Ebrahim Patel wants better envoys
South Africa to oppose reciprocal duty-free access for US companies during the Agoa conference
Trade, Industry and Competition Minister Ebrahim Patel and government insiders have decried the lack of experience among the heads of South Africa’s diplomatic offices in strategic countries such as the United States and China.
Patel, who is at the helm of efforts to ensure the country continues to enjoy preferential export access to US markets under the African Growth and Opportunity Act (Agoa), spoke to the Mail & Guardian against the backdrop of rising calls in the US for businesses there to get reciprocal duty-free access to South Africa.
With negotiations underway for an early extension of the Agoa agreement, which brings in billions in trade but is set to expire in 2025, government insiders say South Africa’s efforts have been undercut by having an ineffective ambassador to the US — Nomaindia Mfeketo — who has failed to foster stronger relations between the two countries. They say Mfeketo was unsuccessful even before starting to grapple with ill health.
The government has previously been criticised for using its embassies abroad as dumping grounds for under-performing or disgraced members.
On Thursday, Patel said there had always been willingness among the staff in South Africa’s embassy in the US to promote the country’s interests.
“But we recognised that in this more complex world, we need to further strengthen the overall capacity South Africa puts into its economic relationships with the US, European Union, China and India,” he added. “It’s in the US as well as in a number of areas that we need to strengthen the efforts.”
Mfeketo stepped down as South Africa’s ambassador to the US in August because she is ill. She was absent at the height of Pretoria’s strained relations with Washington when ambassador Reuben Brigety accused South Africa of loading arms
on a cargo ship destined for Russia.
Patel said Pretoria was now working more with counterparts in a number of key markets, whereas previously it had focused on domestic issues.
“Now the dynamics are more complex to manage; they can’t always be managed at a technical level between officials. It does require more attention from us,” he said.
One government insider said the US congress was hostile towards Agoa, which provides duty-free access to American markets for the goods of designated Africa countries, and Pretoria had in the past to failed to have discussions with Republicans and Democrats in congress, instead focusing its energies on US President Joe Biden’s administration.
“What the Americans have said is that Pretoria needs to have a senior ambassador to replace [Mfeketo] with a person who is familiar with the US to engage different stakeholders,” the insider said.
US embassy spokesperson David Feldmann said there was ongoing dialogue with Pretoria to facilitate market access for US exports, particularly in sectors such as agriculture.
“We value our continued discussions with South Africa to address further means of increasing bilateral trade and investment, including at the upcoming Agoa Forum in November,” he added.
Patel said when the issue was raised by members of the US congress, his response would be that the relationship already provides several benefits to both sub-saharan African countries and the US itself.
“We point out that African countries are significant suppliers of raw materials to the US. That is a benefit that the US obtained. The US companies find greater access to investment opportunities in the continent as a result of Agoa, which provides a significant flow of dividends from sub-saharan countries to the US. American suppliers are often integrated in these value chains.”
He said reciprocity did not have to be measured on a “like-for-like basis; they can come in the equivalence of the package”.
“Opening African markets prematurely will act as a chilling factor in African industrialisation,” Patel warned. “To the extent that the US sees strategic value in an Africa that is prosperous, an Africa that is able to avoid being a base for terrorism and civil unrest, it ought to back and support our industrialisation effort. That industrialisation effort in turn requires African countries to have a degree of policy space to enable external trade tariffs to support infant industry. That is essentially how we try to frame the story.”
South Africa is in the third term of its Agoa trade agreement with the US and is awaiting approval on its application for an early extension. The pact provides duty-free product coverage for 1 835 products across sub-saharan Africa. In 2021, South Africa’s total goods exports to the US amounted to $15.4 billion. Agoa benefits include job creation in agriculture and manufacturing, export earnings and economic development.
Patel said the political divisions in the US congress meant South Africa would need to secure a bipartisan consensus to secure an extension of Agoa.
“It makes it more complex because it means that very often more related matters can be caught in the domestic backwash in American politics. Aside from the political dynamic in the US between the two parties, there has also been a sea change in the American attitude towards trade. There is a view that the US has lost many jobs particularly in trade with
Asian countries and sometimes they would point to European countries. So there is more scepticism.”
Agoa would be less sufficient without South African participation, the minister said, adding that there had been a significant move by the US away from investing in trade.
“There is a bigger focus on localisation in the United States. The second risk is geopolitics as the world becomes more divided. There is a danger that one or more countries and blocs will begin to take a fairly shortsighted geopolitical view,” Patel said. “If South Africa was taken out, many neighbouring countries would suffer quite significant losses, we will be making that argument in our engagement with our American counterparts on a broader basis in November.”
South Africa will host the 20th Agoa forum in November.
A high-level South African government official said the country’s position was “precarious” because of the US’S own economic downturn.
“The middle class in the US, much like us, are feeling the economic strain and the general mood has moved away from free trade and giving free trade to developing countries. The general mood is either you scrap Agoa or for emerging countries to feel the pinch,” the insider said.
The criteria to qualify for Agoa include market-based economies, the rule of law and political pluralism.
The total two-way investment stocks in 2021 totalled just more than $11.9 billion between the two countries with $7.4 billion in US investment stocks in South Africa while South African firms invested $4.5 billion in the US, Patel said. South Africa also provides more than 25% of all imports to the US, ranging from manganese to platinum.
The US is a significant market for South African goods and a key source of investment with the US as South Africa’s second-largest national trading partner, after China. South Africa is also the largest exporter to the US on the African continent.
According to the department of trade and industry, South Africa is the largest sub-saharan African importer of goods from the US with the biggest source of foreign direct investment to the US from the African continent.
There are more than 600 US firms in South Africa with many using the country as a gateway to other African countries.