Corporate Council on Africa (Washington, DC)

17 June 2014

Africa: Don't Stifle South Africa's Opportunity

Blog

Cape Town, South Africa — For the United States, there are few more important decisions about our relationship with South Africa than one soon to be made by the office of the United States Trade Representative. On the face of it, the choice might seem a small matter, but the U.S. decision on whether to retain South Africa under the terms of the African Growth and Opportunity Act will be a primary determinant of the direction in which the South African economy and political structure moves.

The act generally allows qualified nations of Africa to export to America duty-free, and it has worked best for those economies which have the capacity to use it. Unfortunately, South Africa is one of the few countries for whom it has worked well. No country has benefited more under the act than has South Africa, and if some get their way by dropping the country, no one will suffer more for its success.

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On one hand, those who favor dropping South Africa argue that it, by the nature of its economy, should be declared a success and be "graduated" out of the act. It should not be given the same benefits as far less developed nations, they say. What this means to South Africa is that its trade with the United States would be significantly reduced, as the duty-free access to the U.S. market would be lost, and South Africa would have to turn more to Asia and other markets for its trading partners, just at a time when many in South Africa are beginning to question the benefits of China's engagement in Africa.

China has certainly added to infrastructure development in Africa, but at the same time it has done little to build African worker capacity, bringing its own workforce to Africa, and often leaving that workforce permanently in Africa as colonizers. Another growing problem is the wholesale slaughter of African wildlife for the Chinese market.

Rhinoceroses are killed for the belief that the powdered horn increases virility and the animal is nearing extinction in the wild. Whole herds of elephants are gunned down for the Chinese ivory market, and the taste of exotic meat in China and Southeast Asia is adding rapidly to the disappearance of species throughout Africa. Africa's unique heritage and the billions of dollars in tourism are being threatened by the Chinese marketplace. It its unique wildlife that is the spiritual reservoir of many Africans.

Some South Africans suspect that their country may be removed from the African Growth and Opportunity Act because of political factors. The political relationship with America is strained for a variety of reasons. South Africa killed trade negotiations for a free trade regional agreement with the United States, and it has opposed key U.S.

international policies, including the Iraq War and sanctions on Iran, a country for which South Africa depends on for its fuel supply. More than a third of the oil South Africa imports comes from Iran. There is also a growing sense that President Jacob Zuma is about to take the nation on a more eastward tilt, returning to the Cold War alignments with which he was comfortable in his earlier adulthood.

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Part of South Africa's image problem is that its two major cities, Johannesburg and Cape Town, are well developed cities, but appearances are deceiving at best. Upon arriving in South Africa, headlines told of the massive power shortages in these cities. Yesterday, more than 400 communities in the Johannesburg area reported power shortages. In the region affected there are only four qualified electricians to address the problem. In the offices of the city of Johannesburg, newspapers reported that because the only printing press in the building had not been repaired for five months, there was a backlog of permits necessary for any new construction in Johannesburg.

The unemployment figures cited by the South African government are around 25 percent of the workforce. Some believe the figures are closer to 50 percent, a virtual time bomb in the underbelly of the nation.

These figures and the many daily trials of life in South Africa are not those of a developed nation. To remove South Africa from qualification as an African Growth and Opportunity Act-approved nation not only takes out the law's primary success story, it sends the South African economy backwards, rushing away from any hope of a stronger economic and political relationship with the United States. It will also allow the political demagogues of South Africa to demonize the United States further at a time when many business and civic leaders are seeking a closer economic relationship with the U.S., if for no other reason than to bring balance to the relationship with China that is beginning to overwhelm parts of the country.

A strong U.S. relationship with South Africa could help both the American and South African economies. The African Growth and Opportunity Act allows for more buyers and sellers from the two countries. If the U.S. wants a long-term economic relationship with South Africa, its inclusion in the law needs to be retained.

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