The Joe Biden administration announced the move at the weekend, just before US President-elect Donald Trump’s inauguration in January.
Minister of Trade, Industry and Competition Parks Tau has hailed the United States’s announcement that South Africa will retain its trade benefits under the African Growth and Opportunities Act (Agoa) for another year, saying on Monday that the move “provides a good basis to strengthen SA-US relations”.
The Joe Biden administration announced the move at the weekend, just before US President-elect Donald Trump’s inauguration in January. This means SA has a least a year on the programme, but the SA government will be pushing to convince Trump in next year’s review and in the run-up to the G20 Summit of world leaders in Johannesburg.
Under Agoa, SA along with 31 other countries in sub-Saharan Africa have duty-free access to US markets.
In a notice issued on Saturday 21 December, US Trade Representative Sam Michel confirmed that the list of eligible countries for Agoa remains the same as does the list of ineligible countries.
“Based on the results of the annual Agoa eligibility review, which included a public hearing in July that was chaired by the Office of the United States Trade Representative, President Biden has determined to maintain Agoa benefits for each country currently eligible under the program,” Michel noted.
“South Africa is looking forward to work with the US on mutually beneficial areas of cooperation,” Tau said.
In addition, the minister welcomed the fact that the National Defense Authorisation Act that the US Congress sent to Biden for signature does not contain the provisions relating to the review of SA-US relations.
In June, the US House of Representatives passed legislation that would require the Biden administration to conduct a full review of America’s relationship with SA.
This came as a result of SA’s relations with Russia, China and Iran and entailed an assessment of whether these relations were undermining the US national security.
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SA lobbying
Since the establishment of the government of national unity (GNU), the new executive has worked hard to repair relations with the US.
In September, Ronald Lamola, minister of international relations and cooperation, visited Washington DC in what he called a “successful working visit”.
Two months before Lamola’s visit, Tau and his deputy Andrew Whitfield were in the US from 24 to 26 July for the 21st Agoa Summit.
Briefing the media after the Agoa summit, Tau said he hoped SA’s benefits would be renewed before the US elections in November 2024. He said at the time, the “least ideal” scenario would have been that a decision on Agoa would only be reached in 2025.
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Trade under Trump
Trump’s return as US President in November has heralded heightened fears of a global trade war if he makes good on his promise to implement tariff increases.
SA could also be in the firing line, not only because of its position on Israel and its closeness with Russia, but also because of its association as a member of the Brics group.
At the beginning of December, Trump threatened on his social media platform Truth Social that Brics countries run the risk of being hit with “100% tariffs” if they created a new currency to replace the dollar.
“We require a commitment from these countries that they will neither create a new Brics currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy,” Trump said.
ALSO READ: Will a Trump presidency affect the SA economy?
US-SA trade numbers
SA’s exports to the US increased in the last five years from US$1.9 billion (around R35.2 billion) in 2019 to $3.3 billion (R61.12 billion) in 2023 under Agoa, including the Generalised System of Preferences (GSP) initiative,
In 2023, 25% of SA’s total exports to the US took place under Agoa and GSP, with Agoa constituting 21% of this share, Tau notes.
The country’s major exports under Agoa include automotive and parts, ferro-alloys, citrus, jewellery, nuts, chemicals, wines, and ships and boats.
According to Tau, Agoa, which was instituted under the presidency of Bill Clinton in 2000 and extended on two occasions, is scheduled to expire at the end of September 2025.
The hope is that it would be renewed by the US.
“SA, as part of continental efforts, has urged the US Congress to consider renewing Agoa for at least 16 years with all countries retained in the programme in order to preserve and develop regional value-chains,” Tau said.
“The retention of all beneficiary countries will also ensure that Agoa supports the African Continental Free Trade Agreement and broadly the continent’s regional integration efforts.”
This article was republished from Moneyweb. Read the original here.
