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 since it was launched in 2000, and is due to expire in September 2025.
In his closing remarks at the Agoa Forum in Johannesburg on Saturday, 4 November, South Africa’s trade, industry and competition minister, Ebrahim Patel, said the government’s plan involved two stages.
“The first stage will be focused on reauthorisation as rapidly as possible with a modest package of refinements, which do not require lengthy discussions. And the second stage will involve deeper improvements to Agoa that might require time. We are particularly keen to get the reauthorisation in the earliest part of 2024,” Patel said.
In other words, the government wants Aoga to be first extended and improvements on its trade terms can be made at a later stage.
With the re-authorisation of Agoa still up in the air, businesses that benefit from export activity under the programme are already hitting the pause button on new and expansionary investments, Patel said. “An early reauthorisation will unpause those buttons,” he said.
Meanwhile, the US government’s stance has been not to pre-empt the approval processes by Congress, which has the final say on the reauthorisation of Agoa. However, in recent months, the US Congress has struggled to pass even the most critical legislation, which might spell further delays for the extension of Agoa.
When asked during a roundtable with journalists on Saturday, hosted by the US trade delegation, about the country’s preferred timeline for getting the Agoa extension over the line, US Trade Representative Katherine Tai refused to proffer an answer.
“You’re asking me to enter a world of hurt to give you a real answer on that question. So, I’m not gonna answer it,” said Tai, earlier stating that her role limited her to opine on economic trade policies and not diplomacy or political processes.
Considerations to improve Agoa
There are still outstanding issues to be considered and resolved by the US and African states to refine Agoa. African states are pushing for a 10-year extension of Agoa to ensure its continuity for businesses and investors over a long period, and for the eligibility of countries that benefit from the trade deal to be reviewed every three years instead of annually. Also being negotiated is how best to amend Agoa to strengthen US-Africa economic ties and deepen two-way trade and investment.
Tai said she was committed to working with the US Congress on these outstanding issues. She added that whatever length of time was attached to a reauthorised Agoa must be “long enough to be meaningful and to foster the confidence in the [trade] environment” while also providing the programme flexibility “to the number of changes that are happening around us”.
The Biden administration also wants changes to the Agoa programme after its reauthorisation.
Tai said a renewed Agoa should aim to improve the programme’s utilisation by qualifying countries. There are concerns that South Africa benefits disproportionately from Agoa, with higher export activity into the US than other countries in the programme such as Kenya and Lesotho.
She said changes to Agoa must take into account the recent creation of the African Continental Free Trade Area, which seeks to turn the continent into the largest regional free-trade area in history, with most tariffs on goods traded between African countries eventually at zero. Amendments to Agoa should also ensure that countries maintain benefits even as they grow wealthier and include more small business participation, Tai said.
On 31 October, four African countries (Uganda, Gabon, Niger and the Central African Republic) were expelled from participating in Agoa because of “gross violations” of human rights or not making progress towards democratic rule, the Biden administration said. South Africa maintained its Agoa status.
And because of Agoa, an estimated 31% of South African exports to the US get duty-free access, amounting to $2.7-billion in 2021 and slightly more in 2022. As Ferial Haffajee writes, South Africa exports cars, jewellery, ferroalloys, fruit and nuts, beverages and spirits to the US under Agoa.
SA’s relationship with the US
The relationship between the US and South Africa was the subject of chatter on the sidelines of the Agoa Forum following the Lady R debacle, differing positions between the countries on Russia’s war in Ukraine and on Israel amid its war with Hamas. US Democratic Senator Chris Coons, Republican Senator Jim Risch and other congressional leaders have lobbied for Biden to move the Agoa Forum away from South Africa and possibly strip South Africa of its benefits in the trade programme.
Asked about South Africa’s relationship with the US and whether it had recovered following the geopolitical events cited above, Tai restricted her answer to the economic relationship between both countries.
“Let’s acknowledge that we live in a very complex world that is only becoming more complicated. That said, I think that the relationship overall and the relationships on a more human level are strong, on the economic side, which is where my competency lies.
“We all need to figure out how to navigate this complex world, and I have a high degree of confidence, at least on the economic side, that we have managed to navigate some choppy waters this year and that we will continue to do our best to do so.”