/ 31 October 2023

Cosatu: Agoa must support Africa’s industrialisation

South Africans March On International Day For Decent Work In Johannesburg
March past: A Cosatu demonstration in Johannesburg last year. Photo: Papi Morake/Gallo Images/Getty Images

Multinational businesses should pay their “fair share” of taxes in African countries and those that exploit workers and flout labour laws must be sanctioned under a renewed United States African Growth Opportunity Act (Agoa) trade pact, local and international unions said this week.

Unions welcomed the inclusion of labour at the negotiating table, where they would ensure the voice of workers is heard to secure decent jobs and workplace rights, labour federation Cosatu’s acting national spokesperson Matthew Parks told the Mail & Guardian ahead of the Agoa Forum taking place in Johannesburg from 2 to 4 November.

He said Trade, Industry and Competition Minister Ebrahim Patel had helped to secure labour’s seat at the “heart of the discussions” this year rather than as a civil society stakeholder as had been the case previously.

“For the first time the annual Agoa summit will include organised labour where Cosatu and our sister union movements from across Africa and the US will be placing the cause of decent work firmly on the Agoa agenda,” Parks said.

“It is particularly important that labour is there because now we are heading towards a new Agoa agreement and it is important that the views of workers be heard from across Africa, and we have synergy with labour in the US.”

Parks said a renewed Agoa “needs to include provisions to support compliance with good labour practices and to penalise employers who flout labour laws”.

“We can learn from the experience the US has encouraged in the North American Free Trade Area Agreement with Canada and Mexico where companies that violate labour laws can be sanctioned,” he added.

But he said there should not be blanket sanctions as occurred against Mauritania, which is not eligible for benefits under Agoa because of its insufficient progress in combating forced labour and slavery.

The Agoa agreement, passed by former US president Bill Clinton in May 2000, was extended by 10 years in 2015 to 2025. The purpose of the legislation is to expand the country’s trade and investment relationship with sub-Saharan Africa, encourage economic growth and development as well as regional integration into the global economy. 

“There has been some noise that the Seychelles, Equatorial Guinea, Mauritius and South Africa might be graduated from Agoa  because, on paper, South Africa is a middle income country,” Parks said.

“But in South Africa white people in Constantia have the lifestyle of Europeans and black people have the lifestyle of Brazzaville in the Republic of the Congo, so there should be more of a nuanced understanding. If we remove South Africa it won’t only hurt the country but the whole region.”

Parks said the US Congress had not understood this reality until it was explained to it that, despite appearing middle income on paper,  South Africa, is an unequal society with an unemployment rate of 42.1% (expanded definition), while 60% of young people struggle to find work.

Parks said US companies investing locally supported 450 000 jobs as well as indirect jobs in the country’s mining, manufacturing and agricultural sectors that benefit from large volumes of exports to the US.  An estimated 20% of South Africa’s exports to the US are covered by Agoa, which provides duty free access for more than 1 800 products.

“Agoa has been important not only to South Africa’s industrial development but also to those of other African states, in particular our neighbouring countries, for example, Botswana whose direct exports to the US pale into insignificance compared to its value add exports to South Africa’s vehicle manufacturing sector, which are then included in vehicle exports to the US,” he said.

In essence, Botswana’s direct exports to the US under Agoa are worth just $1 million. But Botswana also exports wiring to its neighbour, which is used in assembling vehicles in South Africa, that are then exported to the US, also under Agoa. The beneficiated value of this wiring is$106 million.

Parks said some African countries saw limited benefit from the trade pact.

“South Africa is dominant in Agoa but other members have very little trade under it which means there is a problem — are those countries aware of it and do they have financial and logistics support to take advantage of it? Those countries are very poor and we need to try and address this,” he said.

“We should be more ambitious to see how we can enhance and strengthen a new Agoa and see how we can improve on it because it has huge potential. It’s always a key issue that we should not just be an exporter of raw materials; there are some factories in the US that are looking for raw materials for processing there and that’s fine but how do we ramp up beneficiation of our products also to the EU, China and India to ensure the stability of our economy?

