With the US government due to begin a review of African countries' eligibility for participation in the African Growth and Opportunity Act (Agoa), Business Unity South Africa (Busa) has conveyed concerns over risks to trade with the US to the department of trade, industry & competition (DTIC), which will plead South Africa's case to the US Congress.
Submissions to the US government had to be submitted by Friday ahead of virtual hearings that begin on July 24.
Agoa is US legislation that allows duty-free access to the US market for eligible African countries to diversify exports in addition to products already qualifying under the Generalized System of Preferences (GSP) that was established by the Trade Act of 1974.
The Ethiopian government has reportedly hired international law firm Squire Patton Boggs to assist in pleading its case to be readmitted to Agoa, while Busa worked with business groups to make a compelling submission for South Africa.
CEO Cas Coovadia said Busa engaged with the DTIC on behalf of members as the agreement is government to government.
“We engaged on the basis of what we need in Agoa to promote South African companies and their interests in trade relationships with the US,” Coovadia said on Thursday.
Busa members include the National Association of Automobile Manufacturers of South Africa (Naamsa), Agri SA, Fish SA and the Minerals Council South Africa.
The US annually reviews the status of African nations participating in Agoa, taking into account whether they meet criteria such as progress towards market-based economies, rule of law, political pluralism, combating corruption, and protecting human rights.
Participating countries are not allowed to engage in activities that undermine US national security, foreign policy interests or constitute gross violations of human rights.
The International Criminal Court's warrant of arrest for Russian President Vladimir Putin for war crimes in Ukraine puts participating African states with strong ties to Russia at odds with Agoa.
Our ideal outcome is not only the renewal of Agoa, but the expansion of the US market
— Justin Chadwick, CEO, Citrus Growers Association
The DTIC did not respond to requests for comment.
Agoa has provided a substantial boost to South African businesses, with the total tariff revenue that exporters are relieved of paying at about R2bn, Van Der Rheede said.
Citrus Growers Association CEO Justin Chadwick said it had made a submission to the US Congress arguing for the continuation of Agoa benefits.
“Our ideal outcome is not only the renewal of Agoa, but the expansion of the US market. Currently, only citrus from the Western and Northern Cape is shipped to the US because of regulatory stops that can be lifted. Goodwill on the side of the US is essential for this to happen,” Chadwick said.
According to Agri SA, the agriculture sector, which is the third largest for Agoa, has been relieved of paying duties of $5.7m (about R109m) for 107,000 tonnes of citrus entering the US.
Agri SA CEO Christo van der Rheede said the continuity of Agoa will further strengthen trade relations between Southern Africa and the US, and will improve the scope of employment creation and industrial growth and development in Africa.
Van der Rheede said Agoa provides eligible Sub-Saharan African countries with duty-free access to the US for more than 1,800 products, while more than 5,000 commodities enjoy duty-free access under the GSP programme.
He added that Agoa is crucial to the development of the automotive industry in South Africa. “As an important agro-processing trading partner, South Africa will need to carefully consider its post-Agoa trade relations with the US,” he said.
Van der Rheede said South Africa is the US's largest trade partner in Sub-Saharan Africa with exports to the US growing to $15.5bn in 2021 and imports from the US reaching $4.7bn in the same year.
The agro-processing industry employs about 10,000 people in local manufacturing facilities, sourcing raw materials from 1,500 farms that employ more than 15,000 people.
Naamsa CEO Mikel Mabasa said: “The South African automotive industry has been earmarked as one of the key drivers of industrialisation, not only in South Africa but also on the continent.
“The Auto Pact developments in Africa, led by South Africa, to establish regional automotive hubs and value chain integration in the various regions under the framework of the African Continental Free Trade Area [AfCFTA] will be adversely affected should Agoa be discontinued for South Africa,” he said.
Mabasa said the expiration of Agoa in 2025, or for a country to be excluded before that date, would pose a challenge to maintaining the investments and jobs generated by the programme.
“Ideally for South Africa and its automotive industry as the main beneficiator of Agoa, continuation up to 2025 as well as beyond for preferably another 10 years would be an ideal situation in providing a long-term framework for investments and value chain creation in the country and Sub-Saharan Africa,” Mabasa said.
In 2022, automotive exports to the US amounted to R24.1bn and automotive imports amounted to R18.3bn.
Mabasa said without Agoa the domestic automotive industry would attract the relevant import duties into the US on passenger cars of 2.5% and bakkies of 25% and eliminate its competitive advantage against other major vehicle exporting countries.
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