World

South Africa fears removal from US trade deal

In a confidential briefing note, the South African government warned that influential business people believe South Africa will be removed from the Africa Growth and Opportunity Act (AGOA) with the United States.

Some US businesses are also believed to be opposed to renewing the entire agreement as they seek equal access to African markets.

Business Day first reported on the confidential briefing note dated March 2023, informed by government envoy discussions with their US counterparts in Washington. 

President Ramaphosa sent a South African government delegation to the US to defuse tensions with the country’s second-largest trading partner over its foreign policy.

Finance Minister Enoch Godongwana and Trade Minister Ebrahim Patel are among those who met with US lawmakers and lobbied for South Africa to retain its eligibility to export goods under AGOA. 

The officials aimed to dispel what the government has termed misinformation about its stance toward Russia’s war in Ukraine.

Several US lawmakers have called on President Joe Biden’s administration to reconsider whether South Africa should continue to benefit from AGOA.

AGOA expires in 2025, and US officials have previously said the qualifying criteria may be revised or the program may be replaced.

South Africa ships cars and agricultural produce to the US under the accord. Last year, it exported $2.7 billion worth of goods using AGOA.

US Trade Representative Katherine Tai (left) with Minister of Trade, Ebrahim Patel

The South African government has warned that US legislators hostile to South Africa may use the upcoming AGOA Forum, hosted by South Africa, to exclude it from the agreement. 

Some US businesses are also believed to be opposed to a renewal of AGOA as they demand reciprocal access to African markets, particularly the South African market. 

US and Africa trade expert Laird Treiber said South Africa would lose thousands of jobs and export revenue if removed from AGOA. 

Treiber also said that the country had not used the AGOA agreement to its full potential, with very few resilient value chains created from exporting goods to the United States. 

He dismissed claims that South Africa would be removed from AGOA because it is a middle-income country and not because of its relations with Russia. 

“There is no question that South Africa-Russia relations have raised issues in Washington,” Treiber told Newzroom Afrika. 

These issues must be resolved between South Africa and the United States before the country can consider renewing its position in AGOA. 

However, Treiber also said the United States would lose if South Africa is removed from the agreement or sanctioned. 

The United States imports significant amounts of South African citrus, vehicles, industrial equipment, and minerals.

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