The United States Congress is set to review the eligibility of countries, including South Africa, for benefits under the African Growth and Opportunity Act (AGOA) next week.
Since its enactment in 2000, the act has been at the core of U.S. economic policy and commercial engagement with Africa.
AGOA provides eligible sub-Saharan African countries with duty-free access to the U.S. market for over 1,800 products.
More than 5,000 products are also eligible for duty-free access under the Generalized System of Preferences program.
By providing new market opportunities, AGOA has helped bolster economic growth, promoted economic and political reform, and improved U.S. economic relations in the region.
36 countries, including South Africa, are eligible for AGOA benefits. In 2015, Congress passed legislation modernising and extending the program to 2025.
Last year, the United States removed Ethiopia, Mali, and Guinea from AGOA “due to actions taken by each of their governments in violation of the AGOA Statute”.
South Africa’s AGOA future is in doubt as the United States Congress begins reviewing countries’ eligibility for benefits under the act.
American lawmakers on both sides of the aisle want the Biden administration to punish South Africa for supporting Russia’s war in Ukraine.
The group highlighted that a Russian cargo vessel subject to U.S. sanctions docked in South Africa’s largest naval port.
US intelligence suggests that the South African government used this opportunity to covertly supply Russia with arms and ammunition that could be used in its illegal war in Ukraine.
They also pointed to joint military exercises with Russia and a Russian military cargo plane subject to US landing at a South African air force base.
Another contentious point is South Africa working to facilitate the participation of Russian President Vladimir Putin in the BRICS Summit despite an outstanding ICC arrest warrant.
Busi Mavuso, the CEO of Business Leadership South Africa (BLSA), said AGOA has been key to building the country’s exports ranging from vehicles to citrus fruit.
Billions of rands of economic activity and tens of thousands of jobs in South Africa depend on those exports.
AGOA is widely expected to be renewed for another ten years when it expires in 2025. However, the key question is whether Congress will remove South Africa’s eligibility.
“The eligibility debate is one matter, and the renewal debate is another, but South Africa stands to lose in both,” Mavuso said.
She said the South African government’s ambiguous stance on Russia had upset many in Washington.
She pointed to one of the statutory requirements that beneficiary countries “not engage in activities that undermine US national security or foreign policy interests”.
“If we care about AGOA eligibility and the tens of thousands of jobs it creates, then the time has come to clarify how we as a country do not threaten US security interests,” Mavuso said.
“We must come out with the facts about the Lady R, what it was doing docking in secret in South Africa and what was loaded onto it before departure.”
“We must explain the landing of Russian aircraft at Waterkloof. We must set out a clear policy on the supply of weapons to Russia and why the US should be able to trust that our stance of neutrality means at minimum that we will not in any way fan the flames of war in Europe.”
She said this clarity needs to be backed up by a capable diplomatic effort by South Africa’s foreign service in the United States.
Eligibility will be determined before the end of the year, and the White House will announce which countries will continue to benefit under AGOA from next January.
“We have a narrow window of opportunity to make the case that it is in US interests to continue to give South Africa access to US markets,” she said.
“If we don’t get it right in the next few months, it will result in another significant blow to the economy.”