The expected renewal of the African Growth and Opportunity Act (Agoa) for another 10 years in 2025 should be better negotiated by Africa for more benefits.
This was according to panellists yesterday at a Trade & Industrial Policy Strategies (TIPS) Development Dialogue on South Africa in Agoa: Impact and Renewal.
Agoa provides preferential access for African, including South African, exports to the US.
Agoa provides eligible sub-Saharan African countries with duty-free access to the US market for more than 1 800 products, in addition to the more than 5 000 products that are eligible for duty-free access under the Generalised System of Preferences programme.
South Africa, and by extension the continent, did not need the Agoa extension as much as the US did as it played catch-up to China as a leading trading and investment partner in Africa, they said.
There was a keen interest in the minerals needed for technology to curb climate change, 30% of which were in Africa.
The panellists said too few African countries benefited from Agoa and had better potential of trade without excessive duties through the African Continental Free Trade Area (AfCFTA) agreement.
Faizel Ismail, a director of the Nelson Mandela School of Governance, said the percentage of products that benefited from Agoa were a small percentage of total imports into the US and there still were duties to be considered.
“For the rest of our trade, we do not need Agoa because it is either duty-free or the rate of duty is very small or it is under the general system of preferences. Only seven countries other than South Africa in sub-Saharan Africa exported more than $100 million (R1.8 billion) to the US,“ he said.
Sub-Saharan African countries should stipulate that they be allowed to cumulate with the north African countries across all sectors to build regional value chains, relaxed rules of origin to be made more flexible from the current 35% and excluded agricultural products be included.
He said US-Africa negotiations should be conducted regionally with the AfCFTA playing a key co-ordinating role so there was no misalignment or undermining of AfCFTA agreements.
According to data from the US, in the past 20 years of trade between the region and US, total exports on average was less than 1% of imports into the US under Agoa and less than 1% of US imports were impacted by Agoa.
TIPS CEO Saul Levin said although there were risks in Agoa, including that it was increasingly aligned to trade or political requirements to stay in the deal, the arrangement had not only helped improve South African exports to the US, but it also provided a platform to engage in trade issues without trade agreements
“The total saving on taxes and jobs impact is relatively small, but of strategic value in a very competitive trade environment. Agoa provides the access, but there is need for industrial policy to drive development to access opportunities. Trade policy alone will not achieve industrial development,” Levin said.
Cosatu head of policy Tanya van Meelis said South Africa needed to establish a one-stop shop for Agoa investment, which would liaise with a US counterpart on the specifics of trade under the arrangement between the two countries.
According to a report released by the Office of the United States Trade Representative in 2022, US census data for 2021 showed that South Africa was the top exporter under Agoa, with products worth $2.7 billion (R50.5bn) exported to the US, including vehicles and parts, jewellery and ferro alloys.
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