Disaster looming for South Africa

The policy and international relations spat between South Africa and the Trump administration in the United States has sparked fears that the country will be booted from the African Growth and Opportunity Act (AGOA), putting billions of rands at risk.

The Select Committee on Economic Development and Trade said this week that there is ongoing negative speculation regarding South Africa’s future participation in AGOA, and requested urgent and clear communications from the government on the matter.

It said that AGOA has significant economic implications for South Africa.

AGOA is a duty-free arrangement for sub-Saharan African countries to the US markets. Several projects are supplied through this platform, and South Africa is the major beneficiary.

The Act saw more than R55 billion worth of exports pass from South Africa to the United States in 2022 alone—mainly motor vehicles, fruit, and wine.

The US is South Africa’s second-largest export partner, with R61.49 billion of South African goods exported to the US in the first five months of 2024.

The loss of free trade benefits under AGOA would mean South Africa’s exports would cost more in the US, which would reduce their competitiveness, in turn negatively impacting demand for these exported goods, weakening the trade balance.

AGOA is expected to come to an end in September 2025. Hopes for a renewal under the Biden administration were climbing—however, under the Trump administration, these hopes are diminishing fast.

Calls from industry groups for the government to move quickly to secure AGOA access have grown this week.

The select committee was scheduled to receive a detailed briefing on AGOA from Trade and Industry Minister Parks Tau. However, the meeting coincided with a special Cabinet meeting, and the committee received a late apology from the minister.

The meeting has been rescheduled to 18 February, with the committee calling on government officials to address the matter with the urgency it deserves.

It said that the risk of South Africa’s exclusion from AGOA has been on the horizon for some time, with American lawmakers explicitly calling for its removal.

The Trump administration and his supporters have flagged South Africa’s stance on the Hamas/Israel war and support of BRICS partners China and Russia as being against United States interests, thus warranting its exclusion from beneficial trade relationships with the states.

“Constituencies are deeply worried about the potential impact,” the committee said.

Trump takes aim at South Africa

Existing fears were amplified this week after US President Donald Trump stated that he would cut all future funding to South Africa based on its land expropriation policies.

Trump accused South Africa of confiscating land and treating ‘certain classes’ of people poorly—alluding to the recently-signed Expropriation Act, which introduces specific wording about expropriating land with zero compensation.

President Cyril Ramaphosa and International Relations Minister Ronald Lamola have taken great pains to explain and clarify the laws, specifically that they do not allow for the arbitrary expropriation of land and are aligned with the country’s constitution.

Section 25 of the Constitution deals with land expropriation, and specifies that compensation has to be just and equitable. Notably, it makes no provision for zero compensation, and the Expropriation Act in no way amends the Constitution.

The true extent of expropriation without compensation in the Act will thus likely be tested in the country’s courts, if the state ever tries to do so.

However, despite the assurances from the government at the highest levels, the furore and international relations dispute over the Act has not died down.

In the latest development, US Secretary of State Marco Rubio said he won’t attend a Group of 20 summit in Johannesburg later this month, citing the new land expropriation law.

Lamola responded to the statement by reiterating that the laws are not what the United States think they are, calling for further engagements, especially at the G20.

“We are a sovereign and democratic country committed to human dignity, equality, and rights, championing non-racialism and non-sexism while placing our constitution and the rule of law at the forefront.

“There is no arbitrary dispossession of land or private property. This law is similar to the Eminent domain laws,” he said.

“Solidarity and Ubuntu promote collective problem-solving. Our G20 Presidency is not confined to just climate change but also equitable treatment for nations of the Global South, ensuring an equal global system for all.

“These are important principles that we remain open to pursue and engage the United States on.”