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Confidential document reveals SA fears that AGOA trade pact status is under threat

Confidential document reveals SA fears that AGOA trade pact status is under threat

Daily Maverick | 25th July 2023

By Queenin Masuabi

In a confidential discussion note seen by Daily Maverick, South Africa admits its status as a beneficiary of the African Growth and Opportunity Act is under threat. Meanwhile, Cosatu has made a submission that It will be a ’devastating blow to millions of workers and those in the region were South Africa to be graduated out’ of Agoa.

he document about South Africa’s Agoa status informed deliberations by high-level envoys sent to the US by President Cyril Ramaphosa to explain South Africa’s stance on the Russian invasion of Ukraine and to lobby to retain South Africa as part of Agoa.

“The debate around the renewal of Agoa has provided Congress with an opportunity and a powerful tool to cajole and pressure South Africa to speak out against Russia more forcefully and publicly,” the document, dated March 23, reads.

“In addition, the new power dynamics in Congress, the current geopolitical context and big power competition for strategic influence, including in Africa, have afforded the Republicans a platform to use their narrow majority in the House of Representatives to put the Democrats under pressure to take stronger [measures],” it reads.

On Monday this week, the United States Trade Representative, which is responsible for developing and coordinating US international trade, began its annual review of the eligibility of sub-Saharan African countries to receive the benefits of Agoa.

Western Cape premier Alan Winde also presented his submission on the matter, while the South African government, through the Department of Trade and Industry, has made a separate submission on why the country should continue being part of the forum.

South Africa and Russia enjoy historic relations dating back to the days of the former USSR, which provided military and other forms of support for the fight against apartheid (noting though that both Russia and Ukraine formed part of the USSR). South Africa, Russia and China, with Brazil and India, are member states of the BRICS bloc.

South Africa revealed last week that Russian President Vladimir Putin would not be attending the BRICS Summit in Johannesburg in August. Russian Foreign Minister Sergey Lavrov will attend instead while Putin will take part virtually.

This was a move to avoid breaking South Africa’s own law as the International Criminal Court (ICC) had issued a warrant for Putin’s arrest in March, indicting him for the war crime of abducting Ukrainian children and deporting them to Russia.

As an ICC member, South Africa would have been obliged to arrest Putin had he set foot in the country. Pretoria’s attempt to persuade Putin not to visit was also seen as necessary to save South Africa’s international reputation and maintain its valuable Agoa trade privileges with the US.

Geopolitics at play

The confidential concept note mentions that SA’s woes started when Lavrov travelled here in January to engage in bilateral talks with International Relations Minister Naledi Pandor.

When a senior US bipartisan Congressional Delegation (Codel), led by Republican Senator Lindsey Graham visited South Africa in February, they used the opportunity to alert South Africa about their discomfort over the sanctioned Russian vessel Lady R docking at the Simon’s Town Naval Base in December 2022.

“Prior to their visit, the US Ambassador to South Africa indicated to the Department that the members of the Codel are unhappy about South Africa hosting the Russian Foreign Minister in January 2023 and are seeking to punish South Africa,” reads the document.

“The visit to South Africa, in January 2023, by Russian Foreign Minister Sergey Lavrov, would also have raised concerns in the US. In addition, South Africa’s voting patterns in the United Nations General Assembly on various resolutions relating to the Russia-Ukraine conflict have drawn the attention of Congress, which is questioning South Africa’s non-aligned stance on the conflict.”

The Codel delegation also cast aspersions on the explanation provided by South Africa relating to the presence of Lady R, indicating that they were in possession of different information, which they would not divulge.

In May 2023, the US ambassador to South Africa, Reuben Brigety, opened a can of worms when he publicly announced that the US was “confident” that South Africa had loaded weapons and ammunition on to the Lady R.

Brigety told journalists in Pretoria at the time that the loading of arms and ammunition for Russia was “fundamentally unacceptable” and contradicted South Africa’s professed non-aligned status in Russia’s war on Ukraine.

While South Africa has vehemently denied these allegations, President Cyril Ramaphosa decided to establish a panel to investigate them.

