South Africa should not panic about the potential loss of its AGOA trade benefits, but plan an orderly exit from the United States legislative arrangement, according to trade advisor Donald MacKay.
MacKay said in an online post that he believed the loss of South Africa’s preferential access to the US market would happen this year.
“AGOA is not a trade agreement and although valuable I believe the cost of the preferential access is beginning to outweigh the benefits. The decision our politicians need to make is if we are better off waiting for the axe to fall or whether we should choose the time and terms of our exit. I don’t believe grovelling before President Trump will accomplish anything.”
In the article, MacKay detailed South Africa’s exports to the US. He said exports to the US had fallen by $2.3 billion over the past three years, with exports under AGOA rising to $4.14 billion in 2024, and non-AGOA exports falling to $4.42 billion.
Exports under AGOA accounted for 48% of all exports to America last year, up from 33% in 2022.
He said the top three categories of South African exports under AGOA were subsidised – automotive products (42% of AGOA exports), aluminium (13%) and iron and steel (8%, mostly subsidised).
“6% of our exports (are) fruits and nuts and here the pain will be real, although the rand value is much smaller.
“Our top three exports under Agoa are all subsidised, but our agricultural goods are not and this is a very big difference indeed. It is an indictment on South Africa’s competitiveness, that our top three exports to the US are all subsidised,” MacKay said.
The US took 7% of South Africa’s exports, but these made up only 0.44% of total US imports in 2024.
“We are literally a rounding error,” MacKay said. This made it politically powerful in the US because America’s decision on South Africa’s AGOA benefits “has no ability to impact the US market one way or the other”.
