We are just a few weeks into the second Trump administration and there have already been major foreign policy decisions that are not only redefining the US’s view of the world but fundamentally changing the course of its partners.
South Africa, along with the rest of the world, is experiencing seismic shifts in US foreign policy in what could be a new era in global and international relations. These changes call for a sober reflection on the implications of US foreign policy on bilateral commercial relations.
Generally, US-South Africa relations have been somewhat frosty, mainly due to differences in domestic and foreign policy over the years — from the infamous Agoa out-of-cycle review of 2015, military drills with China and Russia, the Israeli-Gaza conflict and now, the Expropriation Act.
These issues have come to define the constant tension and major divergent views between South Africa and the US, which, while playing out in the public square, have always been managed through the appropriate diplomatic channels.
The Trump administration, however, has a different approach to dealing with domestic and foreign policy differences — it is far more direct and confrontational.
While temporarily halting foreign aid, the Trump administration singled out South Africa through a specific ban in direct response to what it wrongly perceived as human rights violations. There are no land grabs in South Africa. The South African government has since noted that the premise upon which some of the views that informed the aid ban were made was based on misinformation and a misrepresentation of the reality in the country.
As South Africa grapples with the immediate to short-term impacts of the aid ban there are also long-term implications for the bilateral trade and investment relationship, all of which require urgent attention.
South Africa’s trade and investment benefits under the African Growth and Opportunity Act (Agoa) are coming under scrutiny yet again — this time, under a hostile administration that is seeking to establish reciprocity.
Holistic approach
In the past, one would have focused on tracking the bipartisan processes in the legislative branch of the US government which define subtexts of the Agoa Reauthorization Bill. However, under the Trump administration, the South African government may need a more holistic approach. The positive momentum from diplomatic engagements in 2024 has been upended by Trump’s recent executive actions.
It’s an entirely different set of circumstances which call for a new response mechanism to mitigate and manage risk. South Africa must double down its efforts under a comprehensive plan of action that can cover advocacy across legislative and executive branches of government in Washington, DC. Currently, a bilateral trade and investment framework agreement is in place that reviews and addresses implementation issues and investment cooperation from time to time.
However, a separate and more agile set of bilateral response mechanisms may need to be established to address issues which require urgent attention. For instance, in responding to the misguided human rights violations claims raised by the US, South Africa may require a dedicated standing task force that can communicate facts of these issues at the highest level of government — clearly stating and showing that there are no land grabs in South Africa.
Much of what has shaped the US leadership perception is misinformation. Importantly, the standing task force should serve as a crisis management committee — this will not be the last time that the US has issues with South Africa.
Overall, there should be a broader and common understanding within South Africa about what type of bilateral relationship the country needs to establish with the US.
First, South Africa needs to decide when, how and under which terms it needs to transition from Agoa to a reciprocal trade agreement. A preferential trade agreement (PTA) is more advantageous than a free trade agreement.
A PTA would allow South Africa to cushion sensitive industries while providing access to the US to sectors that can compete fairly. South Africa is the US’s largest trading partner in Africa and reciprocity is an inevitability and a strategic necessity for establishing a sustainable partnership.
However, having a bilateral and reciprocal trade and investment agreement will not solve all the challenges South Africa has with the US. As witnessed by how the US gained concessions from Mexico and Canada under the threat of tariffs, the Trump administration will continually seek to extract more benefits and strategically (ab)use its position to negotiate further. To counter this, South Africa should strategically broaden its export markets and have a more diversified trade approach in various regions of the world. DM