Sizo Nkala
SOUTH AFRICA’S new Minister of Trade, Industry and Competition, Parks Tau, is leading a delegation to the United States to attend the 21st Africa Growth and Opportunity Act (AGOA) Forum in Washington between July 24 and July 26. The theme of the forum is Beyond 2025: Re-imagining AGOA for an Inclusive, Sustainable and Prosperous Tomorrow and participants will discuss how the trade scheme can be improved to better serve the participants.
The AGOA Forum has been in existence for 24 years and allows eligible African countries duty free access to the US market covering about 1500 product lines. Since its inception, AGOA has provides an important economic boost for Sub-Saharan African countries. Eligible African countries were able to export goods worth a significant US$10 billion to the US under AGOA arrangement thus creating millions of much-needed jobs in a continent where unemployment rates are skyrocketing.
One of the key items on the forum’s agenda will be the renewal of the AGOA programme which is set to expire in 2025 after having been extended by 10 years in 2015. The African parties have unanimously asked that the lifespan of the programme be extended beyond 2025. This did not fall on deaf ears as the US lawmakers have indicated in a recent bill, the AGOA Renewal Act, that they would like AGOA to continue arguing that it is a cornerstone of the economic relationship between the US and Sub-Saharan Africa.
If passed, the bill tabled in the US Senate in April would extend AGOA by 16 years which would see it expire in 2041. The drafters of the bill argued that granting the scheme a long extension would instil a sense of certainty for investors who may want to invest in African countries to benefit from the preferential trading scheme. This will come as good news to the eligible countries whose economies will continue to benefit from the duty-free access to the US market.
However, Minister Tau’s mission to the US is not just to take his seat on the Forum. His mandate will be to ensure that South Africa’s AGOA status, which came under increasing scrutiny in the US Congress last year is maintained. Having exported US$3 billion worth of merchandise to the US under AGOA in 2022, making it the largest beneficiary of the scheme, South Africa would not want to lose these benefits.
But the last two years have seen tensions grow between the US and South Africa over the latter’s foreign policy choices on Russia-Ukraine war, the Israel-Palestine conflict, and its cosying up to US rivals such as China, Russia, Ukraine, and Hamas. South Africa’s perceived anti-US foreign policy, which is one of the conditions which can render a country ineligible for AGOA, has triggered a series of reactions from the US legislature.
While Minister Tau will be relieved that the updated version of the AGOA Renewal Act has removed the demand for the immediate review of South Africa’s AGOA status, the country is not out of the woods yet. The US House of Representatives, the lower chamber of the US Congress, voted to pass a bill titled: US-South Africa Bilateral Relations Review Act in June which calls on the President of the US to determine whether South Africa has undermined the interests of the US.
If passed by the US Senate, the bill would also enjoin the president to conduct a comprehensive review of SA-US relations. As such, the bill has now moved to the Senate, the upper chamber of the US Congress, where it has to be passed before it goes to the President for his assent.
Judging by the partisan majority which got the bill passed in the House of Representatives and also a bipartisan letter penned by US Senators last June to the Biden administration expressing similar sentiments contained in the bill, the legislation is likely to pass in the Senate as well.
The Biden administration, which has unequivocally expressed its displeasure over South Africa’s foreign policy posture in the recent past, will be happy to be seen to be taking action against countries perceived to be supporting its global rivals, especially in an election year.
The implications of the bill successfully passing the Senate and securing the signature of the President include the possibility of South Africa losing its AGOA status. As such, the new Minister Parks Tau’s first international assignment is not an enviable one. He has to convince US Senators, who have also registered their disapproval of South Africa’s foreign policy choices, not to pass legislation that would jeopardise South Africa’s AGOA benefits.
He will probably argue that South Africa has a new dispensation which cannot be crucified for the deeds of the previous one and that US businesses in South Africa are also benefitting from AGOA. Only time will tell whether the minister will be able to save the day.
* Dr Sizo Nkala is a Research Fellow at the University of Johannesburg’s Centre for Africa-China Studies.
** The views in this article are the writer’s and do not necessarily reflect the views of IOL or Independent Media