Farmer's Weekly (South Africa)
All eyes on SA’s AGOA review for 2021
This year, 24 June was the deadline for submissions for the eligibility of SubSaharan African countries to receive benefits under the US’s African Growth and Opportunity Act (AGOA) for 2021.
South Africa’s position in AGOA has been tenuous since the renewal of the preference programme in September 2015. Policy issues continue to be a key part of the reason why some lobby groups argued for South Africa’s benefits under AGOA to be revised.
At first, it was the Protection of Investment Act, which was argued weakened the rights of foreign investors and private property rights. More recently, the International Intellectual Property Alliance expressed reservations about the Copyright Amendment Bill, noting that the Bill does not provide sufficient rights and protection for US intellectual property. Moreover, there has been negative reaction to the amendment of Section 25 of the Constitution, which relates to the expropriation of land without compensation.
OUT-OF-CYCLE REVIEW
As attention shifts to the presidential election in the US, a scenario is possible in which South Africa is placed in an out-ofcycle review. The significance of this year’s election is that the next administration will have the task of not only setting the foundation for a post-AGOA reciprocal arrangement, but also initiating the new envisioned trade relationship between the US and Sub-Saharan Africa.
South Africa’s exports have been on an upward trend over the past 20 years. Between 2016 and 2019, overall agricultural exports increased 43% from US$269 million (about R4,6 billion) to US$385 million (R6,6 billion).
South Africa is the US’s most dynamic and diversified trade partner in Sub-Saharan Africa. As the leading exporter in the subregion, the country accounts for 38% of Sub-Saharan Africa’s export revenue in 2019.
Out of the US$385 million worth of agricultural products that South Africa exported to the US, 76% were claimed under the preference programmes (both AGOA and Generalised System of Preferences [GSP]). However, AGOA made up the 70%, and GSP accounted for 6%. Two-thirds of these agricultural products consisted of macadamia nuts, citrus fruit, wine and cider, and specific fish and seafood.
South Africa has arguably taken advantage of the AGOA preference programme more than any other country in Sub-Saharan Africa. Amid all the on-going uncertainty around South Africa’s continued inclusion in AGOA, what remains clear is that a decision to either revise South Africa’s benefits or graduate the country from the preference programme, will significantly reduce the value of AGOA, and consequently weaken the US trade relationship with Africa.
GLOBAL PANDEMIC
What makes this year’s AGOA review particularly unique is not just the fact that the US is in an election year, but also that the review is taking place in the middle of a global pandemic, which has triggered a recession that has severely and negatively affected the economies of both South Africa and the US.
Whether some or all of these factors present extenuating circumstances that might, at a bare minimum, pause, or to some degree, even sway US foreign and trade policy, remains to be seen. The hope, however, is that a preoccupation of the US with its presidential election, the coronavirus disease (COVID-19) pandemic, and its economic ramifications would take away attention from the AGOA in general, and South Africa’s inclusion in particular.
With agriculture having been left relatively uninterrupted during the pandemic, South Africa’s agricultural exports to the US have remained strong in the first quarter of 2020. Between January and March, South Africa exported US$58 million (R1 billion) worth of agricultural exports, which is a 12% decline compared to the first quarter of 2019.
High levels of unemployment in the
US, and consequently, expected weaker demand, as well as the fall in economic activity, is expected to dampen South Africa’s exports for the rest of 2020. Meanwhile, all eyes will be on the US trade representative’s AGOA report, which will make recommendations on Sub-Saharan African countries that are eligible for AGOA.