Parks Tau, serving as the Minister of Trade, Industry, and Competition, has expressed his approval of the United States’ recent decision to allow South Africa to continue receiving benefits from the African Growth and Opportunities Act (Agoa) for another year. On Monday, he noted that this development “sets a strong foundation for enhancing SA-US relations.”
The announcement from the Joe Biden administration was made just ahead of the inauguration of President-elect Donald Trump in January. This extension guarantees South Africa’s participation in the program for at least another year; nevertheless, the South African government is keen on persuading Trump during the upcoming review and as the G20 Summit in Johannesburg draws nearer.
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Thanks to Agoa, South Africa, along with 31 other sub-Saharan African nations, enjoys duty-free access to US markets.
In a statement released on Saturday, December 21, US Trade Representative Sam Michel affirmed that the list of countries eligible for Agoa remains unchanged alongside the ineligible countries list.
“Following the annual Agoa eligibility review, which included a public hearing chaired by the Office of the United States Trade Representative in July, President Biden has chosen to maintain Agoa benefits for all currently eligible countries,” Michel explained.
“South Africa is eager to work with the US on areas of mutual benefit,” said Tau.
The minister also expressed approval that the National Defense Authorization Act, which the US Congress has sent to Biden for his signature, does not include provisions related to the review of SA-US relations.
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In June, the US House of Representatives passed legislation mandating the Biden administration to perform a comprehensive evaluation of the US relationship with South Africa.
This move was triggered by South Africa’s connections with Russia, China, and Iran, which led to concerns about whether these alliances posed threats to US national security.
South Africa’s lobbying efforts
Since the establishment of the government of national unity (GNU), the executive has undertaken significant initiatives to enhance relations with the US.
In September, Minister of International Relations and Cooperation Ronald Lamola visited Washington DC, describing the trip as a “productive working visit.”
Before Lamola’s visit, 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 expressed optimism that South Africa’s benefits would be confirmed prior to the US elections in November 2024. He indicated that it would be “far from ideal” to delay any Agoa decisions until 2025.
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The prospect of Trump returning as US President in November raises alarm over the potential for a global trade conflict if he acts on his threats to impose tariff hikes.
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South Africa could face risks due not only to its views on Israel and its closeness to Russia but also its affiliation with the Brics group.
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In early December, Trump issued a warning via his social media platform, Truth Social, claiming that Brics nations could be subject to “100% tariffs” if they sought to develop a new currency to rival the US dollar.
“We demand a commitment from these nations that they will not create a new Brics currency or support any other currency to overshadow the powerful US dollar; otherwise, they should brace for 100% tariffs and can expect to lose the ability to trade in the fantastic US marketplace,” Trump asserted.
US-South Africa trade statistics
South Africa’s exports to the US jumped from US$1.9 billion (around R35.2 billion) in 2019 to $3.3 billion (R61.12 billion) in 2023 under Agoa, which also incorporates 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 making up 21% of this total, as noted by Tau.
The primary exports from South Africa under Agoa include automotive items 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 began under President Bill Clinton in 2000 and has been renewed two times, is scheduled to end in September 2025.
There are expectations for its reauthorization by the US.
“In line with continental initiatives, South Africa has urged the US Congress to contemplate extending Agoa for an additional 16 years, retaining all countries within the program to support and enhance regional value chains,” Tau stated.
“Including all beneficiary nations will also guarantee that Agoa backs the African Continental Free Trade Agreement and, more broadly, the continent’s regional integration efforts.”
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