The government appears to be on an out-of-the-blue coordinated charm offensive to mend our relations with the United States following months of actions which severely damaged those relations. The Minister of International Relations, Naledi Pandor, was in the US last week trying to mend relationships with several congressmen and economic players.
Also last week, President Cyril Ramaphosa addressed the matter in his weekly newsletter, while significantly downplaying what is happening and what is at stake. But it seems that the damage is already done and worse could be on the way.
South Africa is a beneficiary of the African Growth and Opportunity Act (Agoa) which is a United States Trade Act with Africa. Agoa was enacted on 18 May 2000 as Public Law 106 of the 200th Congress.
South Africa exports a significant amount to the US, they are our second largest export destination — second only to China. According to the South African Revenue Service (SARS), the US received 7.8% of our exports last year.
Read more in Daily Maverick: ‘Don’t play us for fools’: If SA wants to remain a close US partner in Africa, it must meet us halfway
According to the US Department of Commerce, the value of exports from the US to South Africa in 2022 was $6.5-billion or (R130-billion). The value of imports from South Africa to the USA was $14.6-billion or (R280-billion) — meaning the balance of trade between the two countries is largely favourable to South Africa.
Agoa allows duty-free access for certain African countries into the US market. To date, $3-billion (or R60-billion) of SA goods has been exported to the US duty-free. In addition to Agoa there is the US Generalised System of Preferences (GSP) and under the GSP preferences South Africa exported $559-million (or R11.8-billion) to the US. In total, South Africa had R72-billion worth of exports under preferential terms to the US.
Those preferential market access conditions are now under review by the United States Congress and if removed could have a disastrous impact on our economy. Qualification for Agoa preferences is based on a set of conditions contained in the Agoa legislation.
In order to qualify and to remain eligible for Agoa, an Agoa beneficiary country must demonstrate respect for the rule of law, human rights, and core labour standards. An important provision to be aware of is that beneficiary countries should also not seek to undermine US foreign policy interests. Agoa includes a statutory requirement for annual reviews to examine the compliance of each participating country with the act’s eligibility criteria.
We are now facing the serious prospect of losing access to Agoa. This follows the tabling of “The US-South Africa Bilateral Relations Review Act”, last week. It passed the House Foreign Affairs Committee by 36 votes to 13 on Thursday 28 March.
Effectively, there is bipartisan agreement in Congress that our country’s actions must be considered. The Republicans and Democrats in Congress have initiated a process that calls into question South Africa’s foreign policy positions and contends that South Africa is “siding” with enemies of the United States, and acting as a proxy for terrorist organisations.
The review bill specifies that President Joe Biden must determine “whether South Africa has engaged in activities that undermine United States national security or foreign policy interests”.
In a US election year where Biden is facing significant domestic challenges and a rival who is currently polling ahead of him despite facing notable legal challenges, he may very well make this determination.
This puts South Africa in a precarious position. There is a very tangible risk that we could be removed. This would be an economic shock that our country will struggle to absorb.
The economic growth rate has been stagnant and our manufacturing and mining industries are under strain. If our exports to America lose preferential status, this will increase the price to US importers who are likely to look for cheaper sources.
Expensive, dangerous alliances
How did we get to this point? By becoming too close to Hamas and too close to Vladimir Putin and Russia.
Read more in Daily Maverick: Pretoria walks tense tightrope on US relations under shadow of Russia, Iran, China alignment
While arguing that our foreign policy position is one of engaging both sides, we must be cognisant that the actions of the Executive show a clear preference and proximity to groups considered hostile actors to the US. In his letter to South Africans last week President Ramaphosa stated that:
“An important starting point for that discussion is that since the advent of democracy in 1994, South Africa has sought through its foreign policy to promote peace, security and development on the African continent and across the world. Consistent with our history, South Africa has taken a non-aligned position in our international relations. We have deliberately avoided aligning our country with any of the major powers or blocs. Rather we have sought to forge cordial relations with all countries.”
There is a good reason for scepticism and scrutiny of the authenticity of this position from the president, his Cabinet and his party. Their actions belie the position they express. The ANC hosted three members of Hamas in Pretoria recently, which included Khaled Qaddoumi, Hamas’s representative to Iran, and Bassem Naim, a member of Hamas’s political bureau in Gaza. It was a move that was provocative and suggested that the ANC did not in principle oppose the actions of Hamas on 7 October.
Read more in Daily Maverick: Hamas leaders’ presence in SA for a Palestine solidarity convention stirs controversy
Not only has the ruling party been seen cavorting with Hamas, but the minister of international relations also visited Iran two weeks after the 7 October terror attacks in Israel by Hamas. While there, Minister Pandor met with the President of the Islamic Republic of Iran, Ayatollah Seyyed Ebrahim Raisi and also had engagements with the Minister of Foreign Affairs, Dr Hossein Amir-Abdollahian.
