United States needs Agoa more than South Africa – analysts

With threats to exclude South Africa from the African Growth and Opportunity Act (Agoa) trade agreement with the United States, industry heavyweights argue that, as much as SA has gained, the US has also benefitted significantly.

The United States Congress is expected to begin its review next week of the eligibility of countries for benefits under Agoa.

This legislation, which was originally drawn up under the Bill Clinton presidency, provided duty-free access for certain African countries, including SA, to the US market.

Business Leadership South Africa chief executive Busisiwe Mavuso cautioned there was a narrow window of opportunity to make a case with the US that it should continue to give South Africa access to US markets.

SA’s ambiguous stance on Russia had “upset many in Washington”, and the SA government was running out of time to clarify its position – and assert that tens of thousands of jobs hung in the balance.

However, political analyst Professor Siphamandla Zondi said SA was still a significant trade partner to the US – and the trade was worth a billion dollars to the US.

“While South Africa benefits from it … the trade imbalance is in the favour of the US,” he said.

“Africa is a major gateway for US trade with the rest of Africa and the US is not foolish to harm its trade with Africa simply because it disagrees with South Africa’s independent foreign policy in respect of the Ukraine matter.”

According to the Observatory of Economic Complexity (OEC) in March, the US exported $553 million (about R1.04 billion) to and imported $860 million from South Africa, resulting in a negative trade balance of $308 million.

“Between March 2022 and March 2023, the exports of the US have increased by $60.6 million (12.3%) from $492 million to $553 million, while imports decreased by $771 million from $1.63 billion to $860 million,” it stated.

“In March 2023, the increase in US’ year-by-year exports to South Africa was explained primarily by an increase in product exports in vaccines, blood, antisera, toxins and cultures, aircraft parts and metal mountings.”

Zondi said there was confusion about SA’s policy on the war in Ukraine until two months ago because South Africa had not communicated its non-alignment stance clearly enough and had acted as if it was “somewhat aligned” to Russia.

“It has since corrected this, with President Cyril Ramaphosa taking the lead in communicating that South Africa rejects the Russian invasion, but it also regrets the arming of Ukraine by the West,” Zondi said.

“It calls for a peaceful settlement of the conflict and has taken steps to actively pursue this shifting from passive non-alignment to active non-alignment.

“It would have been its fault if it lost preferences under the Agoa treaty for being unclear in its stance, which was the case until about February this year.”

“But if [SA] loses the privileges simply because it chooses to support no side in this war, then the US would be in the wrong because then it would not be a decision out of principle and respecting the sovereignty of South Africa, just as it does that of Ukraine.”

Zondi said it would be wrong to force South Africa to simply be a vassal of the US.

“In the latter case, the US loses face and sends a risky message to emerging regions across the world at a time when it needs relations with these regions in its economic competition with China.

“It is wise for South Africa to keep communicating its nonaligned position on this new Cold War manifesting in Ukraine. It must keep clarifying that this is a shared position in Africa and the developing world.”

Independent economist Bonke Dumisa said the US would not remove South Africa from Agoa, as this was a threat it often made against SA whenever they failed to treat the country as “one of their puppet satellite states”.

Dumisa said the US gained as much from its trade with South Africa as was received “despite SA having more exports to the US than the other way round”.

“But having said this, South Africa must prioritise its relationship with the US and do more to consistently maintain those good mutually beneficial relationships,” he said.

Dumisa said the US was one of the top five countries to which South Africa exported in the first quarter of 2023 and the country’s trade with Russia was “so little and negligible”.

The OEC reported in January last year that Russia had exported $16 million to and imported $45.5 million from South Africa, which resulted in a negative trade balance of $29.5 million.

Between January 2021 and January 2022, the exports from Russia had increased by $12.5 million (355%) from $3.52 million to $16 million, while imports increased by $16.9 million (58.9%) from $28.7 million to $45.5 million.

Dumisa added South Africa could not afford to allow President Vladimir Putin’s attendance of the Brics gathering to happen.

“We can do without them [Russia] if it comes to that, especially given the recent audacity of the Russian Ambassador to South Africa who said ‘no-one can be neutral on the issue of Russia-Ukraine conflict’,” he said.