SA is on a diplomatic drive to retain its status as a beneficiary of the African Growth and Opportunity Act (Agoa), with trade, industry & competition minister Parks Tau saying that early and long-term reauthorisation of the US legislation will provide policy certainty for investors and spur industrialisation on the continent.
Tau’s comments echoed US President Joe Biden’s earlier call on the first day of the Agoa Forum on Wednesday to extend the legislation beyond 2025, when it is due to expire.
“Reauthorisation of Agoa will also enable the US market to benefit from an expanded basket of goods from Sub-Saharan beneficiaries, a flow for more manufactured goods to be exported under the trade agreement,” said Tau.
“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 a primary level and the opportunity currently provides for us to upgrade the level of integration to manufactured goods.”
He was speaking at a panel on Wednesday on the sidelines of the Agoa Forum in Washington. SA is on a diplomatic drive to be kept as a beneficiary of the programme — which provides duty-free access to US market for eligible products from Sub-Saharan African countries — amid a deterioration of SA-US relations in recent years.
In May the US House of Representatives passed legislation requiring the Biden administration to review SA relations. The US-SA Bilateral Relations Review Act is not yet law. It has to pass in the Senate and be signed into law by the president.
US-SA relations have been marked by tension for two years, sparked by Russia’s invasion of Ukraine in February 2022.
The US and European governments are conducting an intensive campaign to rally African governments against Moscow’s invasion of Ukraine. SA chose to remain nonaligned.
SA’s participation in Agoa came under threat in 2014 because it is an upper-middle-income country, while the programme’s support measures are aimed at lower-income countries. As a unilateral trade agreement, it was up to the US to decide on SA’s future inclusion or exclusion.
Yet SA politicians contend that without SA, Agoa, which intersects with the US’s broader national security considerations, would be less successful because the country’s developed infrastructure plays a critical role in facilitating the movement of goods.
For SA, Agoa provides preferential access for about 20% of its exports to the US, or 2% of its shipments globally. SA was the second-largest Agoa exporter in 2023, behind Nigeria, and the largest exporter of noncrude oil products ($3.6bn in 2023), supplying a range of products, including vehicles, yachts, jewellery, chemicals and fruit.
Speakers on the first day of the forum included US secretary of state Antony Blinken, AU economic development, tourism, trade & mining commissioner Albert Muchanga and Standard Bank Corporate and Investment Banking client coverage head Anne Aliker, alongside other corporate executives and business leaders.
Biden has called for speedy reauthorisation and modernisation of Agoa, calling it “the bedrock of America’s economic partnership with African nations” for two decades.
Blinken, who made opening remarks at the forum, reiterated Biden’s commitment to extending the legislation, and said that Agoa should reflect the changed nature of economies and trade between Africa and the US.
The new Agoa should “be agile, adaptable and driving value forward in a dynamic environment. Whether we are trying to meet climate goals, preparing for the next pandemic or respond to shifting global demands, we want Agoa to be ready to support the businesses and the economies of the future.”
Update: July 24 2024
This story has been updated with new information throughout.
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