Concern over tariff advantage which EU would enjoy AS THE negotiations between SA and the European Union (EU) on a duty-free trade pact get nearer completion, the US government is expressing a desire to follow the same route.
This, according to reports from the US, is largely stimulated by the cost-disadvantage that US exporters would face if EU competitiors gained duty-free access to the SA market.
This was publically expressed in a report to Congress where the White House warned that “should the current negotiations result in a preferential trade agreement providing European manufacturers duty-free access, US exporters would face a 5% to 35% tariff wall not inhibiting their European competitors.” A bilateral trade pact between the US and SA would, the report suggested, be a means of levelling off this imbalance in competitive advantage.
This is the second time that the US has hinted at such a trade deal - although last year’s suggestions were rejected by Congress because (incidentally to the SA proposal) President Bill Clinton requested authority to “fast track” trade agreements, which Congress could not subsequently amend.
A second attempt at this “fast tracking” proposal is expected this year, and the SA trade deal could very well be a test-case if it is implemented.
While SA would benefit from both of these possible trade pacts in a reverse, duty-free access to these two market areas, local manufactueres have expressed some concern about them. The likes of the US and the major EU nations fighting a duty-free price war in this country might benefit their exporters, the industrialists say, but such a war could have the unwelcome offshoot of blowing local-manufacturing competition apart.
The losses could well outstrip the gains, said one worried manufacturing executive.
