Economic development

Agoa worries may be over

After some very worrying moments earlier this year, it seems certain that South Africa’s diplomatic and trade relations with the United States will be stronger after this week’s Agoa Forum meeting in Johannesburg.

The forum reviews and makes recommendations on the renewal of the Africa Growth and Opportunity Act, a piece of US legislation which, since 2000, has given preferential access to US markets for goods from a number of African countries.

It will be up to the US Congress to decide whether to renew the Agoa deal, and if so for how long, but the talk now is of a long-term renewal, possibly for another 10 years. There is no more speculation about South Africa’s benefits being reduced or ended. After a lot of unpleasantness about South Africa’s failure to condemn Russia’s invasion of Ukraine, a diplomatic flurry has resulted in smiles and optimism.

South Africa’s trade minister Ebrahim Patel, who headed a mission to Washington to help heal the breach, said the Agoa forum would strengthen trade ties and “reaffirm the significant relationship between the two countries”.

Whether the Agoa terms will be changed remains to be seen. Not trying to improve it would be a “wasted opportunity”, US trade official Constance Hamilton said ahead of the meeting.

“We need to do better,” she said. “Some countries have benefited greatly from Agoa, but the majority have not.”

A research report requested by US lawmakers and published earlier this year found that Agoa had helped reduce poverty and create jobs in certain countries, particularly for women.

But more than three quarters of duty-free non-petroleum exports to the United States under the programme from 2014 to 2021 came from just five countries: South Africa, Kenya, Lesotho, Madagascar and Ethiopia.

US Senators from both the Democratic and Republican parties wrote to the senate leadership at the end of last month, urging it to make Agoa a legislative priority.

“While there are aspects of Agoa that Congress should seek to improve, we believe the priority should be renewing the programme as soon as possible and for a lengthy period,” they said in their letter.

For South Africa, that’s very good news.