Photo: FW Archive
However, as conversations swirl about a potential extension of the agreement, South Africa finds itself at a crossroads with compliance concerns.
While continued access to the lucrative US market is undeniably attractive, compliance barriers and a complex relationship with the US raise concerns about the future.
The current iteration of AGOA is set to expire in 2025. Talks of a potential extension offer a glimmer of hope for South African exporters who have benefitted significantly from duty-free access to the US market.
According to Dr Noluthando Phungula, a researcher at the Institute for Pan-African Thought and Conversation, there is a significant financial advantage: “In 2022 alone, preferential access under AGOA helped South African exporters avoid a staggering US$116 million [about R2,1 billion] in tariffs.”
This translates to substantial cost savings and a competitive edge for South African goods, particularly manufactured exports and agricultural products.
“South Africa has been perceived to show actions that undermine US national security and foreign policy interests. In efforts to remedy the situation, South Africa has proposed a mandatory out-of-cycle review of [its] eligibility compliance.
“Unfortunately, important aspects of the US government proposals have been misconstrued in the South African media. This poses a major challenge for SA,” she explained.
No official announcement has been made, leaving South African businesses and policymakers in a state of uncertainty. This lack of clarity makes long-term planning difficult, potentially hindering efforts to fully leverage AGOA’s benefits.
Compliance concerns beyond trade barriers
Furthermore, Dr Mmatlou Kalaba, senior analyst at the Bureau for Food and Agricultural Policy (BFAP), warns of the broader scope: “Compliance can encompass intellectual property rights protection, environmental regulations, and even foreign policy stances taken by South Africa.”
This wider net can be a challenge for South Africa to navigate, potentially requiring costly adjustments and policy changes.
Kalaba added that even if an extension is granted, South Africa faces significant hurdles in maintaining compliance with AGOA’s requirements. These extend beyond just traditional trade barriers like tariffs and quotas.
Misinformation and geopolitics
Adding another layer of complexity is the potential for misinformation surrounding a potential extension.
Dr Tinashe Kapuya, research director at the African Network of Agricultural Policy Research Institutes, pointed out the dangers: “There’s a risk of confusion regarding the conditions attached to an extension. The influence of US elections and broader geopolitical considerations on future reauthorisations cannot be ignored.”
He added that South Africa needed clear communication to understand the full implications of any extension and avoid being caught off guard by changing priorities in US trade policy.
Regardless of the extension’s fate, experts agree that South Africa must remain proactive in its relationship with Agoa.
Phungula stresses the importance of ongoing engagement: “Continued dialogue with the US government and stakeholders is crucial.”
This includes addressing compliance concerns, diversifying export products beyond natural resources, and continuously improving product quality to meet US standards. By taking these steps, South Africa can demonstrate its commitment to the agreement and solidify its position as a reliable trading partner.
