With an assassination attempt on Trump and Biden stepping out of the presidential race, America is making the headlines, but South Africans have another concern when it comes to America – trade relations. Just how crucial is this trade partnership and can it survive the political differences between the two countries? How important are we to America and vice versa?
South Africa is the largest U.S. trade partner in Africa, with a total goods and services trade of an estimated $25.5 billion in 2022. Exports were $9.3 billion and imports were $16.2 billion. (Read more) Seems like significant numbers to me even though they fade in comparison to America’s top commercial partner, the EU amounting to $1315 billion in 2022 for trade and services. (Read more) Although South Africa is not nearly in the league of many of America’s other trading partners, it should be significant to the US as it is their most important partner in Africa. Adding to this, approximately 600 American businesses operate in South Africa, and many of those use South Africa as regional headquarters. Agreements that are in place are the amended Trade and Investment Framework Agreement (TIFA – 2012) and the Trade, Investment, and Development Cooperative Agreement (TIDCA – 2008) as part of the Southern African Customs Union. (Read more) There is also a bilateral tax treaty that prevents double taxation and fiscal evasion, and America’s foreign direct investment (FDI) led by manufacturing, finance, insurance and mining in South Africa (stock) was $7.4 billion in 2022, a 11.9 percent increase from 2021. (Read more)
SARS statistics indicate the USA as South Africa’s second most important country for exports (7.8%), behind China (11.7%) and third on the list for imports (7.2%), behind China (18.8%) and Germany (7.3%). Except for the obvious trade benefits, South Africa’s sentiments toward the likes of Russia, Iran and China have been detrimental to the relationship with America and according to the Institute of Security Studies, this cordial relationship has become difficult to manage from a political partnership perspective. (Read more)
Some weeks ago, I mentioned the positive effects of trade agreements such as the AGOA agreement between America and Africa. (Read more) Some members of the US Congress have however called for South Africa to be excluded from the agreement because of our geopolitical stance when it comes to key issues and therefore a South African delegation to Washington is trying to ensure that the preferential import rates stay in place. According to economist Dawie Roodt, the new national government of unity and the coalition with a more business-friendly alliance partner should be a positive factor in these discussions. With unemployment at a high and economic growth at a low, a positive trade environment with an important partner is essential to South Africa. (Read more).
South Africa puts the emphasis on its importance as a trading partner to America, but as the strategic partnership between South Africa and America is being questioned, it seems that the continuance of such a partnership might be about more than economics. Will politics and policy weigh more than the potential and profitability of our economic ties? Let’s hope not!