SA strengthens Agoa trade bond

SOURH Africa’s government has moved to strengthen its trade relations with the United States as both countries have confirmed the date of the African Growth and Opportunity Act (Agoa).

This comes after trade relations between South Africa and the US nearly broke down, with the US threatening to remove South Africa from Agoa after the US ambassador to South Africa, Reuben Brigety, accused the government of selling arms to Russia.

However, US Trade Representative Katherine Tai and Minister of Trade, Industry and Competition Ebrahim Patel on Friday announced that South Africa will host the 20th US-sub-Saharan Africa Trade and Economic Cooperation Forum (Agoa Forum) on November 2-4 in Johannesburg.

The announcement dispels prior concerns about the possible relocation of the summit to a different country and affirmed the US’s willingness to consider South Africa’s role as a significant player in the Agoalandscape.

The Forum will bring together the US government and Agoa-eligible countries, as well as representatives from key regional economic organisations, the private sector, civil society and labour.

Over the course of the event, participants will engage in discussions on how to strengthen trade and investment ties between the US and sub-Saharan Africa and how to promote resilient, sustainable and inclusive economic growth and development.

It will also feature the ‘Made in Africa Exhibition’ , which will showcase regional value chains on the continent.

“The Agoa Forum is an opportunity for the United States to build upon the success of the Africa Leaders Summit and further our economic partnership with Agoa countries,” Tai said.

“As President (Joe) Biden has said, the future is Africa. I look forward to visiting South Africa in November to discuss our shared priorities, reaffirm the administration’s commitment to the continent, and discuss opportunities to make Agoa more transformative as we deepen our trade and investment relations with the sub-Saharan African countries.”

Agoa provides eligible sub-Saharan African countries with duty-free access to the US market for over 1,800 products, in addition to the more than 5,000 products that are eligible for duty-free access under the Generalised System of Preferences programme.

Since its enactment in 2000, Agoa has been at the core of US economic policy and commercial engagement with Africa.

To meet Agoa’s rigorous eligibility requirements, countries must establish or make continual progress toward establishing a market-based economy, the rule of law, political pluralism and the right to due process.

Additionally, countries must eliminate barriers to US trade and investment, enact policies to reduce poverty, combat corruption and protect human rights.

By providing new market opportunities, Agoa has helped bolster economic growth, promoted economic and political reform, and improved US economic relations in the region.

Patel said South Africa was looking forward to welcoming a senior delegation from the United States and a number of countries in sub-Saharan Africa.

“Agoa has helped to promote the export of African goods to the United States, and we believe there is scope to deepen its impact on African industrialisation,” Patel said.

“An extension of Agoa beyond 2025 will promote inward investment in Africa and provide benefits to both the United States and African countries. It will also support our efforts to increase growth through the African Continental Free Trade Area (AfCFTA) that will cover 54 countries and 1.4 billion people.”

The Agoa agreement is very important for South African economic growth as the US is among the country’s top five major export destinations, which account for over a third of the total value of South Africa’s exports.

South Africa has seen a strong increase in year-on-year Agoa exports of motor vehicles , articles of jewellery, ferroalloys, fruit and nuts, and beverages and spirits.

The country’s exports utilising Agoa grew to $2.7 billion (R51bn) in 2021, but they were still well short of the value recorded during the period 2008 and 2014.

Earlier this month, the government released the findings of an independent inquiry which revealed that the Lady R ship was carrying equipment for the South African National Defence Force (SANDF), which it had requested and had been ordered by Armscor and waited for since 2018.

Momentum investments economist Sanisha Packirisamy said foreign policy and geopolitics had been in the limelight over the past few months after a sanctioned Russian vessel docked at Simon's Town Naval Base in the Western Cape.

“This has negatively affected sentiment about the country and increased concerns about more damaging consequences such as an exclusion from the Agoa and possible secondary sanctions,” Packirisamy said.

“Recent developments of a favourable finding from the Lady R (Russian vessel) inquiry and successful hosting of the Brics summit have dissolved some of the foreign policy risks, but upcoming key events such as the Agoa Summit and the European Union (EU)-SA Summit remain important to watch.”

– BUSINESS REPORT