Katherine Tai, US trade representative, Cyril Ramaphosa, and Ebrahim Patel, arrive at the African Growth and Opportunity Act (AGOA) forum in Johannesburg on Friday, Nov. 3, 2023.
Photo by Leon Sadiki/Bloomberg via Getty Images
The United States has not moved on from talks of reciprocal access to duty free in Africa for its exports, deputy assistant secretary at the US bureau of African affairs Joy Basu said.
Basu was speaking to the Mail & Guardian on the sidelines of the African Growth and Opportunity Act (AGOA) forum on Friday.
The M&G previously reported that there were rising calls in US-based businesses to get reciprocal duty-free access to South Africa.
“I think that reciprocal access will continue to be a conversation. We are very proud of Agoa, it is an incredibly generous programme, it is unilateral and we want to find ways to increase two-way trade.
“Maybe through Agoa, maybe through other trade programmes. I think conversations will continue. We need to think about the right channels for all of them,” she said.
African Union commissioner for trade and industry Albert Muchanga commented on the call for reciprocal access by the US government during the Agoa forum, saying that it would not be possible.
He said his engagements with the US congress and administration had revealed some misunderstanding on how to exploit the African Continental Free Trade Area, with a number of them thinking that “they can produce goods in the United States of America and export them duty free across the African Continental Free Trade Area”.
“I told them very very frankly that that is not possible,” he said.
“If they try to export goods from the US into Africa, they are going to meet national tariffs and that is going to make the cost of the exporting uncompetitive.
“This is the message that I would like us to convey to the US administration and the US congress so that, right from the beginning, they understand that they are free to take advantage of the African Continental Free Trade Area market … but it will not be possible for them to export duty free.”
Trade, Industry and Competition Minister Ebrahim Patel had previously told the M&G that when members of the US congress raised the issue, his response would be that the relationship already provides several benefits to both sub-Saharan African countries and the US itself.
“We point out that African countries are significant suppliers of raw materials to the US. That is a benefit that the US obtained. The US companies find greater access to investment opportunities in the continent as a result of Agoa, which provides a significant flow of dividends from sub-Saharan countries to the US. American suppliers are often integrated in these value chains,” Patel said.
Patel said reciprocity did not have to be measured on a “like-for-like basis; they can come in the equivalence of the package”.
“Opening African markets prematurely will act as a chilling factor in African industrialisation,” Patel warned. “To the extent that the US sees strategic value in an Africa that is prosperous, an Africa that is able to avoid being a base for terrorism and civil unrest, it ought to back and support our industrialisation effort. That industrialisation effort in turn requires African countries to have a degree of policy space to enable external trade tariffs to support infant industry. That is essentially how we try to frame the story,” Patel said.
South Africa is in the third term of its Agoa trade agreement with the US and is awaiting approval on its application for an early extension. The pact provides duty-free product coverage for 1 835 products across sub-Saharan Africa. In 2021, South Africa’s total goods exports to the US amounted to $15.4 billion. Agoa benefits include job creation in agriculture and manufacturing, export earnings and economic development.
Basu said that the forum would also look at opportunities to increase access for small to medium enterprises and women-run enterprises.
She said that while Agoa had proven to be a generous programme for sub-Saharan Africa, a lot of businesses were not aware of its advantages.
“We need to make sure that there is increased awareness particularly for small businesses and particularly for women-owned enterprises.”
Basu said small business centres focused on women were part of their strategic plan for the continent.
“I would also encourage the South African government and other governments to think about their Agoa utilisation strategies and how they bring small businesses into that. That was the intent that was under utilised.”
She added that to bring more awareness to the benefit of Agoa for small businesses, the US is also looking at translating its information into local languages and look to have more Agoa business centres in affected countries to have stations in localised communities.
“That is a huge opportunity and it is an intent of ours. I welcome partnering with labour unions and civil society in African governments in how we can have small and medium enterprises particularly women owned enterprises benefit more from Agoa.”