Iran is accused by the US of sponsoring groups such as Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen. The timing of this trip could not have been worse. The optics were an eyesore to our Western allies. Early last year, Russian Foreign Minister Sergey Lavrov received red carpet receptions from the ANC and government ministers alike.
Last year I wrote an article where I said that Naledi Pandor is wrong on Russia and I pointed out that the ANC was putting our relationship with some of our largest trading partners in the West in peril. I pointed out that the collective actions of the government have shown favourability to Russia.
Read more in Daily Maverick: Russia’s Sergey Lavrov returns to Africa with aggressive charm offensive
In August 2022 the South African Defence Minister, Thandi Modise, departed for Moscow for the “10th Moscow Conference on International Security at the invitation of the Russian Minister of Defence, General Shoigu”. In October of 2022, South Africa was one of 35 countries that abstained from a vote condemning Russia’s annexation of Ukrainian territories. In February 2023, the country hosted trilateral naval exercises called Operation Mosi II with Russia and China.
Foreign policy chaos
It is time for us all to think about our foreign policy bipolar disorder. Government says that we care about human rights while we accept and embrace murderous regimes like the Zanu-PF government in Zimbabwe and the anti-democratic regime of Yoweri Museveni in Uganda.
We say we care about the loss of innocent lives, but earlier this year President Ramaphosa hosted Mohammed Hamdan Dagalo, a man who is accused of participating in the genocide in Darfur in the early 2000s and in an ongoing genocide in the current Sudan war.
Read more in Daily Maverick: Sudan is being destroyed while the world focuses on Gaza and Ukraine
We ignore the atrocities that have been committed by Russia which also include the killing of innocent women and children in Ukraine.
In addition, it is time to examine whether or not we are benefitting from our BRICS Alliance. When I look at the products in our stores, most of these products are made in China. There has been an increase in the number of “Chinatown” malls in South Africa and this poses a long-term threat to our domestically owned retail sector. These trends are cause for concern because it is a goal of South Africa to improve our local manufacturing and to strengthen our exports of finished products and skills to the region under the African Continental Free Trade Agreement, AfCFTA.
China is not an ally in our accomplishment of these goals — it is instead a direct rival as it is trying to expand its influence in the region and consolidate its supply chains. The role of Africa under the Belt and Road Initiative of China is to be a supplier of raw materials and a consumer of finished goods from China.
I believe that we must reexamine our positions and our risks before it is too late. We have shifted too far to one side of the global order and we need to start to walk it back to the centre. In order to accomplish that, we need to pivot away from some of the nations we have embraced. We need to do this to make sure that our foreign policy interests are preserved.
What this means is that we must call the Chinese government officials and companies to appear before the following parliamentary committees: communications and digital technologies, and trade — industry and competition. They must appear before these committees to give an account for the security and social risks associated with some of their companies and products. They must give an explanation to South Africa about the expansion of China mall outlets and the economic impact thereof.
We need our government to directly call on Hamas to release all the hostages captured on and around 7 October 2023. This means that the Department of International Relations must issue statements expressly to that effect.
We also need to create some distance between Pretoria and Moscow. This means that we need to issue statements condemning the continued attacks by Moscow in Ukraine.
We need to challenge both Russia and China for their actions in various African nations. We cannot continue to merely assert to the West that we have shared and strategic interests while in our public rhetoric and our public associations as a nation we show that this is mere lip service.
In addition, we need to play our own leadership role as a custodian of democracy and human rights in southern Africa. We must use our influence to avert abuses of democracy in the region, be it in Eswatini, Mozambique, Lesotho or Zimbabwe.
The failures of democracy and human rights protection in these nations affect South Africa. DM
Agree 100%! The despicable anc government embraces the most vile, evil and murderous regimes on earth whilst spewing hot toxic bile about being not aligned. Their actions are the very antithesis and they have betrayed our human rights values, our Constitution and the very freedom that was fought for. Cyril, Pandor, Dirco etc are nothing but arch-hypocrites, masters of duplicity and deception and totally immoral. The US has every right to kick us out of AGOA as we do not deserve their goodwill and largesse.
I guess there is a good chance we may get kicked out of AGOA. I just wonder how much of the $14.6 billion export value we will lose by not being competitive against other countries and if we can find other markets for the relevant exported goods. I don’t see the gap being filled by other BRICS countries. What products makes up the bulk of these exports?
Oh, the pinnacle of irony must be when they align with the pure, spotless, and utterly blameless regime—the West, in your eyes. Because, of course, that makes perfect sense.
Read the article again. “We have shifted too far to one side of the global order and we need to start to walk it back to the centre”. Do you find the concept of a balanced approach difficult to comprehend?
South Africa may not be on the wrong side, or at least the unpopular side (“unpopular” is not defined by the USA). Countries representing over 50% of the world’s population care less about Ukraine V Russia. The USA tried to do a deal with South American governments: For every jet you send to the Ukraine, we will give you a nice, new one. There were no takers.
India did energy deals with Russia, which shows where it stands.
