AGOA renewal fate lies in the hands of American Congress

The newly appointed Minister of Trade, Industry, and Competition, Parks Tau, has arrived in Washington DC to lead the South African delegation to the 21st African Growth and Opportunity Act (AGOA) Forum. The event will take place from July 24-26, 2024.

AGOA was enacted as part of the Trade and Development Act of 2000 in the United States. The legislation aims to promote a free-market system, expand US-African trade and investment, generate economic growth, and provide financial assistance to sub-Saharan African countries, including South Africa. In 2000, South Africa and the US signed a trade agreement, which was signed into law by former President Bill Clinton in May 2000. The agreement was set to expire in 2015 but was extended for an additional 10 years, until 2025.

Since the implementation of the trade agreement, South Africa’s economic growth has experienced a significant boost. The country’s automotive exports to the US increased by 89.17% from $195 million in 2000 to $1.8 billion in 2008, representing a $1.605 billion increase. In 2013, South Africa’s automotive exports reached $8.9 billion.

Minister Tau’s visit to Washington DC aims to ensure the renewal of the AGOA agreement, which is set to expire in 2025. However, tensions between South Africa and the US have raised concerns about the agreement’s renewal. Recently, the US ambassador to South Africa alleged that South Africa supplied weapons to Russia, which led to an investigation by the South African government. The allegations were found to be false, and the White House praised President Cyril Ramaphosa for launching the investigation and assured its commitment to the AGOA program.

Despite this, some members of the US legislature have questioned whether South Africa should be removed from the AGOA renewal.

The upcoming US elections are posing additional threats to the renewal of AGOA, and the recent development of Joe Biden withdrawing from the Presidential race may further complicate the renewal process.

If South Africa is excluded from AGOA, the country’s GDP is estimated to decline by 0.06%, the food and beverage sector will lose 16%, and the transport equipment sector will drop by 13%. US investors may also withdraw their investments, leading to a decline in business profits, closure of businesses, retrenchments, and increased unemployment and poverty.

The renewal of AGOA now lies in the hands of the American Congress and the South African delegation’s visit to the US. Minister Tau and the South African delegation will engage with Members of Congress, the US Administration, and the US Business community to strengthen SA-US economic relations and secure a renewal of the AGOA Legislation for at least another 10 years.