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imports from the US. is threatened South Africa’s eligibility to remain a signatory of AGOA, almost costing the country’s vehicle market dearly. Had it not made the concessions it did this year, to take 65,000 tons of bone-in chicken from the US each year, a much bigger price to pay may have been to the vehicle export market. Lucrative tari preferences may have been withdrawn, and compromised a market last estimated to have grown to R17 billion, from R4 billion it was worth in 2001, when AGOA started. ese exports rank second in size only to Germany at R21 billion.
Another area of concern for the Americans, which could a ect South Africa’s eligibility to participate in this export arrangement, stems from the Southern African Customs Union, the union South Africa has with its neighbours. Swaziland was struck o the list of eligible bene ciaries, but sneaked in through the back door – so to speak – by capitalising on an arrangement South Africa can make use of, which allows regional inputs up to 35 percent in the value chain of exports to the US. America has questioned why it should not be in uencing decisions in this customs arrangement, if countries like Swaziland are nding their way indirectly back into the trade agreement.
American politics can be a contact sport, more so when trade agreements are under review that put America rst. While there may be casualties in these reviews, a point worth considering is that if Donald Trump achieves the GDP growth of four percent he is aiming for, a er the pedestrian pace of one percent the world’s largest economy has grown by over the past eight years under Barack Obama, will that not be good for the global economy, and by extension
also for South Africa? e challenge for local policymakers is that they may ironically have been given an opportunity to synchronise South Africa’s macroeconomic, scal and monetary policy mix, with seismic changes that are expected to take place in the US political economy. As thinly worn as the cliché may be, it is worth repeating – when America sneezes, the rest of the world catches cold. Watch out!
Colen Garrow has a BCom(Hons) in
Economics. He started a career in banking
with Barclays Bank in 1983, initially on an
accelerated training programme through
foreign exchange and capital markets. He
later pursued the management of forex,
xed income and derivative portfolios
associated with these markets at FirstCorp Merchant Bank, later becoming the economist for the South African-based branch of ABN AMRO Bank in 1997.
He joined Brait, a JSE-listed private equity company, shortly after the 9/11 terror attacks on the US in 2001. In the following decade, he analysed macroeconomic trends in a number of important sectors of the South African economy, predominantly in sectors to do with those that had some association with government’s ambitious infrastructural development programme.
Since his exit from Brait, he started Meganomics, a platform being used for his book based on the nancial crisis South Africa nds itself tangled in with the global economy. As an independent economist, he continues to liaise with monetary and scal policymakers, as well as with a wide range of media. He was also the author of the ‘Market Eye’ column for Business Times for a number of years.
Colen is an award-winning economist, voted a number of times by Reuters as amongst the top ve economists in South Africa and ranked second for the South Africa Economist of the Year award in 2016. He has also won awards from Reuters as having most accurately forecast economic growth for 2011 and 2012.
Author
2 The Corporate Report
African Growth and Opportunity trade agreement under review?