SA Trade Minister Parks Tau urges US to extend Agoa to help Africa industrialise

25 Jul 2024

Minister Parks Tau is also holding meetings in Washington with Biden administration officials to try to ensure that South Africa is not dropped from the trade agreement.

New Trade, Industry and Competition Minister Parks Tau has called for an extension of the US African Growth and Opportunity Act (Agoa) when it expires next year to provide long-term certainty to investors in Africa and to traders between the continent and the US.

He was speaking at the annual Agoa Forum, which this year is being held in Washington, DC, to chart the course forward for Agoa. Since 2000, Agoa has provided duty-free access to the US market for the exports of eligible sub-Saharan African countries, including SA.

Tau said by providing long-term certainty to investors and traders, extending Agoa and its duty-free access to the US market would also help African countries to plan ahead and industrialise.

“In many ways, African countries are demonstrating increased improvement in the levels of value chain integration, but the reality is that value chain integration is happening at the primary level.

“The opportunity currently provided is for us to upgrade the level of integration and to get to manufactured goods and value chain integration at a much more secondary level,” said the minister.

He told the forum it was important to see Agoa and the African Continental Free Trade Area (AfCFTA) as complementary “and as functioning in a way that Agoa could supplement the initiatives of the free trade area”.

Tau said Agoa was increasing opportunities for African countries to increase their own capital investments as well as to attract foreign investment. He said the increased access to African markets, which SA manufactured goods were enjoying, also because of the AfCFTA, made SA a more attractive investment destination.

Tau is also holding meetings in Washington with Biden administration officials and congressional leaders to try to ensure that South Africa is not dropped from Agoa when it is generally renewed.

Read more: GNU gives SA a honeymoon period for keeping its Agoa status, say analysts

The threat to end SA’s Agoa trade privileges has emanated largely from Republican members of Congress who believe Pretoria’s warm relations with Russia, China and Iran undermine US national security and foreign policy interests.

They have tabled legislation that would require the Biden administration to review US relations with SA and in particular to establish if SA has harmed US foreign policy and national security interests. A finding to that effect could jeopardise SA’s continued participation in Agoa.

Biden administration backs Agoa

US Secretary of State Antony Blinken told the forum that Biden and the entire US government fully supported the reauthorising of Agoa when it came up for renewal next year and would continue working with Congress to make that happen.

“We’re also focused on modernising Agoa to reflect how our countries and our economies and international markets have evolved since the law was first passed [in 2000]. We see value in an Agoa that is agile, that’s adaptable, that’s capable of driving trade forward in a dynamic environment,” said Blinken.

“For decades, our businesses, American, African, have helped create jobs, uplift communities on both sides of the Atlantic, and build stronger connections between our people. Over the last two decades, a key pillar of that partnership has been the African Growth and Opportunity Act.

“By allowing products from sub-Saharan countries to enter the United States without paying tariffs, Agoa has let entrepreneurs expand to new markets to grow their businesses. It’s created tens of thousands of good jobs across our nations, from Portland, Oregon, to Port Louis, Mauritius.

“It’s helped companies further diversify and strengthen their supply chains so that consumers can benefit from more affordable, more innovative products. Agoa has also created incentives for governments to develop more stable and transparent business environments that attract more and better direct investment.

“It’s given us a platform for building more just societies, helping reduce poverty, protect our planet, defend the rights of our workers.”

Blinken said that at Biden’s Africa Leaders Summit in Washington in December 2022, the US government committed to growing its collaboration with the private sector to boost African economies, through but also beyond Agoa.

“Since then, we’ve been working very closely together and with our colleagues across the United States government to help close hundreds of new private sector deals between African and American businesses. Altogether they’re worth more than $16-billion.

“For example, in March multiple agencies came together to launch the Africa Trade Desk. This is a platform that connects African agricultural producers with more than 20,000 American retailers like Walmart, like Whole Foods.

“Already we’ve helped conclude a $56-million agreement to bring South African grapes to the United States while meeting requirements that promote good conditions for workers.”

Towards integration

Albert Muchanga, the African Union commissioner for economic development, tourism, trade and mining, said Africa was working towards integrating the continent, not only through the AfCFTA, which was now in its third year, but other measures such as creating a single air industry market, harmonising labour, education and medicine authorisation standards and building regional infrastructure such as the Lobito Corridor connecting Angola to the Democratic Republic of the Congo and Zambia.

He urged US businesses to invest in this integrating African free trade market which would provide them with duty-free access to a population of 1.4 billion people and vast reserves of virgin agricultural land and natural resources.

“Investing in the African Continental Free Trade Area also opens up opportunities for US business to export to the US using preferences in Agoa and, in the process, contributing to deeper trade and investment ties between Africa and the United States of America.”

Muchanga said Africa was looking forward to an early and long-term reauthorisation of Agoa. He asked the forum to include in its outcome document a list of measures it would like African policymakers to work on to make the continent a more attractive investment destination.

Eckart Naumann, an independent economist and associate of the Trade Law Centre in Stellenbosch, told the forum that as a result of Agoa there were virtually no more import tariff barriers for African goods entering the US but many other barriers remained to be navigated, especially around technical, sanitary and phytosanitary standards. He said African businesses needed help in navigating these non-tariff barriers.

He added that although the total dollar amount of goods exported to the US under Agoa was not huge, it was important to individual businesses and some industries.

For example, Agoa had helped South Africa to become the second largest foreign supplier of oranges to the US, while South African and Kenyan exports of pecan nuts to the US under Agoa accounted for the majority of US imports of that product. DM

Categories:

Tags:

DM is much better if you are signed in...

Africa

Biden administration backs Agoa

Towards integration