U.S. – Southern African Customs Union Free Trade Agreement

U.S. – Southern African Customs Union Free Trade Agreement

By November 2006, negotiations for a U.S. Southern Africa Customs Union (SACU) Free Trade Agreement had slowed significantly. South Africa’s minister of Trade and Industry, Mandisi Mphahlwa, stated that the countries would continue to discuss trade, “but perhaps at a lesser level.” The U.S. has offered to work with the SACU on negotiations towards a Trade and Investment Cooperation Agreement (TICA).

History of US-SACU FTA/African Growth & Opportunity Act (AGOA)

On November 4, 2002, the U.S. Trade Representative notified Congress of President Bush’s decision to negotiate a Free Trade Agreement with the member countries of the Southern African Customs Union (SACU). The five nations of the Southern Africa Customs Union are South Africa, Botswana, Namibia, Lesotho and Swaziland. Total U.S.-SACU trade totaled over $13.6 billion in 2015.

A U.S.-SACU Free Trade Agreement would have built on the African Growth and Opportunity Act (AGOA) of 2000. The California Chamber of Commerce supported the AGOA, which President Bill Clinton signed on May 19, 2000 as part of The Trade and Development Act of 2000.

President Bush signed legislation on July 13, 2004 extending the African Growth and Opportunity Act (AGOA) from 2008 to 2015. The AGOA was initially enacted in 2000, eliminating duties on imports from African nations into the United States if those nations made significant efforts to open their economies. In a signing ceremony speech given to members of Congress and the African diplomatic corps, the President commented that the AGOA will create “jobs, wealth and opportunity on both continents.”

Then Assistant U.S. Trade Representative for Africa, Florizelle Liser told a Washington audience in September 2005 that, thanks to the historic African Growth and Opportunity Act (AGOA), the nearly $13 trillion U.S. market is wide open to exports from Sub-Saharan Africa’s 37 AGOA-eligible countries. While stating that AGOA has been successful, she noted that its overall impact has been “uneven” across the continent, and she called on African countries to further diversify their economies. Although more and more African countries are taking advantage of AGOA, Liser cautioned that the bulk of the trade act’s positive impact has been concentrated in 12 African countries. South Africa has exported more than 300 diverse products under AGOA. Some other countries, she added, “have yet to export anything under AGOA.” Liser said AGOA has had a “positive impact” not only for African business but for American business as well.

A full round of free trade negotiations between the United States and SACU took place in June 2004, followed by several high-level meetings to address issues including investment, intellectual property rights, labor, and the environment. In July 2005, representatives from the SACU and the United States agreed that a comprehensive agreement should be the goal of the negotiations in a sequence of small rounds addressing specific issues. Talks resumed in September 2005 in Botswana, but continued to confront difficulty throughout negotiations.

Africa is one of the world’s great emerging economic opportunities. The African Growth and Opportunity Act represents both a symbolic and substantive step in the right direction in terms of U.S.-Africa policy. The Act embodies a trade and investment-centered approach to development. Enactment of the African Growth and Opportunity Act has stimulated the growth of the African private sector and provided incentives for further reform. This Act is aimed at transforming the relationship between the United States and sub-Saharan Africa away from aid dependence to enhanced commerce by providing commercial incentives to encourage bilateral trade.

On May 16, 2008 USTR submitted a comprehensive report to Congress on the results of U.S. trade and investment policy with respect to sub-Saharan Africa. The 2008 reports shows continued growth and diversification in US – Africa trade.  Since its inception in 2000, AGOA has helped increase U.S. two-way trade with sub-Saharan Africa.

In 2015, U.S. total exports to sub-Saharan Africa totaled $17.8 billion, which has increased by 74.8 percent since 2005. U.S. total imports from sub-Saharan Africa were $18.9 billion in 2015.  In 2015, U.S. direct investment in Africa rose to over $64.2 billion.

CalChamber Position

The CalChamber believes that it is in the mutual economic interest of the United States and sub-Saharan Africa to promote stable and sustainable economic growth and development in sub-Saharan Africa and that this growth depends in large measure upon the development of a receptive environment for trade and investment. We are supportive of the United States seeking to facilitate market-led economic growth in, and thereby the social and economic development of, the countries of sub-Saharan Africa. In particular, the CalChamber is supportive of the United States seeking to assist sub-Saharan African countries, and the private sector in those countries, to achieve economic self-reliance.

Additional Information