Pretoria’s new trade minister is confident the country’s AGOA membership will be renewed, but ties with China, Iran and Russia could impede the process.
JOHANNESBURG—The South African government is lobbying the administration of President Joe Biden to renew Washington’s flagship preferential trade program with Africa before the November U.S. election, amid concerns that former President Donald Trump will win the White House and scrap the agreement.
The African Growth and Opportunity Act (AGOA) was first enacted in 2000 and gives 32 African countries tariff-free access to U.S. markets for a diverse range of products, earning them billions of dollars.
South Africa has been the biggest beneficiary of AGOA since the program’s inception 24 years ago, allowing exports of motor vehicles, fresh produce, and other goods worth tens of billions of dollars to America.
The office of President Cyril Ramaphosa told The Epoch Times that over the past decade, the country’s annual AGOA earnings have consistently hovered between $2 billion and $3 billion.
AGOA has been renewed twice—in 2008 and 2015—and is set to expire in September 2025.
The eligibility of African countries to benefit from AGOA is dependent on a raft of prerequisites, including that they adhere to democratic principles, respect human rights, and don’t undermine U.S. interests.
AGOA Membership Standards
A group of more than 200 bipartisan lawmakers in Washington say South Africa is violating AGOA standards by supporting “regimes that are hostile to the United States,” including China, Iran, and Russia, and they want the country expelled from AGOA.
The Biden administration recently announced it would cut four nations from AGOA—Central African Republic, Gabon, Niger, and Uganda—in 2025 for reasons including human rights violations, political repression, and failure to establish the rule of law.
U.S. Rep. John James (R-Mich.) told The Epoch Times the same could happen to South Africa.
“The ANC [African National Congress] has grown very close to Moscow, Tehran, and Beijing in the last few years,” he said.
“I understand the ANC’s historic ties with certain countries but I also understand that conducting military training exercises with the likes of Russia and the PRC [People’s Republic of China] certainly do not serve American interests, and neither do military cooperation agreements with these regimes.”
James is the chairman of the subcommittee on Africa of the House Foreign Affairs Committee.
James said Pretoria’s alignments with China, Iran, and Russia “contradict South Africa’s proud tradition of non-alignment and sends troubling signals to the United States about the future of our fruitful, bilateral relationship.”
Major Trading Partner
James pointed out that South Africa is America’s largest economic partner on the African continent, with trade between the two amounting to $21 billion in 2021.
In addition, more than 600 American businesses have created thousands of jobs in a country with the highest unemployment rate in the world at almost 35 percent.
“I understand that the United States is no longer South Africa’s only choice as a global partner,” said James. “But with malign forces that are hostile to America undermining longstanding partnerships between the U.S. and critical allies, it’s my duty to act.
“The legislation I have introduced simply calls for the type of objective and collaborative review that should be non-threatening to those who mean America and our friends no harm.”
He said he and many other members of Congress are concerned that an oligarch close to President Vladimir Putin is donating large sums of money to the ANC, South Africa’s biggest party in a government of national unity (GNU) formed after an election in late May.
The ANC has acknowledged that Viktor Vekselberg has been “donating regularly” to the party since 2016, in tranches that amount to 30 million rands ($1.64 million).
Vekselberg, along with the ANC’s financial arm, Chancellor House, is joint owner of United Manganese of Kalahari, a mining company.
Ann Bernstein, director of South Africa’s Center of Development and Enterprise, told The Epoch Times the country cannot afford to lose AGOA, given its high unemployment rate and slow economic growth.
But she said the ANC’s poor showing in the election had given South Africa a “lifeline” with regard to maintaining its AGOA status.
The former anti-apartheid liberation movement fell to just 40 percent of the vote, forcing it to form a coalition government in which the pro-business, pro-Western Democratic Alliance (DA) is its main partner.
“The ANC has said it’s determined to keep its relation going with allies such as China and Russia,” she said. “But its foreign policy statements speak for themselves.
“In stark contrast to the past, it hasn’t made one statement in praise of anything that Moscow or Beijing have said or done. The DA’s presence alongside it has tempered the ANC’s foreign policy, at least publicly.”
Bernstein said she’d recently spoken with some U.S. lawmakers who are “very positive” about South Africa’s new political direction.
“Essentially, we no longer have a left-leaning government; it’s a more practical centrist administration, and Washington recognizes this and welcomes this,” she stated.
“This might be just enough to keep South Africa in AGOA, because I don’t think it’s in any U.S. administration’s interests to push Africa’s largest economy to the sidelines. That wouldn’t make sense.”
U.S. Election Uncertainty
South Africa’s trade minister, the ANC’s Parks Tau, recently returned from Washington, where he held talks with U.S. trade representatives, lawmakers, and big business.
“I’m confident South Africa will once again be included in AGOA when it’s renewed in 2025,” he told The Epoch Times. “I felt a lot of positive energy from our American friends.”
But South African economists and political analysts aren’t so optimistic.
“I think the minister’s jumping the gun,” said David Ansara, CEO of the country’s Free Market Foundation.
He told The Epoch Times that the renewal of AGOA will depend heavily on the outcome of the U.S. election in November.
“A win for the Democrats and the program continues, and more than likely with South Africa re-included. A win for Trump and everything’s up in the air, including AGOA.”
Ansara said he wouldn’t be surprised if the Trump administration discontinued the AGOA program altogether, regardless of the countries’ ties to America’s enemies.
He said Trump’s campaign is “very focused on putting America first” and “could well take the view that African countries should pay tax on exports to the United States just like everyone else.”
“Many would say he would be within his rights to ask, ‘What makes these African countries so special? Why do they deserve breaks and advantages that others who are close American allies don’t get?’”
Gracelin Baskaran and Yash Ramkolowan concluded that Pretoria’s total exports to the United States would fall by just 2.7 percent should South Africa be excluded from the agreement.
They calculated that a loss of AGOA benefits would lead to a GDP decline of just 0.06 percent.
“This unexpectedly small effect is a result of two factors—the nominally higher tariffs on South Africa’s exports to the United States and the composition of South Africa’s export basket,” wrote the researchers.
Baskaran and Ramkolowan said average tariffs on South African goods imported by the United States remain below 5 percent for most products.
As a result, they concluded, exports to the United States without AGOA will not be much more expensive.
Their paper noted: “Although the United States is South Africa’s second-biggest trading partner [10 percent of total exports], the composition of South Africa’s export basket to the United States remains concentrated in goods that do not benefit from AGOA.
“Most of the export basket [just over 50 percent] to the United States is in the minerals and metals sector, which is not affected significantly by the loss of tariff preferences.
“Thus, a loss of AGOA would affect just a small share of the total 10 percent of South Africa’s exports to the United States.”
However, said Baskaran and Ramkolowan, the expulsion of South Africa from AGOA could have ramifications for the United States.
“The United States relies on South Africa for a range of critical minerals,” they wrote. “In 2021, the United States imported nearly 100 percent of its chromium from South Africa as well as over 25 percent of its manganese, titanium, and platinum.
“Leveraging AGOA as a form of economic diplomacy is key for encouraging the security of critical mineral supplies.”