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TRADE TALKS

SA is seeking to maximise its Agoa benefits at 20th annual forum

SA is seeking to maximise its Agoa benefits at 20th annual forum
Illustrative image: South Africa exported goods worth about R60-billion to the US under Agoa in 2022, (Photos: iStock; Rawpixel; Vecteezy and Wikimedia)

How to make Agoa work better for the African continent as a whole will be among the key issues under discussion.

After considerable diplomatic drama and one postponement, the annual forum of the Africa Growth and Opportunity Act (Agoa) will be held from 2 to 4 November in Johannesburg, when South Africa will seek to maximise its exploitation of the measure to gain greater access to the lucrative US market.

Pretoria’s tension with Washington over its perceived pro-Russian stance in Vladimir Putin’s war against Ukraine caused the forum to be postponed from September and then almost cancelled. But energetic diplomacy by the government saved the day and it now offers an opportunity for South Africa to boost its exports to the US.

Scores of US, South African and other African political, business and civil society leaders, including trade unionists, will gather at Nasrec to make deals and consider how to make Agoa work better for the continent.

South Africa exported goods worth about R60-billion to the US under Agoa in 2022, according to US figures. About half of that was in vehicles – many of them high-end Mercedes-Benzes and BMWs – and about R8-billion was in agricultural products, much of it citrus and wine. Jewellery was another major export.

But Trade, Industry and Competition Minister Ebrahim Patel made it clear this week that he wanted to increase those export volumes considerably and that the forum would be a good opportunity to discuss this.

Patel told a media briefing on 26 October that most of the South African companies taking advantage of Agoa were large and he hoped to encourage small and medium-sized companies also to find ways of using it.

He suggested that this might need to be done through consortiums as the advantages of scale were important in a huge market like the US.

Patel said an area of potential expansion was for South Africa to make better use of regional value chains by getting more raw materials and components from elsewhere in Africa. This would allow the country to build products that could be exported to the US through Agoa.

He noted that the emerging African Continental Free Trade Area, which is intended to open up the whole continent to trade, would play an important role in forging these continent-wide value chains.

Another opportunity, Patel said, lay in Africa jointly developing expertise in improving sanitary and phytosanitary standards to enable more animal and plant food products to be exported from the continent to the US market.

Pharmaceutical opportunities

Stavros Nicolaou, the group senior executive for strategic trade at Aspen Pharma Group, said another opportunity to exploit would be for the US to procure more of its antiretrovirals (ARVs) and other medical supplies for its massive Pepfar anti-HIV/Aids programme from local producers. He said South Africa was now importing about 80% of its ARVs, which didn’t make sense.

Nicolaou said South Africa was by far the biggest beneficiary of Agoa and also the largest African exporter to the US, exporting three times the amount of the next biggest exporter, Nigeria. Total two-way trade with the US was now about $12-billion annually.

Nicolaou said that the entire Agoa programme was up for reauthorisation by the US Congress in 2025, so this would be a major topic at the forum.

Constance Hamilton, the assistant US trade representative for Africa, said the Biden administration supported the renewal of Agoa, but there would be considerable discussion at the forum about how to improve and make it work for more countries.

“When Agoa was enacted in 2000, we hoped it would be a game-changer for Africa,” she told a media briefing on Thursday, 26 October. The hope had been that many African countries would embrace it and that it would boost the continent’s economic integration.

But, in fact, few countries had taken advantage of it and few categories of exports had been used. So, an important part of the forum would be to discuss how Agoa could be improved.

Hamilton would not discuss which African countries would be eligible to continue enjoying Agoa benefits next year. The Biden administration is due to submit the list of countries to Congress over the next few days. 

Daily Maverick has been told that South Africa will remain in Agoa – despite the earlier concerns – but that Niger, Gabon, Uganda and the Central African Republic will be removed, because of coups in Niger and Gabon, homophobic legislation in Uganda and state capture and human rights abuses by the Russian mercenary group Wagner in the Central African Republic.

Joy Basu, deputy assistant secretary in the African bureau of the US State Department, said that supporting democracy and increasing human and workers’ rights was a huge priority for the Biden administration, which was thinking hard about how to advance those aims better through Agoa. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.

P1. Front page. 28 October 2023

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