SA’s Agoa deal in jeopardy after US Congressmen call for review of SA-US bilateral relationship
South Africa’s trade benefits under the African Growth Opportunity Act (Agoa) are in jeopardy after US Congressmen last week sought a full review of the bilateral relationship with South Africa.
Republican congressman John James, for himself and Democrat congressman Jared Moskowitz, last week filed a Bill in the House of Representatives to require a full review of the bilateral relationship between the US and South Africa.
Agoa, which is scheduled to expire in September 2025, enables more than 30 African countries to export 1 835 types of goods to the US consumer market, and, in turn, Agoa affords the US access to critical minerals, product value chains and investment opportunities in Africa.
The US has been mulling delaying an early renewal of Agoa for South Africa, after disproved allegations that South Africa was selling weapons and ammunition to Russia in its war against Ukraine.
South Africa remains the largest US trade partner in Africa as the US exported $497 million (R9.4 billion) and imported $1.23bn from South Africa in 2023.
Tensions in the already strained trade relations between US and South Africa ratcheted up a notch after South Africa’s government recently took Israel to the International Court of Justice (ICJ) over allegations of violating the Genocide Convention in its war against Hamas in Gaza.
More than 30 000 Palestinians have been killed, mostly women and children, since Israel launched its offensive against Hamas in retaliation for its attack on Israeli towns on October 7 last year.
Last month, the ICJ issued an interim ruling ordering six provisional measures, including for Israel to take all measures to prevent genocidal acts, prevent and punish the direct and public incitement to genocide, and take immediate and effective steps to ensure the provision of humanitarian assistance to civilians in Gaza.
The ICJ also ordered Israel to preserve evidence of genocide and to submit a report to the court within a month regarding its compliance with the order.
However, the US Congressmen want US President Joe Biden to provide unclassified determination, within 30 days, explicitly stating whether South Africa has engaged in activities that undermine US national security or foreign policy interests.
It accused the South African government of having a history of siding with malign actors, including Hamas, and continuing to pursue closer ties with China and Russia.
The Bill also states that Biden, in consultation with various State organs, shall conduct a comprehensive review of the bilateral relationship between the United States and South Africa.
“Not later than 120 days after the date of enactment of this Act, the President shall submit to the appropriate congressional committees a report that includes the findings of the review required by subsection,” it reads.
An adjunct fellow at the Centre for African Studies at Howard University in Washington, DC, Michael Walsh, said the Bill has been referred to the Committee on Foreign Affairs.
“I am not sure if the Senate version has been introduced yet. But I fully expect that will happen. There is strong bilateral support for a full review,” Walsh said.
“However, it is important to point out that this predates the ICJ. It was going to happen either way. The ICJ just provided the policy window to trigger it.”
Since Israel is being heavily supported by the US in its military action in Gaza, South Africa’s legal action to stop the war in Gaza could be interpreted by the US as undermining its national security interest, which is one of the conditions for being disqualified from Agoa.
If this comprehensive review and unclassified determination finds that South Africa’s action undermined the US national security or foreign policy interests, South Africa could be kicked out of Agoa, making the export of many commodities expensive.
XA Global Trade Advisors director Donald MacKay said at the weekend that South Africa's relationship with the US had been pulling apart for quite a while now, not helped along by the Lady R scandal at the beginning of the Russian war on Ukraine.
MacKay said he did not think that the Bill, as it stood, would currently pass, but there might be more of these incidents in the course of the next few months.
However, MacKay said it was increasingly unlikely that South Africa would get an early extension of Agoa for another 10 years, as Minister of Trade Ebrahim Patel recently announced that he had secured additional concessions.
“We are simply rubbing the US up the wrong way. And not just the US, also Europe. So we've got to kind of watch very carefully how we trade. The US trade is an important part, particularly of our export basket,” MacKay said.
“But then if we have Donald Trump elected in the course of this year, I think this accumulation of things that have happened is going to be deeply problematic.
“So even if everything works out fine in the short term, I'd be very surprised in the medium term if South Africa's actions don't start to bear consequences.
“As to whether or not South Africa was right or wrong to go to the ICJ is another question, but I think the way this was handled, particularly with refusing, for example, to call out the actions of Hamas and focusing only on Israel, has cost South Africa, not only as being partisan, but also we start to look quite anti-Semitic.”
Cosatu said it noted with disappointment the draft Bill before the United States Congress calling for a review of US-South African relations.
“Naturally we disagree with the content and premise of the Bill and been assured by parties in the US that it is unlikely to be approved by Congress,” the union said.
“Whilst we appreciate this reassurance, given the importance of South Africa’s trade and other relations with the US, one of our largest trading partners, it is a real politik reminder that all relationships need constant investment and dialogue,” Cosatu said.
It said South Africa’s foreign policy was rooted in non-alignment, the peaceful multilateral resolutions to conflicts and the African continent's development.
“Cosatu will continue working with South Africa’s government and Organised Business at Nedlac to strengthen our relations with all of our key trading partners across the world. This is key to protecting and creating thousands of jobs in the mining, manufacturing, agricultural, tourism and other critical sectors,” it said.
Cosatu said the success this partnership achieved last year included the hosting of the Agoa Forum in Johannesburg where for the first time a dedicated Labour Leg featured.
BUSINESS REPORT