- African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/South Africa’s access under AGOA helps neighbouring countries, says country's trade minister

South Africa’s access under AGOA helps neighbouring countries, says country's trade minister

Published date:
Tuesday, 26 September 2023
Linda Ensor

SA is to argue strongly that its participation in the Africa Growth and Opportunities Act (Agoa) benefits neighbouring countries through shared value chains, said trade, industry and competition minister Ebrahim Patel on Tuesday.

The argument will be made in November when the Agoa forum meets in Johannesburg that neighbouring countries will suffer significant losses if SA is excluded from the scheme, which provides preferential access to certain products from Africa to the US market.

The forum will bring together the governments of the US and Agoa-eligible countries, as well as representatives from key regional economic organisations, the private sector, civil society, and labour. The next Agoa forum will be held in the US in 2024 when clarity is expected on the time frames for the renewal of the act.

Patel addressed a joint meeting of the select committee and portfolio committees on trade and industry, which was also attended by representatives of provincial legislatures.

The present term of Agoa expires in 2025 and there have been rumblings in the US about SA’s exclusion due to its perceived support for Russia in its war against the Ukraine, though SA has stressed its non-aligned position. SA has sent high-powered delegations to the US to argue its case with US officials, Congress representatives and the private sector.

“Given the political divisions in the US Congress, a bipartisan consensus is essential to secure the necessary backing,” Patel said.

“The example of Agoa’s success is often the example of SA,” he noted. “I will be providing at bit more detail in November at the Agoa forum to my counterparts in the US how an integrated value chain ensures that the benefits of Agoa to neighbouring countries is often via this regional value chain that SA takes part in.”

He gave the example of Botswana, which exports more manufactured products via SA value chains than it does directly in its exports of manufactured products to the US. Botswana supplies wire harnesses, Lesotho car seats and the Ivory Coast rubber.

“So if SA was taken out (of Agoa) many neighbouring countries would suffer quite significant losses,” Patel said, adding that SA’s participation in Agoa supported benefited economic development in the southern African region.

The US is SA’s second-largest national trading partner after China, and SA is the largest exporter to the US on the African continent, exporting three times more than the next largest supplier (Nigeria) in 2022. SA in turn is the largest sub-Saharan African importer of goods from the US.

Patel noted that one of the major risks facing the extension of Agoa was domestic pressure in the US, where there was a greater focus on its own market, on localisation and the re-industrialisation of its own economy. The second risk is geopolitical as the world becomes more divided.

“The growing geopolitical polarisation poses challenges to SA, a country that has strong economic relationships with both west and east, and whose economic challenges require it to maximise the trade and investment relationships with countries across the geopolitical divides. SA trade strategy therefore argues against fragmentation and in favour of multilateralism,” Patel said.

Two-way trade in goods and services between SA and the US amounted to $25.5bn in 2022 with the US being SA’s second largest national export market, after China.

In 2021, SA total goods exports to the US amounted to $15.4bn. Of this 82% was under Most Favoured Nation terms, with an export value of $12.7bn; and 18% was under Agoa and the generalised system of preferences (GSP) programme with an export value of $2.7bn.

Exports under AGOA and GSP together accounted in 2022 for about 2.4% of total SA global exports.

Collectively, Agoa including GSP, provides duty-free market access for 5,235 tariff lines from Sub-Sahara African nations classified as developing countries.


Read related news articles

US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa

President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...

09 November 2023

US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility

Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...

07 November 2023

AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]

Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...

06 November 2023

South Africa pins its hopes on an early 2024 US Congress renewal of AGOA

South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy.   This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...

05 November 2023

SA trade minister Patel expresses confidence at media briefing about South Africa’s continued inclusion in AGOA

Ahead of South Africa hosting the US-AfricaTrade and Economic Cooperation Forum – also called the AGOA Forum – from November 2 to 4, Trade, Industry and Competition Minister Ebrahim Patel on October 26 briefed the media on the state of readiness for the forum, expressing confidence that the South African government’s relations with the US were strong. Various South African stakeholders have been motivating for...

26 October 2023

Business Leadership SA calls for business to capitalise on South Africa’s hosting of AGOA Forum

It is notable that South Africa will still host the African Growth and Opportunity Act (AGOA) Private Sector Forum next month, given that several US lawmakers have called for it to be moved elsewhere, and have questioned the country’s preferential trade terms with the US under Agoa as such preferential access to the US markets is open only to African countries that do not threaten American security interests. This is...

24 October 2023

'South Africa expected to retain its AGOA status despite differences with US'

It is almost certain that South Africa’s Agoa status will be renewed despite it and the US often being on opposite sides over geopolitical crises in the past year. The eligibility of countries for the US’s African Growth and Opportunity Act (Agoa) has been under review during the past few months, and it is becoming clearer that South Africa is one of the countries that will continue being a part of the trade programme. A strong...

19 October 2023

South Africa: Entrepreneurial sisters venture into US market [WATCH]

It was a drive to explore international trade that saw entrepreneurial sisters, Michelle and Mo Mokone, grabbing an opportunity to venture into the United States of America market. The pair are the co-owners of Mo’s Crib, a company that produces a range of handmade home décor products.  Their product range includes handwoven baskets, planters, trays, wall art and home outdoor items. It was in 2021 that the pair decided to take...

09 October 2023

US-South Africa relations in focus as AGOA decision nears

By serendipity I found myself attending a hearing in the US Capitol last week on the US-SA bilateral relationship. Such hearings are easy for members of the public to access and, given an afternoon free in Washington between other meetings, I attended. The most striking feature of the hearings was the common refrain that the ANC was failing. It was taken as a given that the ANC is delivering poor governance. US support was framed as...

01 October 2023

Renewed commitment: South Africa to host AGOA summit amid calls for extension

South Africa is set to host the African Growth and Opportunity Act (AGOA) Summit later this year, despite recent diplomatic tensions between the country and the United States (US). In June this year, US legislators called for the relocation of the summit due to controversy surrounding alleged arms shipments to Russia by South Africa. Cleared of any wrongdoing by an internal judicial panel, the US has reaffirmed its commitment to shared growth...

21 September 2023

You are here: Home/News/Article/South Africa’s access under AGOA helps neighbouring countries, says country's trade minister