Trade agreements between the United States and African countries, such as the African Growth and Opportunity Act (Agoa), could undergo significant reforms after the November elections in the US, particularly if the Trump administration wins a landslide victory.
This is according to US foreign policy expert Professor Michael Walsh – a senior fellow in the Africa Programme at the Foreign Policy Research Institute.
Agoa allows more than 30 African countries to export 1 835 types of goods to the US consumer market, and in turn affords the US access to critical minerals, product value chains, and investment opportunities in Africa.
It is scheduled to expire in September, next year but there is a new bill seeking to extend the preferential trade agreement by 16 years, pushing out the programme’s expiring date from 2025 to 2041.
Speaking to Business Report on Saturday, Walsh said there were fundamental issues with what Agoa sought to achieve as some argue that it was trying to force US primacy in major power competition through trade and using trade as the carrot to achieve that.
Walsh said as a result, one of the reforms was how the US could secure the supply chains; what role did Agoa play in that; and also ensuring that Agoa participants maintained their requirements around not undermining US national security and foreign policy interests.
“So I think there’s going to be a big debate about whether certain countries should be identified as priorities for future bilateral trade agreements? And how do you build mechanisms into Agoa to facilitate countries graduating out of Agoa, and moving into the bilateral trade agreements?
“There may be intra-party conflict between some members of Congress and the White House, but it is going to make it a lot easier either way to reform Agoa. If a unified control happens, then I think the likelihood that Agoa is going to be a lot different from what it is today is increased.”
Walsh also said there was a lot of disagreement about bipartisan support to keep Agoa alive amid the hyper-politicised environment in the US.
“So it’s just really hard to achieve that piece of legislation that’s required to move it forwards. It becomes easier if one party controls both the House, the Senate, and the White House,” Walsh said.
“My own personal view is it’s much more likely if Donald Trump does get elected that the US government will be less interventionist, less directly interventionist in Africa, but that other countries will become much more interventionist in Africa than they have so far.”
This comes as Minister of Trade, Industry and Competition (dtic), Parks Tau is leading a South African delegation comprising the government, private sector, civil society and organised labour representatives to the 21st Agoa Forum in Washington DC.
Tau said Team SA will use the opportunity of the visit to discuss ways of strengthening SA and US economic relations and to advocate for early renewal of the Agoa legislation for at least 10 years in line with the position of the African trade ministers.
“The visit to the US will thus provide Team SA an opportunity to engage with important stakeholders such as members of Congress, the US administration, as well as the US business community,” Tau said.
“South Africa will also advocate for Agoa to be complemented by an investment-led strategy to mobilise US investments into Africa’s productive sector for the mutual benefit of both parties.”
Onyi Nwaneri, CEO of Afrika Tikkun, a youth economic and social empowerment NPO, said the stumbling block to the talks of an early renewal of Agoa was that the US was a bit distracted in terms of it being an election year.
Nwaneri said the Team SA delegation must be very intentional, and ideally come back with a firm agreement that Agoa will definitely be renewed.
“I think South Africa will suffer a big setback if Agoa is not renewed. And if we could secure an early renewal, that would be in our best interests. I want to believe that irrespective of what administration is in place, that Agoa is something that South Africa will continue to enjoy,” Nwaneri said.
“If we do not get an Agoa renewal, it will really impact our competitiveness, and the unintended consequences would be lots of job losses and businesses struggling, if not failing. It is in our best interests for the minister to go and hopefully secure that Agoa renewal,” he said.
BUSINESS REPORT