“South Africa has taken a non-aligned stance on the Russia-Ukraine conflict and has consistently advocated for the use of diplomacy, negotiations, and meditation in bringing the conflict to an end. South Africa has also resisted pressure from the US and the West to align itself behind various UN Resolutions seeking to condemn Russia and to publicly speak out against the ‘war of aggression’ against Ukraine,” South Africa said in its submission.

“At the same time, South Africa has on numerous platforms, including during high-level bilateral engagements with the US, expressed its abhorrence of war and all forms of conflict ; indicated that it is not indifferent to what is going on in Ukraine, and is deeply concerned about the continuing conflict, the loss of lives and the deteriorating humanitarian situation.”

South Africa states its case for Agoa
Not only will South Africa enter the debate around its participation in Agoa on the back foot because of its ties with Russia and China, but some US businesses are also opposed to a renewal of Agoa as they demand reciprocal access to African markets, particularly South Africa’s relatively sophisticated market.

A number of US companies also believe they are being disadvantaged in the markets of South Africa and some of its neighbours compared with European exporters, especially after six southern African countries signed the reciprocal EU-SADC Economic Partnership Agreement in 2016.

A group of Congress members are pushing for the US government to consider certain changes to Agoa to move it towards a traditional reciprocal free trade deal or even to end the programme.

The US Congress sets out the requirements for Agoa eligibility while the US president has the power to add or remove countries from Agoa. The US Trade Representative is responsible for administrating that process.

South Africa is among the countries that have endorsed the Common African Position, which calls for the seamless and timely renewal of Agoa.

The envoys believe that South Africa’s exclusion from Agoa would constitute a significant setback for the economic recovery efforts currently underway after the Covid-19 pandemic.

“Agoa has become the bedrock of the bilateral economic relationship, allowing duty and tariff-free access to the US market for South African value-added, as well as agri-products. The agricultural trade relationship between the US and South Africa is vibrant and growing, but mostly in favour of South Africa’s exports,” according to the document compiled by the envoys.

“South Africa’s agricultural exports to the US benefit from tariff preferences under Agoa. After many years of steady growth, South Africa’s agricultural exports to the US reached a historical high-level US$550 million in 2021, an increase of 17 percent from the previous year. South Africa’s citrus exports, representing around 20 percent of total agricultural exports to the US, also reached record levels in 2021,” it reads.

“The US is an important trade, investment, development assistance, tourism, and technology partner for South Africa. For several years, the US has ranked in the top three most important trade and investment partners, alongside China and Germany,” the document says.

Cosatu submission

The ANC’s alliance partner Cosatu made its own submission to the US Trade Representative, dated 7 July 2023, where it raised concerns that the conflict between Ukraine and Russia may spill over to South Africa.

The trade union federation mentioned the serious nature of allegations that arms and ammunition may have been sold to Russia by South Africa, which would be in violation of South African law.

“Some in the US have raised concerns that South Africa is siding with Russia and thus should be exited from Agoa and not host the Agoa Summit in November. We believe that the South African government and some individuals in South Africa have not handled all matters well and at times badly.

“Cosatu believes and supports the notion that South Africa is non-aligned. South Africa is friends and needs to be friends to all nations as a developing nation. This includes being friends with the US, European Union, China, India etc,” it reads.

The trade union federation believes that South Africa should continue to enjoy Agoa benefits and said there are opportunities for the current basket of goods covered by Agoa to be expanded to further nurture Africa’s economic development.

“Cosatu, like our counterparts in South Africa’s business community and government, are united in support of Agoa, South Africa’s hosting the Agoa Summit in November, South Africa remaining a member of Agoa, and the expansion of goods covered by Agoa. We believe it has been beneficial to workers in South Africa, the region, continent and the US.

“It will be a devastating blow to millions of South African workers and those in the region were South Africa to be graduated out. Our relations with the US are important, are long-standing, healthy and robust. We need to enhance and strengthen them. They are mutually beneficial,” Cosatu said.

 source: Daily Maverick