The diplomatic spat between the United States and South Africa means South Africa stands a very real chance of losing its duty-free access to the US market through the African Growth and Opportunity Act (AGOA).
This would not only have a highly detrimental effect on the local vehicle manufacturing industry, but also on the country’s tyre, equipment and parts sector, industry bodies warn.
Dylan Petzer, Vice-Chairperson of the South African Tyre, Equipment and Parts Association (TEPA), warns about a potential domino effect of reduced exports.
“Our concern is that if exports drop, so does demand for locally produced rubber, manufacturing equipment, and logistics services. This will naturally result in factory downsizing, job losses and wasted investments in meeting US safety and environmental standards,” Petzer said.
“Add to this a substantial loss of tax revenue to the fiscus, and we have a recipe for a potential societal disaster.”
As a result of the AGOA act, South Africa’s automotive-related exports to the US have surged from $151 million (R2.8 billion) in 2000 to $1.6 billion (R29.6 billion) in 2022. Parts and accessories alone accounted for $62 million (R1.1 billion) in 2022.
The US was South Africa’s sixth biggest export destination for fully built up vehicles in 2023, with 19,590 vehicles shipped abroad, accounting for 5% of automotive exports.
Martlé Keyter, CEO of the Motor Industry Staff Association (MISA), said South Africa’s already dire economy simply cannot afford to be excluded from the US trade law, which currently allows over 1,900 local products - including textiles, agricultural products and vehicles - to enter the US market duty free.
“It will be to the detriment of workers and future job creation in our country if South Africa is excluded from AGOA and Government must act swiftly to restore the misunderstanding that may have caused the rife between our countries,” said
TEPA’s Dylan Petzer believes that strategic agility will be key to staying ahead of the curve in these uncertain times.
“Losing AGOA would be a significant blow, but our sector is resilient. This industry has faced tough roads before. The key to survival? Strategic agility, relentless advocacy, and a solid partnership between government and industry. It’s time to buckle up because this ride isn’t over yet,” Petzer concluded.
IOL