South Africa’s trade relations with the United States could get a reprieve if a new bill for an early extension of the African Growth and Opportunity Act (Agoa) for another 16 years, to 2041, enjoys majority support and is passed by the US Congress.
However, analysts say the upcoming US elections could be a big factor behind the bill to renew Agoa, as both Democrats and Republicans try to fortify US foreign policy and preferential trade agreements in case former president Donald Trump emerges victorious in November.
University of Johannesburg sociology professor and political economist Patrick Bond on Friday said it was hard to know how things will develop because in an election year, the Democratic leadership does not want to be seen as being punitive to South Africa for fear of losing African-American and Muslim constituencies.
On the other hand, Bond said, South Africa was still a prime political target of some right-wing senators and members of congress, due to the stance taken by government against Israeli genocide.
“For them, if Trump comes to power, the 'out of cycle' review option to kick South Africa out of Agoa, if they decide it is a post-election priority, would still be feasible,” Bond said.
“So that means our more foresighted government leaders should be figuring out how a just transition in vulnerable industries – smelted metals, petrochemicals, automobiles and the vineyards – might take place the way we are hoping [it will] happen due to the de-carbonisation of energy production in Mpumalanga, when coal mines and Eskom generators close.
“It also might mean a redistribution of still-scarce electricity – from the [electricity] guzzlers, which today have Agoa exports – to labour-intensive industry, small businesses and households, in the event Trump again imposes trade sanctions on South African steel and aluminium, as he [did], out of the blue, in 2018.”
Last week, Democrat Senator Chris Coons and Republican Senator James Risch introduced a 34-page “Agoa Renewal and Improvement Act of 2024” bill in a bid to renew and strengthen the key trade programme with sub-Saharan African countries.
South Africa has been caught in the crosshairs of geopolitical tensions with the US, following accusations of selling weapons and ammunition to Russia.
This escalated when South Africa brought a case of contravening the Genocide Convention to the International Court of Justice against Israel, one of the US’ strongest allies.
The proposed early extension of Agoa has, to some extent, also been exposed to politicisation, as some US Congressmen have called for the out-of-cycle review, or potentially having a hearing on South Africa for allegedly undermining US national security and foreign policy interests.
Agoa allows more than 30 African countries to export 1 835 types of goods to the US consumer market, and in turn affords the US access to critical minerals, product value chains and investment opportunities in Africa.
It is scheduled to expire in September next year, but the new bill seeks to extend the preferential trade agreement by 16 years, pushing out the programme’s expiration date from 2025 to 2041.
The new bill calls for wide-ranging reforms in implementing Agoa, including relaxing the eligibility criteria, prohibiting the import of goods made with forced labour, changing an annual review of all 49 Agoa-eligible countries to once every two years, and extending to Congress the out-of-cycle reviews, among others.
US foreign policy expert Professor Michael Walsh – a senior fellow in the Africa Programme at the Foreign Policy Research Institute – said the bill, if enacted, would rectify some apparent contradictions in existing legislation and executive practice.
Walsh said it would, for example, explicitly provide the US president with the option of issuing a warning letter in lieu of termination of beneficiary status, but also goes one step farther by empowering the president to take no action against a country that is violating the eligibility criteria.
“This includes a country that is undermining US national security and foreign policy interests. That is a remarkable development that is likely to provide fodder for debate. For policymakers, it begs the question: What kinds of scenarios would be appropriate for such an option,” Walsh said.
“One of the motivations for the bill is that there are some business owners who are already starting to consider non-renewal risk mitigation actions, including workforce reductions. Another of the motivations may be that there is a lot of uncertainty about US national security, foreign policy, and trade policy under a second Trump administration.”
Walsh added that right now, there was relatively strong bipartisan support for Agoa renewal within Congress, and the bill, once enacted, would tie the hands of a potential future Trump administration to some extent.
“That said, the president will still retain the power to terminate beneficiary status. So, there would still be options available to a Trump administration that wanted to reign in Agoa after it was renewed,” he said.
“It is really hard to predict what will happen next. The introduction of this bill certainly does not entail its passage. A lot will need to go right for its sponsors to achieve its passage into law before the current session comes to a close.
“One thought, a potential policy window for advancing this bill could open in the aftermath of the U. national election. Depending on who is elected, one could imagine members scrambling to pass a comprehensive trade package at that time.”
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