America’s AGOA trade preferences for African countries have been renewed until the end of 2026. Is that good for South African exporters? Yes, but only partly.
The news is welcome, because many thought the trade deal had died when the African Growth and Opportunity Act expired on 30 September last year. Also, as agricultural economist Wandile Sihlobo points out, AGOA frees South African products from an additional 3.4% “most favoured nation” tariff burden.
So 10%, and not 13.4%, is the rate now applied in the US to South African imports after the earlier 30% tariffs were ruled illegal. The threatened 15% rate has not been enforced, but it may still happen. And the 10% applies to all countries, so South Africa can compete in the US on an equal footing. However, the shortcomings of the one-year AGOA renewal are multiple. The benefits have been nullified since last April, when the Trump tariffs came in at 30%. The current 10% tariffs continue to do so.
The short extension does not give producers much time to plan, with no certainty of what will apply from January next year. And South Africa’s continued inclusion in the AGOA beneficiary list remains uncertain.
Nevertheless, the passing of the renewal legislation without any further threats against South Africa and its leaders will have brought a measure of relief in government circles. It will give hope that a trade deal with the US may be possible.
Some South African products have been exempted from the Trump tariffs. Precious metals such as gold and silver are not affected. Tariffs were also removed from South African citrus and macadamia nut exports. But automotive products, steel, wine and other agricultural products are still hit by tariffs ranging from 25% to 30%.
Then there are the demands for reciprocity that will come from the US. AGOA was largely a one-way benefit for African countries. No longer. AGOA must “yield more market access for U.S. businesses, farmers, and ranchers,” according to US trade representative Jamieson Grier.
There is much work ahead. And probably a lot of pain, particularly for poultry producers who get singled out when the South African government is looking for concessions to offer to US negotiators.
The 72 000-tonne annual US quota of duty-free chicken imports into South Africa remains in force. It should have fallen away last April, because it was contingent on the other AGOA benefits for South Africa that the new tariffs killed.
The poultry industry has applied, without success, to have the quota scrapped. They also face the likelihood that the quota will be included as a permanent feature in any trade deal with the US.
