SA has secured its African Growth and Opportunity Act (Agoa) benefits for another year, allowing duty-free access to US markets in 2025.
Agoa requires US legislators to conduct annual eligibility reviews of beneficiaries. For SA, retaining its status as a beneficiary is crucial as Agoa provides preferential access for about 20% of the country’s exports to the US, or 2% of its shipments globally.
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 is up to the US to decide on SA’s future inclusion or exclusion.
In May, the US House of Representatives passed the US-SA Bilateral Review Act, requiring the Biden administration to undertake a full review of SA relations with the US. It first needs to pass in the Senate before it can be signed into law by the US president.
The bill was hugely critical of SA’s foreign policy stance of non-alignment and cited its “siding with malign actors, including Hamas, a US-designated foreign terrorist organisation and a proxy of the Iranian regime while continuing to pursue closer ties with the People’s Republic of China and the Russian Federation”.
In a statement released over the weekend, however, the US maintained the status quo and SA will continue to enjoy its benefits through 2025.
“Based on the results of the annual African Growth and Opportunity Act (Agoa) eligibility review, which included a public hearing in July that was chaired by the Office of the US Trade Representative, President Biden has determined to maintain Agoa benefits for each country now eligible under the programme,” US Trade representative Sam Michel said in a statement over the weekend.
About 32 sub-Saharan countries are beneficiaries of the act.
“The list of eligible and ineligible countries will remain unchanged for 2025,” Michel said.
The next hurdle for SA and other African beneficiaries of Agoa who had been lobbying for a renewal of the trade agreement, is to ensure that it is renewed for at least another ten years before its expiry in September 2025.
Agoa was signed into law by President Bill Clinton in May 2000. The legislation was reviewed again in 2015 and extended for 10 years after contentious debate. The revisions made it easier to become eligible and focused on improving the future business environment in developing African countries.
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, jewellery, chemicals and fruit.
The Biden administration has endorsed not only an early renewal of the legislation but also an extension for 16 years. However, the incoming Trump administration, which is expected to have restrictive trade policies, , could express a different view.
To secure another extension, which was granted for 2025, the legislation will need to win approval in the US Congress, where Republicans hold the majority after Trump’s electoral victory in November.
Donald Trump is due to be sworn in as the country’s president on January 20.
Business Day previously reported that trade, industry & competition minister Parks Tau pushed for the relaxation of eligibility requirements, including setting aside requirements not related to trade.
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