/ 26 October 2023

Agoa forum: ‘Africa to assert its place in global economy’

Minister Patel 1499 Dv
Minister of Trade, Industry and Competition Ebrahim Patel. (Delwyn Verasamy/M&G)

South Africa will be looking to get more out its trade ties with the US during next week’s African Growth and Opportunity Act (Agoa) Forum, where member countries will showcase the continent’s industrial capability and its regional value chains.

Trade, Industry and Competition Minister Ebrahim Patel said this on Thursday while updating the media on South Africa’s preparedness to host the forum, where African stakeholders will meet members of the US congress to discuss Agoa’s renewal. 

The trade deal — which provides eligible sub-Saharan African countries with duty-free access to the US market — is due to expire in 2025. Member states are asking for Agoa to be renewed for another 10 years.

According to Patel, the forum will take place as Africa seeks to redefine its role in the global economy. A key element of this is the African Continental Free Trade Area, which aims to boost regional trade on the continent.

The forum, Patel said, will allow stakeholders to find ways to get more out of Agoa, which analysts have said has been underutilised. To this end, member states will be seeking to make Agoa’s rules more user-friendly, to add more products to the duty-free list, to attain all beneficiary countries and for Agoa to be complemented by investment and measures that allow more medium-sized firms to access the US market.

The Agoa forum will take place as the global economy continues to reel from the geopolitical shock created by Russia’s war on Ukraine and, more recently, Israel’s brutal bombardment of Gaza in response to a Hamas attack on civilians. Meanwhile, the US and others have endeavoured to “de-risk” from China amid concerns over rising tension between the world’s second-biggest economy and Taiwan.

South Africa’s non-aligned position on Russia’s invasion of Ukraine recently landed it in hot water with the US, after Washington’s envoy to the country Reuben Brigety accused it of supplying Moscow with weapons. 

In June, members of both the Democratic and Republican parties wrote to US Secretary of State Antony Blinken questioning South Africa’s eligibility for trade benefits under the Agoa, given the country’s perceived military ties with Russia. The letter also expressed concern about South Africa hosting the Agoa forum.

On Thursday, Patel said South Africa has clarified its position on the matter, which has gone towards mollifying the concerns of American lawmakers.

“Democracies by their nature won’t always agree with each other … And so, in the long relationship that we have had with the United States, it has weathered many storms,” the minister said.

“It’s gone through many periods and it has remained intact, because there is strong mutual benefit to both South Africa and the United States in building and strengthening this relationship.”

Patel noted that there is significant opportunity for Africa in efforts by countries and firms to de-risk.

“The focus is now on greater resilience. What we are seeking to do is to showcase Africa’s industrial capability. And it is done with two elements to it. One is that that capability is available to be used by American companies to de-risk,”  he said.

“And an added element to that is that we have preferential access via Agoa.”

An earlier renewal of Agoa will give US companies greater certainty about Africa’s investment case, Patel said.