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South Africa's trade minister off to the US to save country from AGOA agony

South Africa's trade minister off to the US to save country from AGOA agony
SA trade Minister, Ebrahim Patel
Published date:
Tuesday, 13 June 2023
Author:
THANDO MAEKO

South Africa is expected to send a high-level delegation headed by trade, industry & competition minister Ebrahim Patel to the US in July as part of the country’s plan to remain eligible for preferential access to US markets.

Patel is expected make an oral submission to the office of US trade representative Katherine Tai to ensure SA remains one of 35 Sub-Saharan countries eligible for trade benefits under the African Growth and Opportunity Act (AGOA) for 2023.

The submissions are to come ahead of the 10-year review of SA’s eligibility for the trade pact, which expires in 2024.  [Ed: September 2025]

“This is standard practice, and talks such as these are usually conducted at ministerial level,” a government official close to the talks told Business Day.

The trip to the US comes amid fears of SA being kicked out of the programme that gives African countries duty-free access to US markets for certain goods such as textiles.

This follows a bipartisan group of US legislators writing to the country’s secretary of state, Anthony Blinken, national security adviser Jacob Sullivan and Tai last week asking for the upcoming AGOA Forum to be hosted in another country. The forum is intended to map the way forward for trade relations between the US and SA.

US-SA trade relations came under pressure after Washington accused SA of providing weapons to Russia in its war on Ukraine, a charge Pretoria has denied. President Cyril Ramaphosa has launched an inquiry into the docking of a Russian ship said to be involved led by retired judge Phineas Mojapelo.

“These actions by SA call into question its eligibility for trade benefits under AGOA due to the statutory requirement that beneficiary countries do not engage in activities that undermine US national security or foreign policy interests,” the US legislators wrote in their letter.

“While we understand that the AGOA eligibility review process for 2024 is under way and that decisions have not yet been made, we question whether a country in danger of losing AGOA benefits should have the privilege of hosting the 2023 AGOA Forum.”

The request by the US legislators is an early indication of the US’s political willingness to penalise SA for its perceived alliance with Russia despite the Ramaphosa administration denying it and saying that the country remains nonaligned in what it says is a conflict between Moscow and Kyiv.

One of the conditions of trade with the US is that its trade partners should not engage in activities that harm Washington’s national security interests or provide support for acts of international terrorism. Another is that these countries should co-operate in international efforts to eliminate human rights violations and terrorist activities.

In a separate process, Ramaphosa plans to send a high-powered delegation of ministerial envoys to meet Group of Seven (G7) countries to explain SA’s nonaligned stance on the Russia’s invasion of Ukraine. The envoys will include international relations & co-operation minister Naledi Pandor, Patel, finance minister Enoch Godongwana and minister in the presidency Khumbudzo Ntshavheni.

Any negative shift in trade relations between the US and SA would have a devastating effect on the local economy as the country battles an electricity crisis, which is hampering its growth prospects.

SA qualifies for preferential trade benefits under AGOA, which permits SA to export more than 7,000 goods to the US duty-free. The US is SA’s third-largest trading partner with more than 600 US companies operating in SA.

Foreign direct investment in SA from the US was valued at R116bn in 2019, a 6.8% increase from 2018. US direct investment in SA is led by manufacturing, finance, insurance and wholesale trade. SA’s foreign direct investment in the US was valued at R59bn, up 1.2% from 2018.

On Tuesday, department of international relations & co-operation spokesperson Clayson Monyela was adamant that the AGOA Forum will still be hosted in SA despite the push by US legislators to move the conference to another country.

“There is no decision by the state department/White House to move the AGOA Forum from SA,” Monyela said.

“President Cyril Ramaphosa’s special envoys recently visited the US ... to explain SA’s active nonaligned position on the Russia-Ukraine conflict to key stakeholders and decision-makers. Our diplomats in Washington continue to engage on these matters.”

The AGOA Forum is likely to be held after the Brics (Brazil, Russia, India, China, SA) summit, at which the presence of Russia’s President Vladimir Putin is uncertain after the International Criminal Court (ICC) issued a warrant of arrest for him.

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