DA lobbying US to allow South Africa to stay in lucrative trade pact Agoa

The government’s non-aligned position in the Russia-Ukraine war could see the collapse of the vehicle manufacturing sector if South Africa is excluded from the US African Growth and Opportunity Act (Agoa) trade pact. 

This is according to the DA, which has started a process to lobby for South Africa’s continued inclusion in Agoa in a bid to save the country’s ailing economy. 

“We are no longer the favourite [country] of the southern African region when it comes to trade, and South Africa’s economy is quickly being outflanked by our neighbours. The incentive to grant South Africa exclusive access to our key export destinations in the US, the EU, and the UK is no longer guaranteed. This is especially true in the automotive sector,” said DA leader John Steenhuisen on Tuesday.

The Sunday Times reported that President Cyril Ramaphosa will this week send a high-level delegation to the US where discussions about Agoa are expected to take centre stage. 

According to the report, the delegation will include three cabinet ministers — Enoch Godongwana of finance, Ebrahim Patel of economic development and Naledi Pandor of international relations. 

Some politicians in the US are lobbying for SA to be excluded from Agoa. They argue that South Africa should be removed as it was no longer a developing country and should no longer benefit from special trade concessions.

Steenhuisen, who visited the BMW motor vehicle manufacturing plant in Tshwane on Tuesday to highlight the importance of the sector and its reliance on Agoa for its exports, said the sector would face a real threat should SA be excluded from the trade agreement.

“Given that the ANC is hosting an exclusive Brics political parties dialogue and that the South African government, under the ANC, plans to host Russian President Vladimir Putin at the 2023 Brics Summit later this year, South Africa faces the very real threat of economic sanctions, with Agoa hanging in the balance,” he said.

Accompanied by his colleagues, Tshwane’s Cilliers Brink and Gauteng provincial leader Solly Msimanga, Steenhuisen said that according to the National Association of Automobile Manufacturers of South Africa (Naamsa) the sector accounted for R157bn in exports in 2022.

“The DA, including leaders of our governments in the Western Cape and Cape Town, have already engaged US politicians on the importance of Agoa’s renewal for regional economies, making the point that the ANC does not speak for South Africa as a supporter of the Russian Federation,” said Steenhuisen. 

He said the party last week made a formal submission to the US Trade Representative in which the party strongly motivated for SA’s continued inclusion in Agoa when it undergoes its annual renewal. Under Agoa, the US grants our economy preferential access to the US market and the privilege of duty-free exports.

Should South Africa's access to Agoa be revoked as a consequence of its allegiance to Russia, Steenhuisen said, 112,000 jobs in the automotive sector and R435bn in automotive trade could be wiped out.

In 2022 alone, automotive trade accounted for 16.5% of South Africa’s total trade GDP, he said. 

Naamsa says the US was SA’s second-largest total automotive export market in 2022, with vehicles and components to the value of R24bn exported to the US alone. 

Germany, which imports motor vehicles manufactured in SA through EU-bilateral trade agreements to the value of R72bn, is the largest export market, he said.

“Much of this trade is reliant on Agoa. South Africans need to realise that our country’s jobs and the security of our economy are intrinsically linked to trade founded on global alliances. 

“The ANC’s alliance with Russia makes no economic sense if it means sacrificing close to 77% of foreign direct investment stock in South Africa in recent years from the EU, the UK and the US, including hundreds of billions of rand in trade, for a country [Russia] with whom our trade is only around 0.3%.”

Steenhuisen said the DA will continue to lobby for SA’s inclusion in Agoa to protect jobs and livelihoods.

“Bad foreign policy decisions have dire consequences for emerging economies such as South Africa’s. The DA will not let the ANC’s allegiance to Russia jeopardise Agoa, the South African automotive sector and our economy at large based on nothing more than greed and political expediency.”

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