- 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

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 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

Fitch research unit expects better AGOA deal for South Africa

Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...

09 January 2024

South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities

Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...

20 November 2023

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

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