GNU gives SA a honeymoon period for keeping its Agoa status, say analysts

The formation of the Government of National Unity (GNU) has secured South Africa a “honeymoon period” for retaining its privileged access to US markets under the African Growth and Opportunity Act (Agoa). This is the view of US politicians and South African trade analysts on the eve of the annual Agoa Forum which runs from Wednesday, 24 July to Friday, 26 July in Washington. 

South Africa’s continued participation in Agoa and its good diplomatic relations with the US generally have been under attack in the US, mainly from conservative Republican members of Congress — though with some Democratic support — who have tabled legislation that would oblige the Biden administration to conduct a comprehensive review of US-SA bilateral relations that includes an assessment of whether SA is undermining US national security and foreign policy interests.

These legislators have been antagonised over the past two years by the ANC government’s friendships with Russia, China and Iran — and its perceived hostility to Israel, particularly in taking it to the International Court of Justice on charges of genocide in Gaza.

If the legislation proposed by Republican Representative John James passes and the Biden administration is forced to review US-SA relations and particularly to investigate whether SA has undermined US national security and foreign policy interests, this could jeopardise SA’s continued participation in Agoa.

Read more: Pretoria walks tense tightrope on US relations under shadow of Russia, Iran, China alignment

This legislation, open to eligible sub-Saharan African countries, gave duty-free access to the lucrative US market for more than $3-billion worth of SA exports in 2022, mainly motor vehicles, fruit and wine. SA exports in 2023 under Agoa reached $2.9-billion by November.

But even without the specific legislation which has been proposed by  James, Agoa itself makes provision for US legislators or officials to review a country’s participation at any time.

The Agoa programme as a whole is up for renewal next year and as things stand, it seems likely to be renewed — and almost certainly if current US Vice-President Kamala Harris or another Democratic Party candidate wins election in November. It is less clear what a victory for the unpredictable Republican presidential candidate Donald Trump would mean for the future of Agoa.

GNU influence

New Trade, Industry and Competition Minister Parks Tau is in Washington to attend the Agoa Forum and more generally to lobby the Biden administration and Congress to save Agoa and keep relations between SA and the US on track.

He told Bloomberg, “We intend to engage senators and also members of Congress about what our position is on a whole range of issues as the South African government on the back of the Agoa Act, but also taking into account bilateral relations.”

The formation of the GNU constitutes a more eloquent argument in favour of SA’s continued Agoa rights than anything Tau could say, unless, of course, the GNU is part of his argument. 

“I do not think the GNU has secured SA’s long-term eligibility, but there will certainly be something of a honeymoon period as we watch to see the direction the GNU charts in the coming months,” a Washington insider told Daily Maverick.

“As a result of this honeymoon period, I would expect SA to keep its eligibility for next year.

“However, the concerns that exist here about the ANC’s ties with Moscow, Beijing and Tehran and its consistent anti-Israel sentiment are strong and pending a significant shift in foreign policy from Minister [Ronald] Lamola (which we do not expect), will remain.

“This will keep the ‘undermining US national security’ argument relevant as it pertains to Agoa eligibility going forward. If the GNU were to collapse these concerns would only be strengthened.”

The Democratic Alliance has played a significant role, both directly and indirectly, in buying SA time on Agoa. Its participation as the ANC’s main GNU partner is in itself a major factor. The party’s deputy minister of trade, industry and competition, Andrew Whitfield, will also attend the Agoa Forum in Washington.

The DA has conducted four missions to the US over the past year to lobby for SA to retain its Agoa privileges. In part, the DA is motivated by the fact that many farmers in the DA-controlled Western Cape export to the US, enjoying Agoa privileges. 

Review in question

One of the main threats to SA emanates from the US-South Africa Bilateral Relations Review Act which James introduced into the House of Representatives in March.

It called for the full review of US-SA relations by the Biden administration and an investigation into whether SA’s warm relations with the US’s enemies were undermining US national security and foreign policy interests. The Bill passed the House Foreign Affairs Committee, but has not reached the floor.

To accelerate the reviews, James reintroduced the operative clauses of his Bill last month as amendments to the National Defense Authorization Act. The legislation authorises the massive US defence budget and has to be passed fairly promptly.

James’ amendments on South Africa were passed by the Republican Party-controlled House. They now have to also be adopted by the Democratic Party Senate. Negotiations to reconcile the House and Senate defence authorisation Bills are under way.

The formation of the GNU has created some ambivalence among Republican legislators about this legislation. Coincidentally, but perhaps significantly, the amendments by James to the Defence Authorization Bill passed the House on the very day the GNU was formed. That has prompted some concern that a full review by the administration into US-SA relations could undermine SA’s Agoa status just as the GNU is beginning to restore US confidence in SA.

However, some supporters of James’ legislation believe that a thorough US examination of SA’s relations with Russia, China and Iran — including a probe into untested allegations that some of them might have been meddling in local politics — could still be useful.

Eckart Naumann, an independent economist and associate at the Trade Law Centre, told Daily Maverick that an investigation by the US administration into US-SA relations, even if it concluded that SA had undermined US foreign policy and security interests, would not necessarily lead to SA being kicked out of Agoa.

“Perhaps put on notice, perhaps warned, perhaps monitored even more closely. I don’t think that it’s in the best interest of the US to kick SA out — as tempting as it may be. It would come at too high a cost, politically and to business, both domestic and foreign investors.”

Naumann is also not convinced that James’s legislation will pass in the Democratic Party-controlled Senate.

Best hope, Democrats

Hanging over the whole debate is the uncertainty about the outcome of the presidential elections. Biden’s withdrawal from the contest has raised the hopes of many South Africans that a Democratic Party candidate — either Harris or someone else — will defeat Trump, who remains ahead in the polls.

Trump’s position on Agoa and relations with SA more generally is unknown, but most commentators suspect his positions would be less favourable to SA than those of any Democratic president.

Donald MacKay, the CEO of XA Global Trade Advisors, believes that SA-US relations, including SA’s continued participation in Agoa, depend very much on who becomes the next US president.

“I think if it’s Trump, our prospects are fairly slim. If it’s anyone but Trump, then probably quite a bit better. I think that affects the outcome of all of this more than anything that Tau can do.”

MacKay adds that, “All bets are off if Trump wins. Firstly, he’s just wild. No one knows what the hell he’s going to do.

“He doesn’t appear to have any sort of principled stance on anything. So, I have no idea what he would do.

“I would just say that the chances of renewal [of Agoa] under Trump are far less than they are under a Democrat president.”

MacKay also believes that the formation of the GNU is a positive. “I think the perception is that the GNU makes the government more business-friendly and more investment-friendly. Whether that is reality, it’s just too early to call.”

He believes the fact that the DA has an agriculture minister, a deputy trade and industry minister and a deputy finance minister is helping to keep the US on side. DM