Agoa Extension Lays Strong Groundwork for Improved SA-US Relations

Parks Tau, the Minister of Trade, Industry, and Competition, has commended the United States for its decision to permit South Africa to continue reaping the benefits of the African Growth and Opportunities Act (Agoa) for an additional year. He stated on Monday that this initiative “creates a solid foundation to enhance SA-US relations.”

The announcement from the Biden administration arrived just ahead of the inauguration of President-elect Donald Trump in January. This extension guarantees South Africa’s involvement in the program for at least one more year; however, the South African government is keen to persuade Trump during next year’s review as the G20 Summit in Johannesburg draws near.

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Thanks to Agoa, South Africa, along with 31 other nations in sub-Saharan Africa, enjoys duty-free access to markets in the United States.

In a statement issued on Saturday, December 21, US Trade Representative Sam Michel confirmed that the list of eligible countries under Agoa remains unchanged, along with the list of ineligible countries.

“Following the results of the annual Agoa eligibility review, which included a public hearing in July led by the Office of the United States Trade Representative, President Biden has chosen to maintain Agoa benefits for all countries currently qualified under the program,” Michel remarked.

“South Africa is eager to cooperate with the US in areas that are mutually beneficial,” expressed Tau.

The minister also expressed gratitude for the lack of provisions regarding the review of SA-US relations in the National Defense Authorization Act that the US Congress has forwarded to Biden for his approval.

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In June, the US House of Representatives passed legislation mandating the Biden administration to conduct a comprehensive assessment of the US-South Africa relationship.

This development was triggered by South Africa’s connections with Russia, China, and Iran, prompting an evaluation of whether these ties pose a threat to US national security.

SA lobbying

Since the formation of the government of national unity (GNU), the administration has made considerable strides to bolster relations with the US.

In September, Minister of International Relations and Cooperation Ronald Lamola visited Washington DC, labeling the trip a “successful working visit.”

Before Lamola’s journey, Tau and his deputy Andrew Whitfield were in the US from July 24 to 26 for the 21st Agoa Summit.

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Briefing the media after the Agoa summit, Tau voiced his hope that South Africa’s benefits would be prolonged before the US elections in November 2024. He emphasized that the “least ideal” scenario would have been a delay in any Agoa decision until 2025.

Trade under Trump

Trump’s possible return to the presidency in November raises alarms about a potential global trade war should he act on his threats of tariff increases.

South Africa may be at risk, not only due to its position on Israel and closeness to Russia but also because of its membership in the Brics group.

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In early December, Trump cautioned via his social media platform, Truth Social, that Brics nations might face “100% tariffs” if they attempted to establish a new currency to replace the US dollar.

“We require a commitment from these countries that they will not develop a new Brics currency or support any other currency to replace the mighty US dollar; else, they will confront 100% tariffs and should be prepared to say goodbye to selling in the wonderful US economy,” Trump stated.

US-SA trade numbers

South Africa’s exports to the US jumped from US$1.9 billion (approximately R35.2 billion) in 2019 to $3.3 billion (R61.12 billion) in 2023 under Agoa, which includes the Generalized System of Preferences (GSP) initiative.

In 2023, 25% of South Africa’s total exports to the US occurred under Agoa and GSP, with Agoa contributing 21% to this total, Tau highlighted.

The principal exports from South Africa under Agoa comprise automotive products and components, ferro-alloys, citrus fruits, jewelry, nuts, chemicals, wines, as well as ships and boats.

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According to Tau, Agoa, which was initiated under President Bill Clinton in 2000 and has been renewed twice, is set to expire at the end of September 2025.

There are expectations for its extension by the US.

“As part of broader continental efforts, South Africa has urged the US Congress to contemplate extending Agoa for at least an additional 16 years, ensuring the inclusion of all countries in the program to foster and enhance regional value chains,” Tau remarked.

“Maintaining all beneficiary countries will also guarantee that Agoa supports the African Continental Free Trade Agreement and, more extensively, the continent’s regional integration initiatives.”

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