US House backs Agoa extension, but SA’s continued participation remains uncertain

Trade and Industry Minister Parks Tau has welcomed the passage of a Bill in the US House of Representatives that would renew the African Growth and Opportunity Act (Agoa) for three years, but it’s uncertain whether South Africa will continue to qualify for Agoa after the Bill passes the Senate.

The Republican-controlled House of Representatives approved the Agoa Extension Act, which would extend the programme until 31 December 2028, by a vote of 340 to 54 on Tuesday, 13 January.

Agoa, which gave duty-free access to the US market for most exports from 32 eligible African countries, expired on 30 September last year. The Bill would reinstate the preferential trade pact retroactively to 30 September, also reimbursing importers for duties they have paid in the interval.

Read more: US Congress moves to revive Agoa, but SA’s continued participation is in doubt

“The Bill proposes reauthorisation of Agoa with all beneficiaries included for three years until 2028,” read a statement from South Africa’s Department of Trade, Industry and Competition (Dtic) on Tuesday.

“While South Africa, together with other Agoa-eligible countries, has been advocating for a long-term renewal of Agoa with all countries retained in the programme, the current renewal, while short, provides the necessary relief to companies in the context of the tariffs implemented by the United States. This will provide certainty and predictability for African and American businesses that rely on the programme,” it continued.

The Bill will now proceed to the Republican-controlled US Senate for consideration and approval before being sent to US President Donald Trump for his approval.

Agoa had been central to US-Africa trade since it was enacted in 2000. It has been particularly vital for South Africa, Lesotho and Madagascar.

Daily Maverick reported that South Africa exported goods to the US worth $3.244-billion under the programme in 2023, which included automotive equipment, agricultural goods and textiles. It has been estimated that thousands of jobs depend on Agoa in South Africa’s citrus sector alone.

Read more: How Agoa non-renewal threatens South African citrus industry and US consumers

SA’s Agoa fate still uncertain

The approval of the Agoa Extension Act by the House comes after it was passed by the House Ways and Means Committee last month. Ahead of its consideration, US Trade Representative Jamieson Greer raised doubts about South Africa’s continued participation in the programme.

Speaking to the US Senate Appropriations Subcommittee on Commerce, Greer confirmed that the Trump administration would agree to Agoa’s extension — albeit for only a year — which would give the administration and Congress time to reform it. Greer said he would be happy to consider removing South Africa from Agoa if Congress wanted that, reported Daily Maverick.

The president of the trade policy consulting firm Manchester Trade, Stephen Lande, told Daily Maverick that when the Bill goes to the Senate, it is unlikely to pass as a standalone measure. Instead, it will probably be incorporated into a broader piece of legislation, such as the Budget Reconciliation Act, which must pass Congress.

“The expectation is that it will not be voted on separately in the Senate, but it will be part of that Budget Reconciliation Bill. And since that Bbill has to pass, it’s doubtful people will try to amend the [Agoa Extension Act],” said Lande. The Budget Reconciliation Bill must be passed by 31 January to avoid another partial government shutdown, he explained.

However, Lande was uncertain whether South Africa would remain eligible after the Bill makes its way through the Senate.

“They currently have the authority to remove South Africa,” Lande said, explaining that South Africa could be excluded later in a regular or irregular review of eligibility.

“I don’t know whether or not South Africa will be there… Whatever happens will not happen legislatively — I have no comment on the review,” he said.

In a post on X on Wednesday, 14 January, ANC Secretary-General Fikile Mbalula said the party welcomed the US House of Representatives’ vote “in favour of extending South Africa’s participation” in Agoa.

“The ANC and its government has fought relentlessly through diplomatic efforts to ensure that South African food producers are protected despite the unpatriotic efforts of some small right-wing groups. All of this has been achieved without tampering with our transformation policies and this alone can be viewed as victory for our country against these right-wing groupings,” he said.

Negotiations on tariffs continue

Trump placed a punitive 30% tariff on South African goods in August last year. The move followed months of work by South African officials to secure a trade deal with Washington to avert the tariffs.

Daily Maverick previously reported that if Agoa was extended, the tariff on South African products would still apply. This would ostensibly make Agoa superfluous, unless South Africa can negotiate it down through bilateral talks.

In an interview with Daily Maverick in September last year, Tau said he was “cautiously optimistic” that South Africa and the US would be able to strike a trade deal.

In its statement this week, Dtic said Pretoria and Washington “continue to engage each other in the negotiation of an agreement on reciprocal tariffs aimed at promoting mutually beneficial trade and investment relations” and addressing barriers that affect bilateral trade.

Tau emphasised that South Africa valued its “longstanding trade and investment relationship” with the US, noting it was a “critical partner in driving mutually beneficial economic growth, industrialisation and job creation”.

He reiterated that South Africa was committed to a “mature engagement” with the US regarding matters of mutual concern.

The US Supreme Court was expected to issue a key ruling on the legality of Trump’s reciprocal tariffs on Wednesday afternoon. Lande told Daily Maverick that if the Supreme Court ruled that the tariffs were invalid, the expectation was that the US would use a different law to enforce a baseline tariff of between 10 and 15%.

“The 30% duty is still an issue; hopefully, there can be some kind of ... either an overall settlement, or maybe a settlement just in the trade area [between South Africa and the US].

“That duty itself may be ruled invalid by the Supreme Court, but the chances are the US will impose a duty of somewhere between 10 and 15 percent,” he said.

“It is my own hope that the negotiations that your trade and agricultural ministers have been carrying out have been going very well, but I think on the economic side, Dtic is still the best negotiator around and they’ve done a beautiful job with the US side.” DM