The millionth suit exported by the House of Monatic, early this year, was a milestone for the Cape-based manufacturer of men's clothing - an exporter to the US since 1998.
And the speed with which the company reached this number is a tribute to the Africa Growth & Opportunity Act (Agoa), passed in the US in 2000, says Monatic MD Brian Buckingham.
The Act allows duty-free access, until 2008, for a wide range of products, including clothes, made in sub-Saharan African countries. The concessions have boosted manufactured exports in several sectors.
Buckingham says SA's clothing and textile exports rose 28% to US356m in 2001. SA's overall trade surplus with the US rose by 17% last year to $1,6bn. The US is now SA's main export destination, says Deloitte & Touche trade analyst Riaan de Lange. It absorbed R22,5bn worth of exports in 2001, followed by the UK with R22,1bn.
But it's not just textiles that are scoring. An immediate and substantial spin-off from Agoa was felt in the automotive industry when BMW Germany decided to ship left-hand-drive cars to the US from its SA plants. See page 239.
The deal expands the opportunities SA offers international car makers, many of which are already using SA as an export base for right-hand-drive cars. They include BMW, DaimlerChrysler, Volkswagen, Toyota and Ford.
The industry is SA's top Agoa exporter, followed by minerals and metals, agricultural products and clothing .
The National Association of Automobile Manufacturers of SA says vehicle exports rose nearly 60% in 2001 to 108 293 units, worth about R13,5bn.
The automotive component industry is also benefiting from its export drive. SA is establishing itself as a major exporter of catalytic converters (not covered by Agoa), leather seats, tyres, silencers and wheels.
It is the catalytic converter industry that has outperformed all the others. It is supported by the strong domestic supply of stainless steel and platinum group metals.
Initially, it was assisted by incentives in the Motor Industry Development Programme; importers of cars and car parts can offset the value of their exports against the duty they pay on imports. Fortunately, a reduction in benefits since 1999 is not depressing growth in the subsector.
In 2001, exports of transport equipment showed the highest growth of all sectors. Passenger and transport vehicles and parts and accessories grew by more than 43% to R17,5bn, yachts by 75% and aircraft by 57%, says Marthinus Havenga of FNB Corporate Trade Services.
Strong growth was also seen in other large export categories, says Havenga. Offshore sales of certain types of machinery rose 28% to R17,4bn; and mineral fuels rose 22% to R26,1bn, mainly owing to coal and petroleum oil.
Bad news for SA was that the slowing US economy and the terrorist attacks on the US in September put downward pressure on most commodity prices. Though still the largest foreign-currency earner for SA, the category "precious metals" (which includes gold and diamonds) rose only 6,6% to R54,5bn.
Platinum exports are not included in this figure because Customs & Excise classifies platinum as a strategic product and doesn't disclose the value of exports. Havenga estimates the value of platinum exports could be higher than that of gold.
Exports overall rose 20% to nearly R262bn last year, largely because of the 14,5% depreciation in the average trade-weighted value of the rand in 2001. Import values, of course, were also affected by the rand depreciation.
The net figure is the best measure of SA's foreign trade trends because it strips out the exchange rate factor. SA's surplus with the rest of the world rose to R34,7bn last year, from R23,7bn, R18,9bn and R4,3bn in the three preceding years.
Agoa played an important role in feeding this growth. Other trade agreements added extra punch. The Trade Development & Co-operation Agreement with the European Union, signed in October 1999 and implemented on January 1 2000, was the first important breakthrough for SA.
The EU agreed to scale down tariffs on SA exports of industrial goods, and on 75% of agricultural products. SA agreed to cut tariffs on 86% of EU exports over 12 years. The net result is that SA's trade surplus with the EU is rising. In the first 10 months of 2001 it stood at R25bn, compared with R17bn in 2000 and R6bn in 1999.
Havenga says new emerging markets, such as China and Nigeria, will provide sustained growth. Exports to China are growing at about 40%/year. From a few hundred million rand about four years ago, they were worth nearly R4bn last year. And Nigeria has the potential to become SA's largest trading partner in Africa, says Havenga. Between 1997 and 2001 exports to that country grew by more than 60%/year, to R1,6bn.
The outlook overall is promising because there is strong pressure on advanced economies to allow imports from developing countries to enter their markets. For instance, this year, a concession came from the US that exempted SA from tariffs of up to 30% on steel imports.
So the trend in the annual trade surpluses should continue as more benefits flow from trade negotiations and possibly from international trade reform.