Economic development

Why kicking SA out of Agoa is not in US interests

A different aspect of the possible loss of South Africa’s beneficial access to United States markets was supplied by FairPlay’s Francois Baird. It would hurt America too, he said, and it is not in US interests to cut South Africa out of the African Growth and Opportunity Act (Agoa).

His views have been published in South Africa, in the Daily Maverick, and in America in the US publication The National Interest.

In the Daily Maverick article, Baird said there had been a lot of focus on what South Africa might lose if it is removed as a beneficiary of Agoa – US legislation designed to boost Africa’s trade with the US by offering qualifying countries duty-free access for their exports.

However, he wrote, “there are good reasons why it is very much in America’s interests to keep South Africa as a trading partner and within its sphere of influence through Agoa membership”.

The US government is concerned about South Africa’s apparent pro-Russia bias, despite its professed neutrality in the Russia-Ukraine war. Ending South Africa’s Agoa benefits would make things worse, and frustrate US efforts to secure better ties with African countries.

“In fact, it would be harmful to America’s interests to terminate South Africa’s Agoa membership because by kicking South Africa out of Agoa the country would be driven into the arms of Russia and China.

“Trade and diplomatic ties could well be followed by military alliances. Does the US really want a Russian or Chinese naval base in Simon’s Town?”

Then there were the potential costs that would be imposed on US manufacturers and US taxpayers if South Africa is thrown out of Agoa.

“First, the US is itself a beneficiary of the Agoa terms of trade, not only because of increased access to the South African market, but because South African manufactured goods, such as parts for motor vehicles manufactured in America, enter the country duty free. Those benefits would be lost to US industry.

“Second, and more importantly, losing Agoa membership would be a harsh blow to the South African economy, with ripple effects beyond its borders, punishing workers and poor people throughout the southern African region, but not politicians.

“Therefore, expelling South Africa could result in very expensive increases in US aid to Africa, funded by US taxpayers, if the South African economy collapses under the weight of its domestic problems and the production of its farmers, businesses and workers denied access to US markets.”

Baird concluded by noting that ending South Africa’s Agoa membership would deprive US poultry producers of a profitable market. US exports had grown since the US in 2015 forced SA to accept a substantial annual quota of US chicken imports free of the anti-dumping duties that had applied.

“Because of the quota, the US has become the main supplier of frozen chicken portions to South Africa, and South African chicken farmers say it is hurting them.

“But, if Agoa goes then the quota automatically goes with it. The South African poultry industry would rejoice, but US poultry producers would forfeit a substantial market they have developed,” Baird said.

“Agoa benefits the US and South Africa, and kicking South Africa out of Agoa is clearly not in the interests of the US or American taxpayers.”