA product coverage full of gaps (becomes particularly evident at the HS8 level) Places major information burden on producers / exporters Among current exporters, some evidence that US importers insisting on receiving the preference level as a discount ( AGOA is for America, not Africa ) Raises question whether AGOA is indeed the much-promised panacea for Africa s small share of US imports, or merely a tool for extending US influence in Africa s affairs

21 Conclusions Although AGOA-beneficiaries share of non-energy exports to the US under AGOA is only 35%, the textile-clothing industry has benefited significantly, esp. in Lesotho, Swaziland, Kenya, Madagascar, South Africa and Mauritius There is major concern about the sustainability of these investments though, and vulnerability esp. of Lesotho Besides AGOA s preference levels, it s greatest benefit probably lies in the fact that (notwithstanding its unilateral nature) it provides far greater predictability than e.g. the GSP, at least until 2008 Up to African producers to harness the very diverse access to the world s largest consumer market that AGOA undoubtedly provides

22 AGOA Information Portal Information on AGOA, Recent Amendments, Country and Product Eligibility The AGOA Rules of Origin, including the Special Rules for Apparel; Comprehensive Trade Statistics of total and AGOA-related Trade covering all 38 AGOA-eligible countries (updated monthly / quarterly as new data released) Archive of Acronyms and Terminology used in International Trade; Information on the HS Nomenclature used in International Trade; Outline of the Trade Process, and US Import Requirements; AGOA-related Documents for Download, including the full text of the Act; AGOA Research Reports and Maps; An Archive of AGOA-related News Articles that have appeared in various African Publications

23 >>> Online:

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