African delegates hail Agoa progress

African delegates have garnered support from President Joe Biden’s administration and members of Congress for a renewal of the Africa Growth and Opportunity Act (Agoa). Legalbrief reports that the 21st Agoa Forum was held between 22 and 26 July in Washington DC and there was a concensus to promote stronger and closer investment relations to complement Agoa and change the structure of Africa’s trade towards value-added exports. Agoa is a US trade law that significantly enhances market access to the country for qualifying sub-Saharan African countries. With Agoa expiring in 14 months, African Ministers of Trade attending the forum urged the Biden Administration and the US congress to expeditiously renew agreement with ‘non-controversial enhancements and amendments’ for a minimum of 16 years. This, they argued, would provide the ‘required predictability and certainty to buyers, exporters and investors’. At the same time they called for Agoa to be concluded by the end of this year.

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Fin24 reports that South Africa’s Department of Trade, Industry & Competition (DTIC) Minister the delegation welcomed ‘the support expressed by both the Biden Administration and members of Congress for the renewal of Agoa’. At the same time, the delegation also secured broad support for strengthening bilateral trade and investment relations between the two countries. The DTIC noted that there were also been mounting concerns in recent months that SA could find itself excluded from the agreement as some members of Congress have criticised its stance on Israel and ties with Russia, China and Iran. The group also held ‘positive discussions’ with US trade representative Katherine Tai with an agreement by ‘both sides’ to resuscitate the Trade and Investment Framework Agreement (Tifa) at a ministerial level, adding this had last met in 2014. ‘We instructed our officials to prepare for our first meeting which will provide a good platform for constructive discussions and effective resolution of trade related matters from both sides. The resuscitation of the Tifa provides new impetus to our strategic partnership’ said Tau.

The world has changed a great deal since Agoa’s enactment in 2000: Supply chains are more interconnected than ever; there is a far better understanding of the link between trade flows and the changing climate, as well as the importance of using trade to create decent work and sustain communities; and it’s become clear how important competition in Africa is to the competitiveness of the US vis-a-vis non-market competitors such as China. An analysis on the American Progress site notes that Congress should therefore consider how best to align Agoa with the needs and realities of the 21st century when it undertakes reauthorisation – and that different and better outcomes from Agoa will require more than just a simple reauthorisation. In other words, Agoa has the potential to be an important source of good for both the US and African beneficiary countries. But reaching this potential means addressing several failings, including low utilisation, the dominance of fossil fuels among goods traded under Agoa, and a lack of environmental and climate standards. And this, in turn, will almost certainly require direct investment in African productive capacity, infrastructure, and communities, as well as in the US Government personnel needed to help American manufacturers partner with new Agoa-eligible suppliers to fuel production in the US.

Since 2000, the Agoa legislation has allowed sub-Saharan countries to benefit from duty-free trade with US businesses, and until recently its annual extensions had been a routine matter. A Sunday Times editorial notes that all changed in February 2022 when Russia invaded Ukraine, an action that divided world opinion. ‘South Africa’s non-alignment’ position has strained our relations with the West and raised question marks over our foreign policy in a world where the US faces an increasingly assertive array of countries boasting economic and military prowess. These include Russia itself, as well as China and countries such as Iran and Saudi Arabia. Tempers cooled somewhat after former International Relations Minister Naledi Pandor led a delegation to the US earlier this year to argue for Agoa’s extension, which was being threatened by conservative Republican legislators. Yet from the administration of US President Joe Biden there has been enthusiastic approval for an extension of Agoa. The White House’s support is premised on an understanding reached between Pandor and US Secretary of State Antony Blinken, based on an acceptance, reluctant perhaps, that South Africa has historic ties with the Soviet Union, given that it supported the ANC when it was still a liberation movement fighting the apartheid government, which itself was backed by successive US administrations.’

The Sunday Times notes that US-South Africa relations got back on track after President Cyril Ramaphosa took part in a peace mission to Russia and Ukraine in mid-2023 and also persuaded Putin not to travel to SA for the Brics summit later in the year. ‘But the goodwill evaporated after South Africa took Israel to the International Court of Justice, arguing that Israel was plausibly committing genocide in Gaza. While US patience with South Africa may be wearing thin, and while our economy is a small player in the greater scheme of things, it is clear that the US needs this country a great deal more than it might care to admit in public. Africa’s vast mineral resources, its role as a market for US goods and its diplomatic clout in world forums are too enticing for the US to ignore. China and Russia will happily step into any vacuum left by the US if it chooses to vacate the Africa scene in a huff. It is clear the US needs this country a great deal more than it might care to admit in public.’