Under Threat: R157 billion in SA vehicle exports

Dear Editor

Democratic Alliance Federal Leader, John Steenhuisen, DA Tshwane Caucus Leader, Cilliers Brink, and DA Gauteng Provincial Leader, Solly Msimanga today paid a visit to the BMW motor vehicle manufacturing plant in Rosslyn, Tshwane to highlight the importance of this economic sector and its reliance on the African Growth and Opportunity Act (AGOA) for its exports.

South Africa’s vehicle manufacturing sector, which accounted for R157 billion in exports in 2022 according to the National Association of Automobile Manufacturers of South Africa (NAAMSA), now faces the very real threat of collapse should South Africa be excluded from AGOA due to its ongoing support of Russia’s invasion of Ukraine.

The DA, including leaders of our governments in the Western Cape and the City of Cape Town, have already engaged US lawmakers on the importance of AGOA’s renewal for regional economies, making the point that the ANC does not speak for South Africa as a supporter of the Russian Federation.

Last week, the DA made a formal submission to the United States Trade Representative in which we strongly motivated for South Africa’s inclusion in AGOA’s annual renewal, which grants our economy preferential access to the US market and the privilege of duty-free exports. Should South Africa’s access to AGOA be revoked as a consequence of its allegiance to Russia, 112 000 jobs in the automotive sector and R435 billion in automotive trade could be wiped out.

In 2022 alone, automotive trade accounted for 16,5% of South Africa’s total trade GDP.

Given that the ANC is hosting an exclusive BRICS Political Parties Dialogue this week, and that the South African government under the ANC plans to host Russian President Vladimir Putin at the 2023 BRICS Summit later this year, South Africa faces the very real threat of economic sanctions with AGOA hanging in the balance.

We are no longer the favourite of the southern African region when it comes to trade, and South Africa’s economy is quickly being outflanked by our neighbours.

The incentive to grant South Africa exclusive access to our key export destinations in the US, the EU, and the UK is no longer guaranteed.

This is especially true in the automotive sector.

According to NAAMSA, the United States was South Africa’s second largest total automotive export market in 2022 with vehicles and components to the value of R24 billion exported to this destination alone.

The largest export market is Germany which imports motor vehicles manufactured in South Africa through dedicated European Union-bilateral trade agreements to the value of R72 billion.

South Africa is also a key manufacturer of right-hand driving vehicles for markets such as the United Kingdom.Companies such as BMW and Mercedes-Benz are key exporters to the US market.

Much of this trade is reliant on AGOA.

South Africans need to realise that our country’s jobs and the security of our economy are intrinsically linked to trade founded on global alliances.

The ANC’s alliance with Russia makes no economic sense if it means sacrificing close to 77% of foreign direct investment stock in South Africa in recent years from the European Union, the United Kingdom, and the United States, including hundreds of billions of rands in trade, for a country with whom our trade is only around 0,3%.

The DA will continue to lobby relentlessly for our inclusion in AGOA to protect the jobs and livelihoods of millions of South Africans who depend on it. Bad foreign policy decisions have dire consequences for emerging economies such as South Africa’s.

The DA will not let the ANC’s allegiance to Russia jeopardise AGOA, the South African automotive sector, and our economy at large based on nothing more than greed and political expediency.

Regards

John Steenhuisen MP
Leader of the Democratic Alliance