Agoa fears grow as Cosatu warns South Africa will probably lose US trade benefits

The National Economic Development and Labour Council (Nedlac) has considered measures to cushion South African businesses and workers from the impact of losing preferential access to the US market, as labour federation Cosatu warns that the country would probably be excluded from the African Growth and Opportunity Act (Agoa).

The contingency measures were discussed at a formal meeting between Trade, Industry and Competition Minister Parks Tau and Nedlac members on October 29, as the government awaited the outcome of the US review of South Africa’s eligibility for Agoa benefits in 2027. The US is expected to announce its decision on Monday, November 2.

Cosatu parliamentary coordinator Matthew Parks said the discussions examined different scenarios facing South Africa and the interventions that could be considered if the US decided to remove the country from the programme.

“It’s likely we’re going to be removed. It wouldn’t be the first time,” he said.

Interventions under consideration

Among the options considered at the Nedlac meeting was targeted assistance for companies and workers likely to be affected, including tax relief and other forms of government support.

Parks said assistance should be directed at businesses most exposed to the loss of preferential access rather than spread broadly across the economy.

Jobs could be affected, particularly in the Western Cape and Northern Cape, with agriculture, especially citrus production, among the sectors facing exposure.

He warned that while the impact might not be significant across the economy as a whole, it could be devastating for individual companies and communities that depend on exports to the US.

The consequences could also extend beyond South Africa. Parks said neighbouring countries were linked to the country’s manufacturing industry through regional supply chains, particularly in the automotive sector, which relies on components from countries including Lesotho and Botswana.

Government is continuing its efforts to retain access to the programme. In September, Tau met US Trade Representative Ambassador Jamieson Greer in Washington DC to discuss bilateral trade relations and the future of Agoa.

In a briefing on Friday, October 30, Tau said the meeting followed two rounds of discussions between senior officials from both countries, during which substantial progress had been made in addressing outstanding issues.

Tau reiterated that South Africa remained open to practical arrangements to grow trade and investment between the two countries.

“These matters are best resolved through diplomatic and trade channels, and that is where we will continue to pursue them. If the United States’ concerns remain, South Africa will have 60 days to address them before any suspension, full or partial, could take effect,” Tau said.

Lack of trade capacity

However, Parks said South Africa could not rely on diplomatic engagement alone and criticised what he described as a serious lack of trade capacity within the country’s diplomatic missions.

“We don’t have a single trade attaché in the embassy across the world. That’s a crisis,” he said.

He argued that South African embassies should work more closely with the trade and agriculture departments to promote local products, identify export opportunities and help businesses access foreign markets.

Looking beyond the US

Parks said discussions also considered the need to diversify South Africa’s trading partners and strengthen commercial relationships across Asia and other regions. He identified Vietnam, Thailand, South Korea, the Philippines, Saudi Arabia, China and Japan as potential markets for expanding trade.

However, he cautioned that developing new trading relationships would take time and would not immediately replace access to the US market.

He also argued that South Africa’s engagement with Washington should extend beyond the White House to include Congress, businesses, universities, think tanks and civil society.

Review of domestic policies

On whether South Africa should change domestic policies to satisfy US President Donald Trump, Parks said the government could review policies such as black economic empowerment to assess whether they were achieving their intended objectives.

He suggested that equity equivalent programmes and worker ownership could be considered as alternatives for investors facing difficulties meeting certain shareholding requirements.

However, he insisted that transformation should not be sacrificed to secure trade benefits.

“You can’t allow another country to dictate to you. No other country would agree to that,” he said.

South Africa last faced the threat of losing Agoa benefits in 2015, under former US president Barack Obama, following a dispute over market access for American poultry, pork and beef. In November that year, Obama notified Congress of his intention to suspend duty-free treatment for South African agricultural products unless outstanding trade issues were resolved within 60 days.

The dispute was settled through negotiations led by then trade and industry minister Rob Davies, with South Africa agreeing to concessions on US meat imports. By March 2016, the outstanding requirements had been met, and the US lifted the threat of suspension, allowing South Africa to retain its Agoa benefits.