JOHANNESBURG—Powerful U.S. lawmakers want South Africa, the continent’s most industrialized country and second-largest economy, excluded from Washington’s biggest trade deal with Africa for “engaging in activities that undermine U.S. national security or foreign policy interests.”
South Africa is led by the African National Congress (ANC), which counts China, Iran, and Russia among its “greatest friends.”
China and the former Soviet Union supported the ANC’s struggle against apartheid with weapons, money, and military training.
Recently, South Africa hosted the annual forum of the African Growth and Opportunity Act (AGOA) in Johannesburg.
The law, signed by President Bill Clinton in 2000, means that 33 eligible countries in sub-Saharan Africa can export more than 1,800 products—from precious metals to vehicles to flowers, fruit, and vegetables—to the United States without paying taxes.
South Africa was by far the biggest beneficiary, raking in almost $3 billion—revenue it wouldn’t have had without access to AGOA advantages.
The money came mostly from tariff-free exports to the United States of metals, jewelry, and vehicles.
Since 1994, the ANC government has been mired in allegations of grand corruption, with scandal after scandal implicating high-ranking officials in plundering the public purse.
Citizens and opposition parties accuse it of mismanaging the country, with basic services declining rapidly and a rate of unemployment (35 percent) that’s the highest in the world.
To qualify for AGOA, countries must meet conditions set by the U.S. government.
These include support for democracy, protection of human rights, removal of barriers to U.S. trade and investment, and not engaging in activities that undermine U.S. national security or foreign policy interests.
Shortly before the forum began on Nov. 9, President Joe Biden terminated the status of four countries for failing to meet the requirements of eligibility: Central African Republic, where Russian mercenary group Wagner has a strong presence and the regime is accused of gross human rights violations; Gabon and Niger, where there were coups this year; and Uganda, which this year implemented anti-LBGT laws, including the death penalty for homosexual activities.
Now, influential members of the Democratic and Republican parties are urging President Biden to add South Africa to that list.
Sen. Chris Coons (D-Del.) has drafted legislation to renew AGOA—which is set to expire on Sept. 30, 2025—for 16 years. His proposal also requires an immediate “out-of-cycle” review of South Africa’s eligibility for AGOA.
“Out-of-cycle” reviews are done when “special circumstances” arise in between the usual annual reviews of all AGOA beneficiaries.
When Congress votes on AGOA in 2025, South Africa could be removed from the program, with local economists saying this would result in the loss of hundreds of thousands of jobs and the collapse of many businesses, especially in the agricultural and automotive sectors.
There had been calls before the summit from several influential politicians on Capitol Hill, including Mr. Coons and Sen. Jim Risch (R-Idaho), the leading Republican on the Senate Foreign Relations Committee, that South Africa be stopped from hosting the event, based on its close ties with Moscow and alleged arms exports to Russia.
But officials from the Biden administration dismissed the calls, repeatedly saying they had “good relations” with South Africa and didn’t want to jeopardize them.
Mr. Risch then wrote to U.S. Secretary of State Antony Blinken, criticizing the administration for allowing President Cyril Ramaphosa’s government to host the summit and for keeping South Africa in AGOA.
He called for the country to be removed, both for its “close relationship” with Moscow and its relations with the Palestinian militant group Hamas and its “chief sponsor” Iran.
Mr. Risch referred to a call made by South Africa’s minister of international relations, Naledi Pandor, to Hamas leader Ismail Haniyeh shortly after Hamas attacked Israel on Oct. 7, as well as her recent visit to Iran to meet her counterpart and President Ebrahim Raisi.
Ms. Pandor told The Epoch Times that her discussions with both leaders focused on getting humanitarian aid into Gaza and shouldn’t be seen as “any kind of endorsement of atrocities.”
However, Mr. Risch pledged that Congress would take “course-corrective action” because of the Biden administration’s “failure” to act against South Africa.
The country’s minister of trade and industry, Ebrahim Patel, told The Epoch Times that he had “every confidence” that South Africa won’t be excluded from AGOA.
“I’ve heard that some people want us excluded because some aspects of our foreign policy are a direct threat to U.S. interests. That is a false premise,” he said.
“From the discussions we’ve had with U.S. officials, they understand that South Africa has an independent foreign policy and that sometimes we’ll have differences. We want to do business with everyone. We cannot afford not to.
“I feel assured that AGOA will be renewed in 2025 and that South Africa will continue to benefit from it for a long time to come.”
The potential loss of AGOA status would be “disastrous” for the country’s automotive sector, Renai Moothilal, CEO of South Africa’s National Association of Automotive Component and Allied Manufacturers, told The Epoch Times. He said it could threaten the ability of South African manufacturers to compete globally.
“The automotive industry has benefited greatly from preferential access to the giant U.S. market. In 2022 we exported vehicles and components worth more than R24 billion (US$1.5 billion) to the United States,” Mr. Moothilal said.
He described AGOA as “one of the foundational blocks of South Africa’s automotive industry in the post-democratic era,” with the sector regarded as a “beacon of industrial hope” in the country’s otherwise stagnant economy.
“Thanks to its strong multiplier effect, manufacturing has an outsized effect on employment and economic activity. That is why anything that could potentially lead to a decline in our manufacturing activity is a cause for concern,” Mr. Moothilal said.
Mr. Moothilal said because of AGOA, the United States is now South Africa’s second-largest export destination, after Europe.
“The U.S. market still represents a significant growth opportunity because of its size. While our products are world-class, it’s true that AGOA gives the country an edge in the highly competitive global automotive market,” he said.
“Losing preferential market access through AGOA into the large U.S. market would also have a number of indirect effects. The reputational credibility that comes from being a trusted supplier to U.S. firms carries weight in other markets, such as the European Union.
“The loss of the U.S. market would necessarily mean that economies of scale would be reduced, potentially affecting the sector’s ability to compete in the EU and other markets.”
Loss of AGOA status, he said, would cost thousands of jobs in the automotive sector, some component factories would close down and it could spark an exodus of U.S. companies from South Africa.
“We host several U.S. firms in automotive manufacturing at both vehicle and component level,“ Mr. Moothilal said. ”U.S.-headquartered multinational manufacturers with plants here may exit the country if there are volume losses linked to our exclusion from AGOA or other forms of political pressure are brought to bear.”
South Africa wouldn’t be able to replace a significant market like the United States, he said.
“Over time, other global automotive producers will fill the gap we would leave. There are many compelling reasons for this country to take the threat of losing its preferential access to the U.S. market seriously,” Mr. Moothilal said.
“We can ill afford to risk the health of our automotive sector, a vital engine of job creation and economic growth.”
Ahead of the summit, President Biden said he strongly supported AGOA’s reauthorization and urged Congress to act.
But the reauthorization is far from a foregone conclusion, and South Africa’s status undoubtedly “hangs in the balance,” according to economist Dawie Roodt.
“The South African government is going out of its way it seems to push the U.S. Congress to take some sort of punitive action against it because of its close cooperation with pariah states and pariah organizations,” he said.
“AGOA expulsion would be a great way to punish South Africa but whether the United States wants to gamble on isolating one of Africa’s most significant powers ... that’s the issue here.”
