In the midst of negotiations to renew the pivotal AGOA trade pact, South Africa’s trade delegation has reportedly "acknowledged American concerns", according to US officials. This development comes as the two nations have been at odds over South Africa's foreign policy, particularly its stance on Israel and the conflict in Ukraine.

Last week, a South African delegation, led by Minister of Trade and Industry Parks Tau, visited Washington, DC, to discuss the renewal of the African Growth and Opportunity Act (AGOA). This trade agreement, established 23 years ago, provides duty-free access to the US market for thousands of goods from qualifying African countries. South Africa, the largest beneficiary of AGOA, exported goods worth around R65 billion ($3.6 billion) to the US in 2022.

Minister Tau’s visit aimed to alleviate fears that South Africa might be excluded from AGOA due to its contentious foreign policy positions. “It is clear that our partners in South Africa heard the concerns raised last year,” remarked Joy Basu of the US Department of State’s Bureau of African Affairs.

But the US has refused to elaborate on what these acts of compliance are, leaving us to merely speculate.

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Foreign policy alignment issues

These concerns may well be related to South Africa's ICC case against Israel for genocide in the Gaza strip, as well as the increasingly close ties with the Eastern Triangle (China, Russia, Iran), with whom the South African Navy regularly perform military drills, while cancelling longstanding military arrangements with the United States. The friendly tacit support which South Africa gave Russia during its invasion of Ukraine also rankled, which the DA, now in the ruling coalition, bucked national foreign policy by openly condemning.

Last week, the United States joined South Africa and the DRC in condemning Rwanda and their proxies in the Eastern Congo, where the South African and Congolese armies are currently battling alongside the Hutu Power movement which committed the genocide in Rwanda in 1994, against the Rwandan-backed Tutsi rebel group M23.

South Africa has also passed the massively draconian Climate Change Act in alignment with the United States' favoured policy for its overseas dependencies under the Paris Agreement, and has entered negotiations to harmonise its tax regime with the United States and EU.

Recent news coverage by global mainstream outlets, which are grouped under the US-government-supervised Trusted News Initiative, has also given blanket coverage to Jacob Zuma's recent expulsion from the ANC, framing it broadly as a responsible anti-corruption measure, rather than a belated punishment for running a rival party against the ANC.

South Africa has also recently been under the spotlight for its role as a laundry for international funds for ISIS, assisted in large part by the Pakistani immigrant community and organised crime in the DRC and Mozambique, where Islamist rebels are currently fighting. South Africa is engaged in the Mozambique from of this conflict at the moment, though is gradually phasing out its participation, while Uganda is still dealing with cross-border raids by Islamist militia in the DRC.

Added to this issue is the recent discovery of a fulll-scale Islamist military base in Mpumalanga, where 95 North-African militia were receiving military training.

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Significance of AGOA

As covered in our previous, more detailed AGOA explainer, attaining or losing AGOA participation status can be pivotal in the survival of an African country’s manufacturing sector.

AGOA has historically enjoyed bipartisan support in the US since its inception in 2000. The current debate revolves around the components of the next iteration of the Bill, and the renegotiation opens a window to leverage for desired reforms among US client states abroad.

Some advocate for a streamlined Bill to expedite its passage and sustain the thousands of textile and apparel jobs reliant on AGOA’s market access. Others see this as an opportunity to include additional products and services and address the Bill’s more contentious provisions, such as annual eligibility reviews and the complete removal of a country’s eligibility for non-compliance.

The latter provision has previously led to industrial collapses and job losses in countries like Ethiopia, Madagascar, and Swaziland, keeping investors wary and hindering business expansion. There is a consensus that a longer extension of the Bill would be beneficial.

Significantly, the global trade landscape has shifted since 2000. China’s trade with Africa has grown exponentially, now four times that of the US. Moreover, Africa has become a crucial supplier of critical minerals to the US, although China dominates the refined critical minerals market vital to US industries.

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Tau's gambit

In anticipation of the AGOA Forum, Minister Tau, accompanied by Deputy Minister Andrew Whitfield and senior officials, engaged with think tanks, business associations, and Congress in Washington. Minister Tau, new to his role, emphasized South Africa’s intention to reset its relationship with the US, which has been strained over recent years due to geopolitical disagreements and South Africa’s perceived leadership in creating a new global order.

Minister Tau defended our membership of the programme on the basis that the ANC have invited the US-friendly DA into the ruling coalition, and by warning that the loss of beneficial trade arrangements would create conditions that would grant greater political capital to anti-US forces like the MK and EFF parties, who could capitalise on economic insecurity and threaten the coalition in the next election.

The delegation expressed concerns about the US-South Africa Bilateral Relations Review Act, introduced by Representative John James. This Act calls for an out-of-cycle review of bilateral relations, which could impact South Africa’s AGOA eligibility. The Bill passed comfortably in the House, and Minister Tau hoped the Senate would refrain from similar legislation, which would effectively turn the Bill into law.

Despite these concerns, it is uncertain whether the Democrat-controlled Senate will include a version of the James Bill in the National Defense Authorization Act (NDAA). Even if it does, South Africa’s AGOA eligibility may remain intact as the State Department reviews compliance with AGOA’s provisions.

The legislation governing AGOA will expire in 14 months, necessitating reauthorization by Congress and the president for the trade deal to continue past 2025. Minister Tau, upon returning to South Africa, reported “productive and constructive discussions” with US lawmakers and the administration. He noted significant interest in the Government of National Unity’s priorities and efforts to enhance bilateral relations.

The Biden administration has expressed strong support for an early AGOA renewal, with President Biden calling it the "bedrock of America’s economic partnership with African nations." However, the US's busy political schedule may delay the new law's passage until early 2025, post the presidential election.

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