Another hammer blow from the US for South Africa
South Africa is set for another blow from the United States, with the African Growth and Opportunity Act (AGOA) set to end soon.
AGOA was signed into law by former US President Bill Clinton in 2000, and gives eligible countries duty-free access to the US market for thousands of products, including apparel, agricultural products and automobiles.
Exporters and the government remain hopeful that AGOA will again be extended to help minimise the impact of US tariffs imposed last month.
Despite a questionable methodology, the US President imposed a 30% reciprocal tariff on South African goods in April.
The tariffs went live in August after months of negotiations and several delays. Exporters are thus hoping that AGOA will be able to soften the blow of the tariffs.
Speaking with the Business Times, Johann Kotze, CEO of AgriSA, said there is no certainty regarding the possible outcomes of AGOA as negotiations continue.
He noted that if South Africa leveraged the strategic importance of agriculture, the US could be convinced to extend the trade agreement when it expires at the end of the month.
“We still need to understand what is going to happen. But everyone we spoke to, there was not one American who did not favour AGOA. Not one,” said Kotze.
“So, hopefully, we’re going to see, maybe, a different form. Maybe not AGOA as is, but hopefully there would be a leeway into the concept that will help us out.”
That said, trade experts are less optimistic about the deal going ahead, as this would undermine the tariff-heavy approach that US President Donald Trump has introduced.
Saul Levin, executive director of trade and industrial policy strategies, said the trade pact will not likely be renewed under Trump.
He said the tariff-heavy approach taken by the current US administration has effectively nullified the AGOA preferences that were previously given to most African countries.
Donald Mackay, founder of XA Global Trade Advisors, also said that it was not likely that AGOA would be renewed, as it would minimise the tariff regime introduced by the US government.
Mackay argued that a better strategy would be to negotiate the current tariffs down to below 30%, with many other countries finding a deal with the US government.
Strained relationship
South Africa’s relationship with the United States has been under extreme pressure since Trump’s return.
The US President has repeatedly claimed that there is a white genocide within South Africa, and his administration has even allowed white South Africans to come to the US as refugees.
Although South Africa is notorious for high rates of violent crime, evidence does not point to a genocide against white South Africans, who remain the wealthiest race in the country.
On top of this, Congress is also looking at a Bill that seeks to sanction South Africans who do not align with the national interests of the US.
ANC officials are the primary target due to their ties with Iranian and Russian leaders.
Amid the strained relationship, Trump said he will not attend the G20 leaders conference in Johannesburg later this year and will send his Vice President, JD Vance, instead.
Loading ...