Remember Agoa? The Donald will do things differently

So Donald Trump is United States president-elect. Brexit V2, only this time with nukes and a side order of sexual harassment. Nothing about this is good, unless you voted for The Donald. Let’s unpack my hysteria and try to get a grip on what this means for South Africa.

For those who have lived under a rock for the past year, let me remind of you of the African Growth and Opportunity Act (Agoa) and the fireworks that were the negotiations. Flowing out of that are a few important issues that suddenly become far more relevant than before.

Out-of-cycle reviews are a thing now. They are likely to become even more of a thing, which has the potential to turn Agoa into an instrument of 50 Shades of Greytype discipline.

Will this happen? Perhaps not, but we should not forget that the reason this particular nuance was built into the agreement was so that there would not be onlytwo options available to the US (being in or out of Agoa).

The management of the relationship has become more subtle and consequently a lot more powerful. If US industry is threatened by South African imports, we may see more of these actions.

South Africa is a lot less likely to be part of Agoa when it is next renewed. This risk could be mitigated by negotiating a full-blown trade agreement with the US, but I doubt either the US or South Africa has a huge appetite for this now. And, if we want to see such an agreement implemented, we need to get busy on that pretty soon.

I think, overall, the US will become more protectionist (although I also think this would have happened with Hillary Clinton as well). This means we could be seeing US duty increases as well as other actions such as antidumping and safeguard applications.

Even if these are not targeted at South Africa, they will still affect us. With every large market that closes, that product needs to find another home and, if the US starts to close its markets, some of that overflow will arrive in South Africa.

In turn, will this mean that South Africa then ends up bringing more protective actions?

Possibly. The recent madness regarding steel has revealed that there does appear to be some sort of limit to how much protection the South African authorities are prepared to provide to a given sector and certainly the higher up the supply chain the industry is the less likely it is to see high duties (I may still swallow my words if the steel safeguard duties are imposed).

What will The Donald do? Only time will tell. A really short amount of time, I suspect.