The only thing “wrong” really with SA’s stance on what is happening in Gaza is that they showed it early and took it all the way to the ICJ. All of Israel’s traditional enemies, even the USA, are running out of patience with the Nethanyahu regime (as, increasingly, are the people of Israel).
SA are on the right side morally with Gaza. They are not actually defending Hamas nor denying Israel’s right to defend itself. They are saying that the response is excessive and a violation of some international laws and norms. Which, increasingly, is being shown to be the case.
But international politics is seldom about principle.
Same as the article Bob, close your eyes and chase the money that cannot be right.
Xiaomi from china released EV’s USA ordered 70%, before the Ukraine war whilst BRICS had already been commission Europe and USA allies were dependent on Russia for oil and gas which led to difficulties with sanctions.
China GDP is around 25 trillion and USA 33trillion a worthy trading partner not against USA but with USA.
AGOA has shown to be a bad faith deal as it can be used as a weapon for politics by the USA, we cannot eat pride but we cannot buy trade by supporting human rights violations, it’s not only against our constitution but it’s against international law which we signed to uphold.
Naughty Hamas has been sneaked among states in this article to mislead as we speak Israel, Hamas,USA and Arab delegates are in Egypt negotiating a ceasefire.
One must bare in mind that we were told that Hamas is a terrorist organisation but comparing terror you can guess who takes the cup.
Our foreign affairs office is not above the law if they broke any of their mandated policies they must be brought to book.
Opposition parties go to other states to request observers and offer support in the middle of a war without the mandate of parliament or any government office.
If opposition want to run the country they must win an election.
If we challenge countries on what they do in Africa we must not choose but must add France, UK and Germany in Namibia and USA and allies in Palestine.
PS.
Prediction: If Trump comes to power AGOA will be repurposed to reward countries that criminalise homosexuality, and clamp down on access to birth control and abortion. Pastors all over the USA will raise their hand and shout “hosana” because the good Lord has blessed them with such a mighty and moral President.
I doubt that. Because AGOA is, in a sense, bilateral, and one of the reasons for its existence is as a sweetener to other deals that give lower/no tariffs to US producers and exporters in the SA market (for example, the >70 tonne frozen bone-in chicken ‘dumping’ quota that the US holds), and to secure our strategic minerals for US import.
The Brookings Institute released a report titled “Quantifying the impact of a loss of South Africa’s AGOA benefits” at the start of the year. Here are some of the conclusions it drew:
“In total, a loss of AGOA benefits would lead to a GDP decline of just 0.06%. This unexpectedly small effect is a result of two factors—the nominally higher tariffs on South Africa’s exports to the U.S. and the composition of South Africa’s export basket.
— First, average tariffs (nonpreferential) remain below 5% for most products. As a result, exports to the U.S. without AGOA will not be much more expensive.
— Second, although the U.S. is South Africa’s second biggest trading partner (10% of total exports), the composition of South Africa’s export basket to the U.S. remains concentrated in goods that do NOT benefit from AGOA.”
They also wrote, “But a loss of AGOA could have ramifications for the U.S. […] In 2021, the U.S. imported nearly 100% of its chromium from South Africa as well as over 25% of its manganese, titanium, and platinum. Leveraging AGOA as a form of economic diplomacy is key for encouraging the security of critical mineral supplies.”
AGOA isn’t bilateral, Greeff – it is entirely unilateral, requiring no tariff phasedown on the part of African countries. The Chicken Stew is separate to that, and we were bullied into it on pain of other retaliatory measures. I also think the Brookings analysis is less than honest in its statement that “exports to the the US without AGOA will not be that much more expensive.” If you’re between 1% and 5% more for a product from South Africa than from say, Chile, or Brazil and you’re importing in bulk, over many years, it adds up: a 2.5% margin of preference on $1bn of goods is $25m a year, and over 10 years, $250 million – it’s one of the reasons Mozambique’s coal struggles in key Asian markets; they’re about a dollar a ton more expensive to land it than Australia, so when you’re talking 20Mtpa over a 10 year contract, are you going to pay $200m extra just because?
However, I think it goes beyond just trade numbers. Can we really afford to have the taps turned off to a key market that may lead others to do the same? First AGOA, then PEPFAR (US$7.5bn over 20 years to fight the scourge of AIDS), then maybe Power Africa, then other USAID programmes in healthcare, fighting GBV, supporting agriculture etc etc. Surely, given the state SA is currently in, we should cherish all the assistance that we a country can get, not just the ANC with its infantile obsession with Cold War politicking.
A huge part of this article is simply numbers… money. It mentions that one condition of the trade agreement is to not undermine any of the US’ foreign policy interests.
So as long as the US is friends with the powerful Arab nations with mighty militaries, but questionable human rights records, and the US’ bombs have killed 13 000 children and counting in 6 months, and we politically toe the same hypocritical line, we’ll get good deals, and that’s what is important Mr. Maimane?