South Africa, the largest beneficiary of the African Growth and Opportunity Act (AGOA), has asked the United States to renew the trade pact for another 10 years beyond its current expiry date in 2025. The request was made during a visit by South African officials to the US earlier this month to discuss the trade pact and finalize preparations for an AGOA forum that’s scheduled to be hosted in South Africa this year.
AGOA: A Key Partnership for Trade and Development
AGOA is a trade program that was enacted in 2000 under former President Bill Clinton to provide eligible sub-Saharan African countries with preferential access to the US market for thousands of products, including duty-free access for some exports. The program aims to promote economic growth, development, and integration in Africa, as well as to foster stronger trade and investment ties with the US.
According to the US Trade Representative, AGOA has helped increase US-Africa trade by more than 300% since its inception, reaching $36.9 billion in 2021. South Africa accounts for about 40% of the total AGOA exports, mainly in vehicles, jewelry, and metals. AGOA has also supported an estimated 350,000 direct and indirect jobs in South Africa, and contributed to the diversification and industrialization of the country’s economy.
South Africa to Host the 20th AGOA Forum in November
South Africa is set to host the 20th AGOA Forum in Johannesburg from November 2 to 4, 2023. The forum is an annual event that brings together senior government officials, business leaders, civil society representatives, and regional economic organizations from the US and AGOA-eligible countries to review the implementation of the program and explore new opportunities for cooperation.
The theme of this year’s forum is “AGOA at 23: Renewing Our Commitment to Shared Prosperity”. The forum will feature a ministerial meeting, a private sector dialogue, a civil society session, and a “Made in Africa” exhibition to showcase regional value chains and products from the continent. The forum will also provide a platform for South Africa to advocate for the early extension of AGOA and to address some of the challenges and barriers that affect its utilization.
Why South Africa Wants an Early Renewal of AGOA
South Africa has been vocal about its desire to see AGOA renewed for another 10 years before it expires in 2025. The country argues that an early renewal would provide certainty and predictability for investors and buyers, and avoid the risk of losing the benefits of the program. South Africa also believes that AGOA is still relevant and beneficial for both the US and Africa, especially in the context of the COVID-19 pandemic and the African Continental Free Trade Area (AfCFTA).
President Cyril Ramaphosa, who met with US Ambassador Katherine Tai during her visit to South Africa in July, said that the US remains a very important economic partner for South Africa and the continent, and that AGOA has helped promote the export of African goods to the US. He also expressed his hope that the US would support the AfCFTA, which aims to create a single market of 1.3 billion people and $3.4 trillion in GDP.
Minister of Trade and Industry Ebrahim Patel, who led the South African delegation to the US in October, echoed Ramaphosa’s sentiments and said that AGOA has been a catalyst for African industrialization and regional integration. He also said that South Africa is ready to engage with the US on a mutually beneficial trade and investment relationship that goes beyond AGOA and supports the development objectives of both sides.
What are the Prospects for AGOA’s Renewal?
The US has not yet indicated its position on the renewal of AGOA, but has expressed its commitment to strengthening its economic partnership with Africa. Ambassador Tai, who will attend the AGOA Forum in November, said that the forum is an opportunity for the US to build upon the success of the Africa Leaders’ Summit that was held in Washington in September, and to further the dialogue on the future of US-Africa trade relations.
The US has also launched a comprehensive review of its trade policy with Africa, which will consider the effectiveness of AGOA and other existing programs, as well as the potential for new approaches and frameworks. The review is expected to be completed by early 2024, and will inform the US’s decision on whether to renew, modify, or replace AGOA.
Some analysts and stakeholders have suggested that the US should move away from a unilateral and preferential trade program like AGOA, and towards a more reciprocal and comprehensive trade agreement with Africa, similar to the ones that the European Union and China have with the continent. However, others have argued that AGOA is still valuable and viable, and that a sudden shift to a different trade regime could disrupt the existing trade flows and undermine the development gains that have been achieved under AGOA.
