WHAT IS AGOA?
Agoa, first enacted in 2000, gives African countries tariff-free access to the US market for various products if they demonstrate progress towards opening their own markets to US companies.
While Agoa is called a “unilateral and nonreciprocal” deal that basically gives market access to Africans, it is also very obviously a tool to create leverage against African trade policies.
After running for an initial 15 years, Agoa got renewed this year with some modifications.
The hallmark of the new amended version of Agoa is greater powers for US interests to challenge countries’ inclusion via the “out-of-cycle” review mechanism South Africa is now being subjected to.
The new Agoa also adds the power to selectively exclude sectors, instead of whole countries, from the tariff-free access. This is a weapon that the US pork industry is now asking its government to use on South Africa.
A major counterargument by the department of trade and industry at the hearing was that Agoa would be pretty meaningless if South Africa was not part of it.
Statistics around the overall value of African exports to the US under Agoa are skewed by the overwhelming importance of oil from Nigeria and Angola, but if fuel is left out of the equation, South Africa completely dominates the scheme.
Because South Africa plays a major role in regional value chains, taking the country out of the scheme would have a knock-on effect on the other beneficiaries and wreck the ongoing attempts to create an African free trade zone.
“Removing South Africa from Agoa would substantially diminish the significance of Agoa for sub-Saharan Africa and the US,” said the department.
South Africa’s tariff-free exports to the US under Agoa amounted to about R20 billion last year, with the roughly 40 000 BMWs especially manufactured here for the US market every year making up the bulk of that.
The BMWs and auto components like platinum catalysts are the only large-scale advanced manufacturing products to actually use the scheme.