DA welcomes AGOA legislation
12 April 2024
The DA notes legislation tabled in the United States Senate that will extend the preferential AGOA trade agreement for another 16 years. We welcome this development as a step in the right direction.
South Africa's participation in the AGOA program faced uncertainty last November when US senators proposed a draft bill calling for an immediate 'out-of-cycle' review of eligibility. While AGOA mandates annual reviews to ensure countries uphold eligibility requirements, an 'out-of-cycle' review is an additional assessment that can be triggered at any time due to serious concerns that a country may not be meeting AGOA's prerequisites. The US reserves the right to conduct such reviews. We note that plans for this specific review have been dropped, although serious underlying concerns remain.
In order to qualify for AGOA trade benefits, trade partners must meet certain statutory eligibility requirements. One of which clearly states that the beneficiary should not engage in activities that undermine Washington’s national security interests.
The original call for South Africa's 'out-of-cycle' review stemmed from concerns about South Africa's relationship with Russia, specifically the ANC's reluctance to condemn its war on Ukraine. Moreover, South Africa's growing ties with countries the US designates as terror states and rogue regimes, such as Iran, raise further concerns. These factors contribute to potential risks for South Africa's continued eligibility in the AGOA program.
Since its enactment in 2000 AGOA has been at the core of United States economic policy and commercial engagement with Africa. For two decades AGOA, with growing success, facilitated privileged market access for South Africa to the gargantuan US market. This preferential access spans a diverse array of goods that benefits an expansive commercial landscape.
A carve-out of South Africa from AGOA's preferential trade terms would unleash a vicious domino effect on our economy.
South African exporters would grapple with heightened barriers to entry in the US market, causing a sharp contraction in export volumes, diminishing investment, and triggering a devastating loss of between 62 000 and 100 000 direct and indirect South African jobs.
With unemployment hovering around 41%, the risk of losing even a single job is inexcusable. Moreover, South Africans are battling a government-induced cost-of-living crisis, with 81% of households skipping at least one meal a day and 5 million children are starving according to the Nelson Mandela Foundation.
It is regrettable that the ANC's neglect of the vital role of strong US relations could worsen this crisis. Promptly correcting these diplomatic failings is crucial to prevent South Africa's further isolation from the international community and global financial markets.
It is in our national interest to remedy these diplomatic perceptions promptly, lest South Africa face further alienation from the international community and global financial markets.
Adherence to AGOA criteria will be essential for economic development in South Africa and the broader SADC region. When elected after the national elections on May 29, a DA-led government will commit unequivocally to maintaining and enhancing U.S.-South Africa relations, and ensure our economy's global relevance and competitiveness.
Issued by Dion George, DA Shadow Minister of Finance, 12 April 2024
