Essay on Doing Business in BRICS Nations

Part 2: Government and Trade

Trade Relationship between Countries

In 1929, the United States developed diplomatic ties with South Africa. It views South Africa as a critical partner in health, security, and trade. South Africa has a vital political and economic goal in Africa, and the two countries have similar development goals in the African continent. On regional and international concerns, the United States is looking for ways to strengthen US-South African collaboration. (U.S. Embassy & Consulates in South Africa, 2018)

Shared principles in democracy and comprehensive bilateral agreement on African development goals have made ties between the United States and South Africa cordial. South Africa has a significant U.S. diplomatic presence, and on multiple occasions, it has hosted high-level U.S. leadership visits. South Africa is an essential ally of the United States, with close relations in the digital economy, the environment, health, and education. (Bureau of African Affairs, 2021)

Exports

In 2019, South Africa ranked 45th in terms of U.S. export products. The United States exported up 20.6 per cent from 2009 with $5.4 billion in goods to South Africa, but down 2.9 per cent ($162 million) from the previous year. The top two-digit H.S. export categories in 2019 included; Aeroplanes ($310 million), machinery, automobiles, electrical machinery, and mineral fuels. In 2019, South Africa imported $365 million in agricultural products from the United States. United States’ Services exports to South Africa totalled $2.6 billion in 2019, up 2.4 per cent ($61 million) from the previous year and 6.0 per cent from 2009. Intellectual property (industrial processes),Travel, and transportation were United States’ top services exports to South Africa. (Office of the United States Trade Representative, n.d.)

Imports

In 2019, South Africa was the 35th most significant source of products imported into the United States. Imports of South African commodities into the United States totalled $7.8 billion in 2019, down 7.9% ($666 million) from the previous year. The top import categories in 2019 included; Iron and steel ($576 million), Precious metals and stones (platinum) ($3.5 billion), ores, slag, and ash (ashes and residues) ($524 million), machinery ($414 million) and automobiles ($435 million). In 2019, the United States imported $389 million worth of agricultural goods from South Africa. The United States imported $2.0 billion in services from South Africa in 2019, up 4.4 per cent ($84 million) from the previous year and 32.5 per cent from 2009. The tourism, managerial and professional services, and transportation sectors were the top United States imports from South Africa. (Office of the United States Trade Representative, n.d.) SOLA being in the transport sector, has a very high opportunity for growth and expansion in South Africa.

Financial Environment

In 2019, the United States invested $7.8 billion in South Africa (stock), up 6.8% from the previous year. Wholesale commerce, manufacturing, finance and insurance, are the mainstays of direct investment from South Africa in the USA. Foreign direct investment (stock) from South Africa in the United States went up 1.2 per cent from the previous year and reached $4.1 billion in 2019. In 2017 (the most recent statistics available), U.S. organizations sold services worth $6.8 billion in South Africa, while most South African-owned corporations sold services worth $97 million in America. In 2019, America’s deficit in goods was $2.4 billion, down 17.2% ($504 million) from the previous year with South Africa. The U.S. had a $648 million trade surplus in services in 2019, down 3.4 per cent from the prior year with South Africa. (Office of the United States Trade Representative, n.d.)

The two nations are in The World Trade Organization, alongside The United Nations, International Monetary Fund, and other International Trade Organizations. A Trade, Investment, and Development Cooperative Agreement (TIDCA)” was signed by the Southern African Customs Union and the United States. (U.S. Department of State, 2021) Some 600 American companies operate and have South Africa headquarters. PEPFAR, or “The President’s Emergency Plan for AIDS Relief,” has funded “South Africa’s HIV response” with more than $6.2 billion since 2004. South Africans are qualified for particular trade advantages under “The African Growth and Opportunity Act and The United States Generalized System of Preferences program.” A tax treaty between the two countries prohibits taxing goods and services twice between the two nations. (Bureau of African Affairs, 2021)

Companies in the United States might act as cheerleaders for the AfCFTA (Africa Continental Free Trade Area) by moving their focus toward higher-value-added manufacturing and services away from extractive industries and integrating their operations across borders. Ford invested $1 billion in its South African business, and it demonstrated its confidence in the continent. The United States has a one-of-a-kind chance to help African unity and economic development with the AfCFTA by aligning its investment and trade policies toward Africa. It is a once-in-a-lifetime opportunity. (Mold, 2021) SOLA must understand that they must be inventive because technology and how people conduct business is continuously evolving. They must have faith in their ideas, decisions, and objectives; else, success will be difficult. To summarize, I feel that the entrepreneurship situation in South Africa is steadily improving, and SOLA should seize this opportunity.

References

Bureau of African Affairs. (2021, April 15). U.S. Relations With South Africa. United States Department of State. https://www.state.gov/u-s-relations-with-south-africa/

Mold, L. M. A. A. (2021, June 21). Charting a new course in US-Africa relations: The importance of learning from others’ mistakes. Brookings. https://www.brookings.edu/blog/africa-in-focus/2021/06/21/charting-a-new-course-in-us-africa-relations-the-importance-of-learning-from-others-mistakes/

Office of the United States Trade Representative. (n.d.). South Africa | United States Trade Representative. Https://Ustr.Gov/. Retrieved October 5, 2021, from https://ustr.gov/countries-regions/africa/southern-africa/south-africa

U.S. Department of State. (2021, April 15). U.S. Relations With South Africa. United States Department of State. https://www.state.gov/u-s-relations-with-south-africa/

U.S. Embassy & Consulates in South Africa. (2018, September 26). Policy & History. https://za.usembassy.gov/our-relationship/policy-history/