Agoa still in the balance for South Africa, and pressure must be sustained on the US

29 Jul 2024

New Minister of Trade, Industry and Competition Parks Tau has made a compelling case that South Africa is seeking to reset its relationship with the United States, which has faltered during the past few years.

Last week, the 21st Africa Growth and Opportunity Act (Agoa) Forum was held in Washington DC. This annual forum is mandated by the Agoa legislation and is meant to provide an opportunity for stakeholders to evaluate the programme’s successes and shortcomings.

The first day of the event provided opportunities for the private sector, civil society and African governments to gather and provide their inputs to the formal government-to-government forum held on days two and three. This year’s forum was a subdued affair, perhaps owing to the unprecedented political dynamics in Washington, the visit of Israeli Prime Minister Benjamin Netanyahu, or plain Agoa Forum fatigue – or a combination of the three.

The private sector forum was opened by US Trade Representative Katherine Tai and Secretary of State Antony Blinken. Both members of President Joe Biden’s cabinet underscored the importance of US-Africa trade and the renewal of the Agoa legislation which expires next year.

While there has been historic bipartisan support for Agoa since its passage in 2000, the debate has centred on what to include in the next version of the Bill. Some argue that a lean Bill will speed up passage and provide relief to the tens of thousands of textile and apparel jobs that depend upon the generous market access that Agoa provides.

Others argue that such extensions come along infrequently and provide an opportunity to include other products and services and modify some of the Bill’s more contentious provisions, namely annual reviews for eligibility and the complete removal of a country’s eligibility when any of the Bill’s conditions are violated.

The latter has caused the collapse of industries (and loss of thousands of jobs) in Ethiopia, Madagascar and Swaziland, and keeps investors on a knife’s edge, thereby thwarting business expansion. There is also a consensus that the longer the extension, the better.

Apart from these procedural aspects of the Bill, there is a recognition that much has changed since passage in 2000. Certainly, China’s trade volumes with Africa have gone from unmeasurable to being fourfold those of the US.

Also, Africa has become a vital supplier of critical minerals to the US, although the US is arriving late to the scene as China has become the dominant supplier of refined critical minerals vital to the US defence, automotive and ICT industries.

The Senate Foreign Relations Committee has introduced a version of a Bill to re-authorise Agoa, and it is rumoured the House Foreign Affairs Committee will do the same within the coming weeks.

However, the main jurisdiction of trade legislation lies within the powerful House Ways and Means Committee, where the details will be ironed out. With any luck, the committee will introduce its version before the August Congressional recess with hopes that the Bill can be debated and passed in September, or during the “lame duck” period after the November elections.

Leaving the Bill to be enacted during the next Congress is a perilous proposition given what may be a contentious political environment.

Washington delegation

In advance of the Agoa Forum, Parks Tau, SA’s new Minister of Trade, Industry and Competition led a delegation to Washington to meet think tanks, business associations, and Congress. Minister Tau was joined by Deputy Minister Andrew Whitfield, senior Department of Trade Industry and Competition staff, and leaders from the labour and private sectors, including leaders from Business Unity South Africa (Busa).

While new to the job, Minister Tau made a compelling case that South Africa is seeking to reset its relationship with the United States, which has faltered during the past few years because of disagreements over the Russia-Ukraine War, military exercises with Russia and China, the war in Gaza and the case against Israel at the International Court Of Justice, and South Africa’s perceived leadership of efforts to create a new world order that better reflects the interests and aspirations of the Global South.

Minster Tau and the delegation persistently raised concerns over the US-South Africa Bilateral Relations Review Act, introduced by Representative John James which calls for an out-of-cycle review of US bilateral relations with South Africa.

The concerns were raised given South Africa’s continued eligibility for Agoa’s free market access, which accounts for about 25% of South African exports into the US and is responsible for a thousand or so jobs in the automotive and agricultural sectors.

The James Bill passed with a comfortable bipartisan margin in the House as an amendment to the National Defense Authorization Act (NDAA) and Minister Tau expressed his hope that the Senate would not pass similar legislation which would effectively turn the Bill into law.

Minster Tau pleaded that such Senate action would be ill timed, given the successful May elections and the formation of the Government of National Unity. It would also play into the hands of those forces in South Africa which seek a continued division of economic and diplomatic relations with the US.

It remains to be seen whether a Democrat-controlled Senate will include a version of the James Bill in the NDAA, but even if it does, South Africa’s eligibility may not be at stake. This is because the State Department, in consultation with other US government agencies, will conduct a review and may conclude that SA is compliant with Agoa’s eligibility provisions in the interest of not appearing punitive to the new political order in South Africa.

However, as seen by this week’s sanctioning of two South African citizens by the US Department of Justice for providing financing to Isis, these considerations are also operating on a knife’s edge, and sustained engagement by Minster Tau and by those communities, businesses, neighbouring countries and customers affected by such measures need to be heard in Washington. DM

Anthony Carroll is a Non-Resident Fellow at the Carnegie Endowment for International Peace.

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Washington delegation