Just last week, trade and industry minister Parks Tau was talking up the “generous” offers made by South Africa to the United States over the course of protracted negotiations to stay in the US’s preferential trade programme, Agoa.
Not generous enough, evidently, given Monday’s announcement that South Africa and Rwanda have been excluded from the African Growth and Opportunity Act; in South Africa’s case, after 25 years of inclusion.
Agoa gives eligible African countries duty-free access to the US market for thousands of products, and South Africa has been the largest beneficiary of the programme. Last year, it exported $1.7bn worth of goods to the US.
In Rwanda, the Trump administration said it is “deeply concerned by the following issues: trade and investment barriers, rule of law, political pluralism, internationally recognized worker rights, human rights, and threats to US national security and foreign policy interests,” read the statement.
As for South Africa, “the Trump administration is deeply concerned by barriers to US trade and investment, corruption, and threats to US national security and foreign policy interests.”
The decision hardly comes as a surprise, given months of increasingly acrimonious relations between South Africa and the US with President Donald Trump taking particular issue with BEE, SA’s ties with Iran, and its case accusing Israel of genocide at the International Court of Justice.
In total trade terms Agoa accounts for about 10% of South Africa’s exports to the US and 1% of its global exports, with the US comprising about 4% of the country’s agriculture exports.
‘Serious blow’ to citrus growers
Local citrus growers have been quick to express their dismay, with Agoa particularly significant for growers in the Western and Northern Cape, where entire communities depend on SA-US trade. The economy of Citrusdal, for example, is directly tied to competitive access to the US market.
“A citrus grower cannot simply divert his crop to another market ... Entire orchards have been planted specifically for the US market. Our exclusion from Agoa will result in job losses in the Western and Northern Cape,” said CGA Chairman Gerrit van der Merwe in a statement.
According to Wandile Sihlobo, SA’s presidential envoy on agriculture and land and the chief economist at the agricultural business chamber of SA, we now face an extra ‘most-favoured-nation tariff’ of about 3.4%, on top of the existing tariffs the US administration has added. At present, some South African products enter the US market at 12.5% tariffs (the so-called Liberation Day tariffs). Without Agoa, these rise to 15.9%.
Sihlobo has argued that although hardly ideal, the increase in tariffs will not be “catastrophic”.
In an extensive post on X, Sihlobo said South Africa “must manage the sentiment and narrative around this issue well. Above all, this yet again reminds us of the need to work hard to diversify South Africa’s export markets to growing regions such as Asia and the Middle East.”
Export diversification, he said, “must be framed correctly; it is not a replacement for the US, EU, UK, Africa, and other markets. These remain key, and we must work to retain our access to them.”
In a recent briefing, president Cyril Ramaphosa said he’d “been going on trips around the world to see where we can open up markets."
“We are not the first and only country to be taken out of Agoa, and I believe we will not be the last,” he said, acknowledging however that the expulsion would be “devastating” for South Africa’s already parlous job market.
