Uphill for Agoa as US rep warns SA

● South Africa’s hopes for renewing a lucrative trade deal with the US are facing fresh headwinds from conservative legislators in Washington DC, with one congressman raising Pretoria’s relations with Hamas in the Israel-Palestine conflict as a new obstacle to the African Growth and Opportunity Act (Agoa).

In a letter to US President Joe Biden, Republican congressman James E Risch criticised the administration for not penalising South Africa for “flouting the US’s targeted Russia-related sanctions” by changing the venue for the Agoa summit.

It also objects to Pretoria deepening its “dependency on China” and bolstering ties with Iran and Cuba. The letter also highlights the phone call between international relations minister Naledi Pandor and Hamas leader Ismail Haniyeh, as well as the country’s plan to host Iranian President Ebrahim Raisi on a now-postponed visit.

In the letter, he urges Biden to make “robust changes” to the Agoa eligibility criteria and hints that Congress, which is Republican-controlled, may hesitate to ratify the treaty unless the changes are made.

Risch’s letter came to light this week as the Agoa forum got under way, amid high hopes the trade deal will be renewed.

However, minister of trade and industry Ebrahim Patel said one of the big takeaways was the level of support for the continuation of Agoa from both the US and African officials.

“We have looked at the mutual beneficial character of our economic relationship as a compelling argument to renew and extend, improve and refine, complement and support Agoa with additional measures.

“We spoke about the renewal period, some asked for a permanent Agoa, some asked for 20 years and it seems to me 10 years was the period where most African ministers settled, believing it is achievable and can be helpful to our own efforts.” Patel said Africa was particularly keen to get the reauthorization in the earliest part of 2024.

Those attending the forum seemed troubled only by South Africa’s unreliable electricity supply, seeing this as an obstacle to deepening US-South Africa investment ties.

Kendra Gaither, president of the USAfrica Business Center at the US Chamber of Commerce, told the Sunday Times business was worried about the impact rolling blackouts were having on businesses and investors.

“Any investor — be it South African, US, or any investor from anywhere around the

world — looks for a scenario where there is stability in their environment where they are operating.

So, stable consistent energy supply is a critical component in maximising productivity for any company.

“I would say this is a concern for companies generally because it can contribute to the cost of doing business and the uncertainty of what that cost horizon looks like,” she said.

President Cyril Ramaphosa has assured his counterparts his government is working on turning the situation around at the embattled power utility.

Nevertheless, the 20th Agoa forum of US and African officials, union and business leaders, policymakers and trade ministers took place amid rolling blackouts, with Eskom implementing stage 2 and stage 3 load-shedding this week.

More than 2,000 delegates met at Nasrec, where they explored ways of enhancing the partnership which, among other things, allows African countries duty-free access to the US market. The discussion about renewing Agoa for another 10 years took centre stage. Africa is calling for the deal, which is set to expire in September 2025, to be extended.

The three-day talks took place under a cloud after President Joe Biden’s administration announced this week that it was expelling four African states — Uganda, Gabon, Niger and the Central African Republic — from the special trade preference for what the US said was a gross violation of human rights and failure to uphold the rule of law.

However, the Sunday Times understands the renewal of Agoa is not a priority for the US Congress.

A US source close to the talks said: “If you look at what is going on in the US Congress right now, the House went without a speaker for three weeks, which basically shut down the operations of the House.

“Now they have a new speaker that has only been in place for a week now, and their priorities right now are passing a number of funding bills before November 17.

“They have a lot of work to do to fund critical US programmes, so I don’t expect them to work on Agoa before November 17, because their priority is to keep the US government open.”

He said the US was also concerned about “indigenous obstacles” in South Africa. “What we see as one of the main impediments to foreign direct investment is that there are indigenous obstacles to that investment, like the energy insecurity [and] other service delivery factors, and you did not hear the president mention those.”

Delivering a virtual address at the forum, US secretary of state Antony Blinken said Biden “fully supports” the reauthorisation of Agoa. “But we don’t just want to extend Agoa — we want to work with the United States Congress to make it even better, and that’s what this week’s dialogue is all about.”

US secretary of trade Katherin Tai said the total for goods imported into the US under Agoa last year was about $10bn (R182bn), a significant increase compared with the $6.8bn achieved in 2021.

Non-petroleum imports, which are major sources of new investment and jobs in Africa, increased to $5.7bn last year, up from $5bn in 2021.

“South Africa, in particular, has been one of the largest Agoa users. The country was the top exporter last year, with $3.6bn in exports. And South Africa is leading the continent on other aspects as well, including through its clear commitment to human rights,” said Tai.

In its argument for the renewal of Agoa, South African business emphasised the importance of the deal as a vital instrument for local businesses to export goods to the US on a tariff-free basis.

However, US embassy spokesperson David Feldman said the decision whether to reauthorise the act was within the purview of the US Congress.

Feldman said that, despite the diplomatic challenges faced by the US and South Africa, his country respected South Africa’s sovereignty, and the country remained a key trading partner for the US.