South Africa risks losing preferential access to the US market under a key African trade pact that’s before Congress, though the economic impact would likely be limited even if the country is excluded.
The Senate may vote as early as this week on renewing the African Growth and Opportunity Act (Agoa), a programme that has been key to boosting relations between sub-Saharan Africa and the US since its inception in 2000.
Listen/read:
End of Agoa shifts spotlight to AfCFTA and new markets
Could South Africa be excluded from a potential Agoa extension?
Why Agoa’s renewal won’t move the needle for SA trade
The legislation, which expired on 30 September, has enabled more than 1 800 products from 32 nations to enter the US duty-free and can only be renewed by an act of Congress, most recently in 2015.
US Trade Representative Jamie Greer last year said he is “happy to consider” removing South Africa from the list of nations that benefit from Agoa, describing the country as a “unique problem”.
That came after US President Donald Trump repeatedly criticised South Africa’s foreign policy and empowerment laws and made false claims about racial violence.
Precious metals would ‘blunt’ the impact
Any removal from Agoa would likely be blunted by the fact that precious metals account for about half of South Africa’s shipments to America and are exempt from duties, as are some citrus exports, according to Donald MacKay, the managing director of Pretoria-based XA Global Trade Advisors.
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He noted that several of its other key exports fall outside the scope of the pact.
The value of the duties saved under Agoa “was about R2 billion a year” MacKay said in a phone interview – adding that while individual exporters of wine and other products may be adversely affected by the loss of accession, it won’t have a material impact effect on the country as a whole.
“This is definitely not to say that Trump’s policies have not done harm.”
Listen: Trump tariffs: The new sanctions?
Even if the Senate does follow the House of Representatives in approving a three-year extension of the pact and Trump signs off on it, a White House official has said that qualifying countries will still be subject to so-called reciprocal tariffs that the president announced last year.
The US Supreme Court has yet to rule on the validity of those charges. A range of products from South Africa were hit with 30% duties, the highest in the region.
“The risk is significant that secondary legislation powers can be used to carve South Africa out” of any extension to Agoa, said Peter Attard Montalto, managing director at advisory firm Krutham.
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“All this is very much by-the-by, however, given the level” of tariffs announced by Trump “far exceeds the protections provided by Agoa”.
“The benefits of the extension to South [Africa] would be exceptionally marginal.”
South Africa’s government has advocated a continuation of its preferential market access to the US and emphasised the importance of economic ties. America is South Africa’s biggest trading partner after China, with two-way flows totalling $21.6 billion in 2024.
Read: South Africa lauds US trade-pact benefits as senate vote looms
“Agoa has been important in this partnership for over two decades, supporting thousands of jobs in both countries and contributing to stable supply chains across key sectors,” Parks Tau, South Africa’s Minister of Trade, Industry and Competition, said earlier this month.
Read: Tau upbeat about Agoa’s continuation
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