Still Agoa — for now

South Africa still has its work cut out if it is to continue to benefit from the African Growth & Opportunity Act (Agoa). That’s despite an unprecedented mission to Washington by a high-powered combination of business, labour and government leaders.

Trade, industry & competition minister Ebrahim Patel led the delegation for the three-day visit,  which included 25 meetings between the hastily assembled group from South Africa and members of Congress and the US Chamber of Commerce, among others. 

Patel has also been in constant contact with US trade representative Katherine Tai in connection with the legislation, under which 35 African countries have duty-free access to US markets on qualifying goods. 

While the act itself is up for wholesale revision by Congress in 2025, the US holds an annual eligibility review, in which each participating country is assessed. That process has not been concluded for 2024 — which has raised concerns that Pretoria might find itself excluded as a result of its ties with Russia. 

Trade relations with the US are no small matter; it is South Africa’s second-largest trading partner after China. And while Agoa’s influence on this trade balance may be marginal — it represents only 2% of South Africa’s exports to the US — a South African exit would have far-reaching effects for other Southern African Development Community countries. These rely on South Africa as a manufacturing hub for component products that they trade under Agoa.

The loss of Agoa privileges would also send a signal to the world that Pretoria has indeed fallen out of favour with the US — which would be unfortunate, given that most investors and bondholders in South Africa are from the US, the UK, the EU and other Western nations. 

Hence the heavyweight delegation to the US. On the business side, it included Adrian Enthoven from Yellowwoods, Anglo American chair Nolitha Fakude, Richard Menell from Sibanye-Stillwater and Aspen’s Kuseni Dlamini. The government was represented by Patel, finance minister Enoch Godongwana and minister in the presidency Khumbudzo Ntshavheni. Cosatu president Zingiswa Losi and the federation’s parliamentary co-ordinator Matthew Parks spoke for labour. 

Patel believes this united front was telling. “I think many US policymakers were taken aback at the composition of our delegation. They were not used to business and labour being part of a national delegation. It made the point powerfully about the broad consensus across South African society that Agoa should be extended,” he says.

“As both business and labour representatives have their own views on a range of matters, it enabled the US audience to experience first-hand the range of views you find in a robust democracy.”

As both business and labour representatives have their own views on a range of matters, it enabled the US audience to experience first-hand the range of views you find in a robust democracy

—  Ebrahim  Patel

The display of unity followed a letter that four senators from both sides of the political aisle sent to President Joe Biden’s administration in June, demanding that Pretoria should no longer host the Agoa Forum in November. This was the clearest indication yet that tensions could jeopardise South Africa’s participation in the free trade pact.

(South Africa has yet to receive any formal indication from the US that it is in danger of losing access under Agoa — though the risk remains that it will be “graduated” out of it. And government insiders tell the FM that the country remains on track to host the Agoa Forum.)

Ties between the two countries have been strained since at least October last year, when South Africa abstained from a General Assembly vote condemning Russian aggression in Ukraine.

In December, a Cosatu delegation to the US received a frosty reception from old allies in Congress, Parks tells the FM — again due to the ANC government’s support for Russia.

Aggravating factors have included South Africa’s naval exercises with Russia in February,  the anniversary of the invasion; the tension (now resolved) around Russian President Vladimir Putin’s invitation to the Brics summit this month; and the landing of a sanctioned Russian cargo plane at Waterkloof Airforce Base in May.

But what really set the cat among the pigeons was the allegation by US ambassador Reuben Brigety in May that South Africa had loaded munitions for Russia’s war effort when the Lady R stealthily visited Simon’s Town in December. 

The FM understands that the delegation to Washington was told that the Lady R debacle has been at the centre of US opprobrium over South Africa’s “nonaligned” stance on the war in Ukraine.

Patel, however, tells the FM that the trip went a long way in clearing the air between the two countries. 

“The visit was very positively received. It enabled us to address a number of misconceptions, affirm the importance of the relationship and point to the enormous value to both countries of deepening trade and investment flows,” he says.

Still, South Africa will need to pay more than lip service to neutrality. As a business leader on the trip tells the FM, it’s not the issue of nonalignment that the US takes issue with — and there’s no need to justify that stance. Rather, the problem is that while Pretoria’s stated position as outlined in speeches and position papers is clear, its actions have sent a different message.

And that’s what may further sour its relationship with the US.

Meanwhile, the 35 Agoa countries are hoping to secure an early extension of the act, having met to discuss the matter in December. 

“During our engagements with other African trade ministers and ambassadors, it became clear that there is a broad consensus for the early extension of Agoa,” Patel says. 

“Yes, there is a trade-off between significant reforms of Agoa to make it more helpful to African countries, but the value of an early extension is clear in that it can give investors the signal that market access is retained, spurring increased commitment of resources to expanding output. In a volatile global environment, that’s a big plus.”

While Patel believes US policymakers were receptive to the idea of an extension, there are no guarantees — particularly given the waning “appetite on global trade” in the US in the past seven years.

“US politics is ... a complex affair, particularly at the moment, and extension will need agreement across the aisle — from Democrats and Republicans. South Africa will need to continue to engage and make the argument,” he says. 

“We need to continue to build bipartisan support for preferential access to US markets. The changing geopolitical context may assist to keep doors open for African exports. Our work is cut out for us, clearly. We will [also] continue to make the case that the extension of Agoa should not be linked to the US electoral cycle,” Patel says. 

The FM understands from a highly placed source that the US embassy’s submission to Mojapelo contained no evidence of arms being loaded onto the Lady R

As for Brigety, his accusations didn’t come as a surprise to the US or to South Africa; they’d first been raised in bilateral talks between Godongwana and US treasury secretary Janet Yellen in January. But meetings on the issue had been behind closed doors.

Following the uproar sparked by  Brigety, President Cyril Ramaphosa established an independent inquiry led by retired judge Phineas Mojapelo. David Feldmann, the spokesperson for the US embassy, tells the FM that Washington “shared information pertaining to Lady R” at the panel’s request. (The FM understands from a highly placed source that the embassy’s submission contained no evidence of arms being loaded onto the ship.)

In any event, the probe has now concluded, with Mojapelo finding no arms were loaded onto the vessel, according to weekend reports by City Press and News24.

There has been no official word from the presidency, but highly placed sources say hardliners in Ramaphosa’s cabinet are making a “strong push” for Brigety’s expulsion.

Another possibility raised by insiders is that Brigety could be recalled by his own government. 

Feldmann, however, rules this out. He tells the FM that Brigety is Biden’s personal representative in South Africa, and both the president and secretary of state have full confidence in him.