Ashraf Patel
The current trade threat that South Africa faces in 2023 regarding its African Growth Opportunity Act (AGOA) non- renewal is not new but part of the ‘’ebb and flow’ of a mix of issues - ranging from geopolitics to the power of industry lobby groups in the US.
There is no doubt that the post-Covid pandemic and current Ukraine- Russia conflict has put multiple pressures on a world order and geopolitical fractures, in particular. This has come to signify severe punishments- and threats for nations that have chosen a non-aligned position, such as South Africa.
The case of Walmart’s takeover of Massmart a few years ago is instructive. Today, despite the investment, many branches of Walmart-Massmart faces closure (that is, disinvestment), with huge job losses in store and unions Saccawu fighting tooth and nail to retain jobs and benefits.
Yet, almost 20 years ago, the US and South Africa signed a Trade and Investment Framework Agreement (TIFA) in 2012. In addition, the US and the Southern Africa Customs Union (SACU), which includes South Africa, signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) in 2008. The TIDCA establishes a forum for consultative discussions, cooperative work, and possible agreements on a wide range of trade issues, with a special focus on customs and trade facilitation, technical barriers to trade, sanitary and phytosanitary (SPS) measures, and trade and investment promotion.
So let us unpack core areas of US- SA trade in context.
Covid nationalism and Western Pharmaceutical behaviour
During the height of the Covid pandemic, vaccine nationalism-racism by the North has shown up the real nature of trade and investment and that it is the interest of Western nations and their citizens which trumps over everyone else. Not only was Africa denied vaccine access and doses, South Africa’s health system and many in the developing world procured the bulk of its vaccines from Western and US pharma corporations, which made billions of profits on vaccines during the pandemic. At the height of the pandemic, South Africa, India, and others lobbied at the WTO for IP access to vaccines, only to be denied this right.
South Africa’s Copyright Bill and pressure from IP and the Entertainment industry lobby
In 2019, at the height of the contested Copyright Bill process, one heavily lobbied by US tech giants Google, Disney and others was the focus of another punitive sanction threat. This time, the US Copyright Entertainment, lobby MPAA, and others pushed the US government to strong-arm SA legislators to push the bill in a direction that favoured their big tech companies' business model. Here the AGOA threat was invoked to push the SA Copyright Bill into a particular line palatable to this powerful lobby, to the detriment of our creative industry.
The organisation’s Generalised System of Preferences (GSP) enabling clause requires that programme criteria be “generalised”, “non-reciprocal”, and based on the development interests of the grantee, not the grantor. The principles of GSP have not been followed by the US.
South Africa’s poultry industry dumping and job losses
South Africa’s poultry industry has been eroded due to the tariff-free access. Poultry is dumped by nations such as the US, Brazil, Belgium and other EU nations to the detriment of the local industry and jobs. According to SA Poultry Association CEO Izaak Breitenbach, “If the Agoa agreement is cancelled or South Africa is excluded, it may have a positive effect on the local poultry industry. South African farmers won’t have to compete with the dumped product, and imports will decline.’’
Hence the latest AGOA withdrawal spat should be seen in context and it is used by various trade industry bodies as well as the US government at certain moments to arm-twist nations in taking particular decisions.
As the case above has shown that in this unequal trade relationship with the US, South Africa hardly gains, and in fact, the real value extraction in the trade and service value chains – from both agriculture to IP actually already favours the US side.
It is all of these specific dimensions of unfair US trade and investment mode that South Africa faces in its unequal trade partnership with the US. In any event, powerful industry lobbies have long bullied SA into taking specific policy directions. Hence, the US trade representative's further threat of AGOA non-access to the US market is a storm in a teacup and not new. In fact, as argued by Poultry SA, it may in fact be better not participate in the AGOA process as the supposed gains are marginal and net negative, and gaining access in one domain (that is, duty free tariffs), means that SA has to make concessions in other domains (IP and Copyright).
Hence South Africa – learning from the Covid vaccine years and poultry dumping and even the citrus case blockage into the EU market is now taking its own national interest position.
According to the Department of Trade and Industry presentation to Parliament in May, SA’s trade policy aims to support industrial development, sustainable economic growth, decent work and economic inclusion and seeks to improve its trade performance by increasing exports of higher value-added manufactured goods and to strengthen national industrial capabilities, promote trade and resilience, taking an Afrocentric perspective.
In Africa, SA has worked to advance continental economic integration and industrialisation, and our non-Africa engagements must support this; it must correct the manufacturing deficit in our trade profile. At a global multilateral level, it commits South Africa to adopt a developmental approach by seeking to address existing imbalances in the rules such as loss and damages fund at COP27and – secure policy space to pursue industrialisation and ensure new challenges (pandemic and environment) are addressed fairly and equitably.
In any event, and in the final analysis, the global geo-economic and political power is shifting East and South, with the collective GDP of BRICS nations now exceeding those of G7. South Africa’s number one trade partner is, in fact, China, both in terms of exports (11%) and imports (23%), as it seeks to diversify into the Global South.
As BRICS and other regions offer better trade, investment and development finance models, the AGOA trade issue and access means that SA now has more options in a world where the Global South and Africa and Latin America and others are becoming more prominent on the international stage, and can get better terms in intra-trade deals in goods, services, and even more equitable cultural relations. The world is indeed multi-polar, and varying risks such as trade wars and punitive sanctions can be mitigated. South Africa should act in its interests as it navigates these global geopolitical headwinds.
Ashraf Patel is a Senior Research Associate at the Institute of Global Dialogue.
The views expressed do not necessarily the views of Independent Media or IOL.