Powerful American politicians are pushing to exclude South Africa from the United States’ biggest trade deal with Africa. This comes as part of the U.S. government’s consideration of the country’s eligibility for the African Growth and Opportunity Act (AGOA). South Africa is led by the African National Congress (ANC), which has close ties to China, Iran, and Russia. Last week, it hosted the annual AGOA forum in Johannesburg.
The AGOA law, signed by President Bill Clinton in 2000, allows 33 eligible sub-Saharan African countries to export more than 1,800 products to the United States without paying taxes. In 2022, AGOA countries exported goods worth $10.2 billion to American markets, with South Africa as the biggest beneficiary, raking in almost $3 billion in revenue. South Africa’s eligibility for AGOA requires compliance with U.S. government-set conditions, including support for democracy and human rights, removing barriers to U.S. trade and investment, and non-involvement in activities undermining U.S. national security or foreign policy interests.
The stringent relationship between South Africa and Moscow, as well as allegations of arms exports to Russia, has caught the attention of influential members of the Democratic and Republican Parties in the U.S. It is argued by some in Congress that South Africa should be removed from AGOA due to its foreign policy actions that are considered a threat to U.S. interests. However, officials from the Biden administration have stated that they intend to maintain good relations with South Africa.
Calls have been made by both Democratic and Republican senators in the U.S. for the renewal of the AGOA law, as it is set to expire on Sept. 30, 2025. It has been stated that South Africa may face an out-of-cycle review of its eligibility for AGOA, which could potentially result in the country’s removal from the program. This would have significant economic implications for South Africa, particularly in the automotive and agricultural sectors.
Business leaders in South Africa have expressed concerns about the potential loss of the country’s AGOA status, highlighting the severe impact it could have on its economy. Automakers, for example, have benefited greatly from AGOA’s preferential access to the U.S. market. The sector contributes significantly to the country’s GDP and has offered employment opportunities and economic growth in South Africa. There are fears that the loss of AGOA status may result in the closure of factories and the exodus of American companies from the country.
Moreover, South Africa could lose its competitive edge in the global automotive market and face economic decline. Economists have stressed the need for the country to take seriously the threat of losing its preferential access to the U.S. market, as the consequences of this would be detrimental to its economy. It remains unclear whether the country will retain its status under AGOA or if Congress will take action to remove South Africa from the program.