South Africa's official opposition DA party urges US legislators to keep SA in AGOA trade pact
The DA has urged US legislators to keep SA as a member of a trade pact that gives African countries preferential access to US markets, saying its removal will have unintended consequences for both countries.
This comes ahead of the US government’s virtual hearings, starting on July 24, when 35 sub-Saharan countries, including SA, are expected to make oral representations in a bid to retain trade benefits under the African Growth and Opportunity Act (Agoa). Written submissions were due on July 7.
The DA submission to US trade representative Katherine Tai come amid concern that SA could be removed from Agoa due to the government’s stance on Russia’s war on Ukraine, which has irked its Western trade partners, including the US.
This comes after a bipartisan group of US legislators wrote to secretary of state Anthony Blinken and other senior US government members last month, asking for the coming Agoa forum to be hosted in a country other than SA. The forum, scheduled to be hosted in SA later this year, is intended to map the way forward for trade relations between the US and SA.
Business Day has seen the DA letter to US legislators, dated July 7, in which DA finance spokesperson Dion George says that keeping SA in Agoa is also in the best interests of the US because of SA’s political influence in Africa and global affairs, US reliance on SA mineral resources used in the manufacturing sector, particularly for hi-tech goods and green technologies, and the growing consumer market in SA, which could be beneficial for US companies.
“If SA were to become unstable, due to a strained relationship with the West, it would have far-reaching consequences for the entire region. With the ongoing rise in immigration from unstable and poor countries to the West, an unstable Southern Africa region might create another frontier for immigrants. This stability also aligns with the US’s interest in maintaining global peace and security,” George says.
“As income levels rise, the continent is becoming an increasingly important consumer market. American companies stand to benefit significantly from this growth, but only if they maintain a strong presence on the continent. SA, with its well-developed infrastructure and relatively stable political environment, is a key gateway to this market.”
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 since 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.
George says that should SA be removed from Agoa, SA exporters to the US would suffer loss of market access and revenue to the tune of R59.9bn.
“This duty-free access to the US market has been instrumental in maintaining our trade surplus, which stood at R150.89bn in 2022,” George says.
“The tariff benefit of Agoa for exports of autos to the US is about 10%, equating to a saving of around R3bn. Without Agoa, these savings would be lost, pricing SA cars out of the US market and hindering our industrial growth.”
Read related news articles
US-Africa trade deal turns 25 next year: AGOA's winners, losers and what should come next
The African Growth and Opportunity Act (Agoa) is a landmark piece of trade legislation enacted by the United States in 2000. Its goal is to promote economic growth, development and poverty reduction in sub-Saharan Africa by providing qualifying countries with duty-free access to the US market for over 6,500 products. By eliminating import tariffs and quotas, Agoa aims to stimulate trade, attract foreign investment and foster economic...
06 May 2024
African trade coalition backs AGOA 16-year renewal bill to boost trade prospects
The African Coalition for Trade (ACT) has voiced its support for the African Growth and Opportunity Act (AGOA) Renewal and Improvement Act of 2024 and credits the bill with creating hundreds of thousands of direct jobs in Africa and the US. The AGOA Renewal and Improvement Act of 2024 which was introduced by Senators Chris Coons and James Risch would extend the bill for 16 years until 2041 and continue to boost Africa’s duty-free status as...
18 April 2024
US apparel and footwear industry supports 16 year AGOA renewal
The American Apparel & Footwear Association applauds Senator Chris Coons (D-DE) and Senator James Risch (R-ID) for introducing the AGOA Renewal and Improvement Act of 2024.Currently set to expire in September 2025, AGOA is a pivotal trade preference program that provides duty-free access to the U.S. market, fostering economic growth and opportunity between the U.S. and eligible African countries. This program is the cornerstone of...
11 April 2024
US senators introduce bill to renew Africa trade pact through 2041 [Download copy]
A bipartisan group of senators will introduce a bill to renew the United States' trade pact with sub-Saharan Africa ahead of its expiration next year, an aide to one of the senators said on Thursday. [ Download it here and download a summary here] The bill was introduced by Senators Chris Coons, a Democrat, and James Risch, the top Republican on the Senate Foreign Relations Committee. A cross-party group of...
11 April 2024
US manufacturing subsidies for Africa could help revive AGOA
Experts at the Center for Global Development argue that the unconventional approach could bring billions in new trade opportunities and would fit with US “friend-shoring” efforts. The US should pay ‘negative tariffs’ in Africa – essentially targeted manufacturing subsidies – to help revive its faltering African Growth and Opportunity Act (AGOA), according to a new report from the Washington-based Center for Global...
05 April 2024
South Africa walks a tightrope on US relations
South Africa has been conducting a high-wire act in its relations with the United States (US). It is maintaining friendships with Washington’s enemies like Russia, Iran and China while trying to avoid disrupting its economic relations with America. Tensions came closer than ever to breaking point this month as the US House of Representatives’ Committee on Foreign Affairs passed the US-South Africa Bilateral Relations...
28 March 2024
Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship
As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country. I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...
13 March 2024
South African president Ramaphosa meets with US congressional delegation
South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...
21 February 2024
US and African civil society stakeholders seek AGOA extension
A Civil Society Organisation, Network and other stakeholders from across the United States and African Growth and Opportunity Act-eligible countries have petitioned the President of the United States of America, Joe Biden, to consider an extension of the initiative. The CSO made the plea in a letter dated February 16, 2024, titled ‘Petition for Timely Re-Authorisation and Enhancement of the African Growth and Opportunity Act Beyond...
16 February 2024
US congress receives Bill to review South Africa relations
A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...
09 February 2024
House Ways and Means Committee leadership statement on meeting with ambassadors from select AGOA countries
Ways and Means Committee Chairman Jason Smith (MO-08) and Ranking Member Richard E. Neal (MA-01) released the following statement after hosting a bipartisan roundtable with Committee members and ambassadors from several African Growth and Opportunity Act (AGOA) countries. AGOA is a U.S. trade program focused on strengthening economic ties between the United States and nations in Sub-Saharan Africa. “We appreciate the ambassadors from...
18 January 2024