US senators tabled a new bill to renew the African Growth and Opportunity Act (Agoa) on Friday, and there is no mention of South Africa being subject to an “immediate review” of its participation in the preferential trade rules.
This comes after US Senator Jim Risch, the ranking Republican on the Senate Foreign Relations Committee, said in November that he was “disappointed” to learn South Africa would remain eligible for duty-free trade under Agoa, despite what he described as the country’s “continued actions that subvert US national security and foreign policy interests”.
South Africa’s closeness to Russia and China, its stance on Ukraine, and its case against Israel in the International Court of Justice have strained its relations with the US in recent years.
However, the final text of the bill to renew Agoa for a further 16 years until 2041, introduced by Risch and Democratic Senator Chris Coons on Friday, does not mention South Africa at all.
Agoa gives businesses duty-free access to the US for thousands of South African exported goods, from cars and yachts to wine and fruit.
Democratic Alliance MP and spokesperson on finance Dion George welcomed the development as a step in the right direction.
“South Africa’s participation in the Agoa programme faced uncertainty last November when US senators proposed a draft bill calling for an immediate ‘out-of-cycle’ review of eligibility,” George said.
“While Agoa mandates annual reviews to ensure countries uphold eligibility requirements, an ‘out-of-cycle’ review is an additional assessment that can be triggered at any time due to serious concerns that a country may not be meeting Agoa’s prerequisites. The US reserves the right to conduct such reviews. We note that plans for this specific review have been dropped, although serious underlying concerns remain,” he said.
To qualify for Agoa trade benefits, trade partners must meet eligibility requirements. One of these is that the beneficiary should not engage in activities that undermine Washington’s national security interests.
George said South Africa’s relationship with Russia, and its growing ties with countries the US designates as terror states and rogue regimes, such as Iran, posed potential risks to its continued eligibility in the Agoa programme.
He said if the country was excluded from Agoa’s preferential trade terms it would “unleash a vicious domino effect on our economy”.
“South African exporters would grapple with heightened barriers to entry in the US market, causing a sharp contraction in export volumes, diminishing investment, and triggering a devastating loss of between 62 000 and 100 000 direct and indirect South African jobs.
“With unemployment hovering around 41%, the risk of losing even a single job is inexcusable,” George said.
He added that it was crucial that the government promptly corrected its “diplomatic failings” in US relations to prevent further isolation from the international community and global financial markets.
“Adherence to Agoa criteria will be essential for economic development in South Africa and the broader SADC region.”