“We want to avoid it just being a trade agreement dominated by mineral exports of petroleum and diamonds. We want it to support the industrialisation of the continent and decent work.”

Cathy Feingold, the international director of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) — the largest federation of unions in the US — said it was important that unions had been invited to participate in the Agoa forum.

“In the past, we had a very limited role in civil society events but this year’s participation is integrated into the main ministerial,” she said.

Feingold noted that for many years, oil and gas had constituted the most exports under Agoa.  

“Only a handful of countries significantly harness the programme for non-energy products. South Africa accounts for a large percentage of non-energy exports like vehicles, chemicals and minerals. The programme has not been as impactful for some of the poorest countries in the region,” she said.

Feingold said labour rights were routinely violated in the US and throughout the Agoa region because many countries were neither protecting workers’ rights nor taking measures to confront corruption and promote democracy and civil liberties.

A new Agoa should state that countries must meet all core rights in the International Labour Organisation (ILO) conventions, she said.

“There also should be an explicit reference to elimination of the worst forms of child labour and freedom from discrimination, including the rights to equal remuneration and freedom from discrimination in employment and occupation enshrined in ILO Conventions 100 and 111, particularly essential given the importance of women workers in the garment sector,” she said.

It should be clarified that the right to acceptable conditions of work with respect to minimum wages included any legally or contractually required pay, such as overtime, bonus and holiday pay, as well as required contributions to pensions, health care and  disability insurance, Feingold added.

Given the high levels of informal work in the region, greater attention must be placed on violations in the informal economy, she said.

“We have used the Agoa labour conditions to raise concerns in countries like Mauritania  

and eSwatini … Right now, the only mechanism to respond to these problems is by completely revoking Agoa benefits,” she said.

“Unfortunately, a regime that sees benefits revoked due to autocratic governance is unlikely to absorb the harm to Agoa-driven export sectors, and is far more likely to pass the losses on to the workers who derive their livelihoods from these industries.”

To prevent this, Feingold argued that there should be intermediate steps such as investigations, hearings and partial loss of benefits, rather than total removal from Agoa. 

“The Generalised System of Preferences contains a detailed review process and other problem-solving strategies, including targeted reduction of benefits or removing specific tariff lines. There also could be provisions that allow for independent monitoring in return for better market access. This change would enhance the ability to address rights abuses without unduly impacting workers,” she said.

International Trade Union Confederation Africa deputy general secretary Joel Odigie said as long as African workers were able to be part of the global value chain through value addition, jobs would be created. Agoa had significantly increased vehicle exports from South Africa and this sector held “a very strategic position to contribute to economic growth and employment”, he said.

Odigie said the issues that labour wanted to raise at this week’s forum included skills and human capacity development, technological competencies to drive the continent’s industrialisation agenda as well as better linkages of Africa’s trade and investment processes, while finding compatibility between Agoa and the African Continental Free Trade Area (AfCFTA).

In addition, unions wanted to achieve and maintain policy spaces for African states in trade and investment as well as support for women and youth, while preserving workers’ rights.

Odigie said Agoa had in some areas presented obstacles to realising labour rights on the continent where exploitation is a problem.

“We have seen the encroachment of the right to freedom of association through the setting up of special export processing zones and the erection of labour laws that bar workers from organising in such special zones,” he said.

“The stifling of the policy spaces also meant that several African governments were not free to intervene within the economic spaces in workers’ interests, such as introducing and applying a national minimum wage. Most businesses use wages as a tool of competition.”

He said there had been heightened calls for laissez-faire practices against better labour market regulation.

“The mantra of ‘an enabling business environment’ is reduced to a business writ  approach: workers’ rights must be slaughtered to appease businesses,” he said.

It was critical that this summit also discussed how businesses that operated and generated profit in Africa paid their fair share of taxes.

“The continent is bleeding from the activities of businesses that evade, avoid and dodge taxes through profit-shifting [tax haven patronisation] and base-erosion activities [over-invoicing of production costs],” Odigie said.

“We need the revenue to boost and enhance the financing possibilities for social protection programmes deployment to tackle poverty and inequality. We cannot have the possibilities for trade when endemic poverty and misery pose threats to stability.”