DA slams Minister Patel’s AGOA comments

The Democratic Alliance’s (DA) Cayla Murray has slated Minister Ebrahim Patel’s comments about South Africa being “graduated” out of the Africa Growth and Opportunity Agreement (AGOA) with the United States as the country has benefitted enough from it. 

Patel said in terms of creating the Africa Growth and Opportunity Act (AGOA), the US could conclude that South Africa has gained enough from the trade agreement and end the country’s participation. 

In effect, South Africa can be “graduated” out of AGOA if it has developed and grown to a point where it no longer needs preferential access to the US market. 

Technically speaking, South Africa, as a middle-income country, was not meant to be a part of AGOA as the Act is specifically aimed at low-income countries.

However, the main reason why South Africa’s preferential access to the US market is at risk is the country’s ties to Russia and alleged support of its war effort. 

Four congressmen wrote to US trade representative Katherine Tai and Secretary of State Antony Blinken asking for the AGOA summit to be moved away from South Africa later this year. 

The congressmen pointed out South Africa’s ties to Russia as a reason to move the summit. 

“South Africa’s actions call into question the country’s eligibility for trade benefits under AGOA,” the letter read. 

AGOA states that the US can unilaterally end any trade relationship with the African participating states if they engage in activities that undermine US national security or its foreign policy objectives. 

South Africa’s stance on the war in Ukraine, alleged support of Russia’s war effort, and joint military exercises with Russia and China were pointed to by the congressmen as examples where South Africa undermined US national security and foreign policy goals. 

Patel is set to lead a high-level delegation to the US to present to Tai why South Africa should remain part of AGOA.

South Africa needs all the help it can get

Murray, a member of the Western Cape legislature and DA spokesperson in the Western Cape on Finance, Economic Opportunities and Tourism, slammed Patel’s comments. 

Murray said the situation the Minister outlined is “very far from the reality South Africa faces”, with high unemployment and minimal economic growth. 

South Africa cannot afford to lose preferential access to the world’s largest economy. 

AGOA makes provisions for countries to graduate out of eligibility once they reach a sufficient level of development. However, South Africa has struggled to develop sufficiently to require its “graduation” from the agreement. 

Only two countries have ever graduated out of AGOA eligibility – Seychelles and Equatorial Guinea. They reached an income level that saw them graduate in 2015 and 2017, respectively.

According to Murray, South Africa is an upper-middle-income country that is not well on its way to high-income status. 

Other African countries in this income level include Mauritius, Botswana, Namibia, and Gabon, which all benefit under AGOA. 

Clearly, South Africa’s economic performance does not necessitate graduation from AGOA, and it would be a discretionary decision from the US on the basis of national security and foreign policy, said Murray.

Simply put, South Africa still desperately needs all the help it can get when it comes to economic growth, and AGOA is still a key part of that. 

Should the country be excluded, there is a real likelihood that our paltry to zero-growth economy will shrink even further, Murray warned.