File: US President Joe Biden shakes hands with South African President Cyril Ramaphosa during a bilateral meeting in the Oval Office of the White House on September 16, 2022 in Washington, DC. The two leaders reaffirmed the importance of enduring partnership, and discussed their work together to address regional and global challenges. (Photo by Pete Marovich-Pool/Getty Images)
South Africa’s trade ties with the United States have recently come under scrutiny in the wake of the Lady R saga, which jeopardised the smaller economy’s inclusion in the African Growth and Opportunity Act (Agoa).
Although South Africa has found itself on the back foot — with the government scurrying to Washington to fight for its slice of the trade agreement — the recent tussle over Agoa has also exposed how crucial a position the country occupies. And with Africa increasingly at the nexus of great tug-of-war between the US and China, questions about whether Agoa is fit for purpose seem more important than ever.
Almost exactly 13 years ago, Hillary Clinton, then the US secretary of state, addressed the 2010 Agoa Forum in Washington. Referring to the continent’s development setbacks, Clinton called the US a “committed friend and partner” in realising Africa’s potential.
A decade prior, Clinton’s husband, who also happened to be president at the time, signed Agoa into law. The duo’s trip to Africa in the late 1990s had helped spark in congress the idea that the continent would be good for business.
Bill Clinton’s national security adviser Samual Berger’s remarks on the trip provided clues about what his boss had hoped Agoa would become: “a genuine partnership where we listen as well as speak, learn as much as preach”.
A lot changed in the years between Agoa’s signing and the former first lady’s 2010 address. The Bush administration championed the “with us, or against us” rhetoric that had accompanied its War on Terror and overtures of world friendship-building fell to the wayside. But the volume of imports to the US from Africa soared during Bush’s presidency, presumably as a result of Agoa. Imports fell off considerably after the 2008 global financial crisis.
Hillary Clinton would later make her own presidential bid, ultimately losing to Donald Trump, who again opened the door to a more inimical foreign policy — ordering the withdrawal of the US from Trans-Pacific Partnership trade agreement after just three days in office. Trump also enforced a travel ban on a number of African nations, which he famously allegedly referred to as “shithole countries”.
Analysts warned that Trump’s foreign policy would have the effect of amplifying China’s gravitational pull, something his administration had attempted to counter in relation to Africa. China has emerged as one of Africa’s main trading partners.
In a 2018 speech, Trump’s national security adviser, John Bolton, advanced the idea of a US-Africa economic alliance characterised by reciprocity and mutual respect against the backdrop of China’s growing influence on the continent, which he described as predatory.
“China uses bribes, opaque agreements, and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands,” he said. “Its investment ventures are riddled with corruption, and do not meet the same environmental or ethical standards as US developmental programmes.”
The Trump administration’s Africa strategy was also set against its “America First” policy, which saw a wider shift toward diplomatic unilateralism and which ultimately had the effect of isolating the world superpower. In a world where supply chains are still so entangled, the pitfalls of this approach are obvious.
US president Joe Biden has since sought to remix Trump’s “America First” policy — underlining the need to bolster domestic infrastructure and industrialisation — a necessary adherence given the superpower’s efforts to de-risk from China, as well as its own struggles to trigger sustainable growth.
This is where Africa comes in.
In July, a delegation led by Trade Minister Ebrahim Patel and Finance Minister Enoch Godongwana travelled to Washington to do damage control in the wake of the diplomatic spat unleashed after the Lady R allegation.
But Patel’s team wasn’t just there to beg for South Africa’s continued inclusion in Agoa, which is set to expire in 2025. They also sought to show what was at stake for the US if it failed to take its ties with the continent more seriously.
Despite growing trade between the US and Africa, Agoa’s reach has been limited, a fact that was laid bare in a 2023 review of the trade agreement by the United Nations Conference on Trade and Development.
Imports from the Agoa beneficiaries are heavily concentrated in just a few countries, the report noted. For the entirety of 2000 to 2021, 78% of all imports from the 39 countries included in Agoa came from South Africa and two oil-exporting countries (Angola and Nigeria). The 18 smallest partners collectively contributed just 1% of these imports. Total imports from all Agoa countries rose by just 37% from 1998 to 2021.
Moreover, South Africa accounts for the majority of the manufactured goods imported to the US under Agoa.
While South Africa’s dominance in the trade pact might be a mark against the country, members of the Patel-led delegation argued that its position as a gateway to the sub-Saharan region makes it an important partner. America’s access to this market is crucial, given the superpower’s race to secure strategic minerals needed for the energy transition, the cornerstone of its reimagined industrial policy.
Then there is Africa’s significance to the global economy of the future. When a number of advanced economies are facing the prospect of ageing populations, young Africans are expected to constitute 42% of global youth by 2030, according to the World Economic Forum. And, with Africa’s GDP still viewed as a source of growth amid uncertain economic conditions, the continent is a clear strategic priority for the US. It would be a grave mistake for the US to abandon its ties with Africa, fostered through Agoa.
But, as some have already argued — in a world where the US is no longer its centre — Agoa cannot be renewed in its current, heavily one-sided, form.
Meanwhile, South Africa ought to imagine its future beyond Agoa, expanding trade and investment with other partners, especially those in the African Continental Free Trade Area.
Since the Lady R debacle, a number of commentators have talked about how Agoa has been weaponised against South Africa. This is, perhaps, the nature of trade pacts. As the world economy continues to shift, the US and others must be careful not to shoot themselves in the foot.