AGOA gets a lifeline as South Africa’s trade future still hangs in the balance

South Africa’s trade relationship with the United States has been given a temporary lifeline, but economists warn that the bigger battle may only be beginning.

Economist, Dawie Roodt, has urged the South African government to tread carefully on the international stage and maintain good relations with as many countries as possible.

His comments come after US President Donald Trump signed legislation extending the African Growth and Opportunity Act (AGOA) for a further two years.

The preferential trade programme allows eligible sub-Saharan African countries to export certain goods to the US under favourable, duty-free terms.

For South Africa, AGOA has been particularly important to sectors such as automotive manufacturing and agriculture.

The country has a large automotive manufacturing and component-supply chain, with export demand supporting jobs across vehicle plants, component manufacturers, logistics companies and other suppliers.

In the agricultural sector, South Africa’s exports to the US reached about R8.9 billion in 2023, with government saying there is potential for substantially greater exports if market-access constraints are addressed.

The extension was passed by the US Congress without major policy changes, providing much-needed certainty for exporters after months of uncertainty over the programme’s future.

At various points, South Africa’s continued participation appeared to be at risk, with some US lawmakers calling for Pretoria to be removed from AGOA amid growing tensions between the two governments.

Roodt says while the extension is welcome, uncertainty could return when the current extension expires in 2028.

Meanwhile, trade union Solidariteit has welcomed the extension, describing it as vital economic security for industries across sub-Saharan Africa.

However, the union warns that South Africa’s long-term eligibility remains a major concern.

It echoes Roodt’s sentiments that losing AGOA benefits could severely affect key industries, particularly the automotive and agricultural sectors.

Solidariteit has been campaigning for South Africa to remain eligible, including through engagements with officials in the White House and US Congress.

The union says it has also presented economic impact studies highlighting the benefits of trade between South Africa and the US.

Solidariteit’s Head of Public Liaison, Jaco Kleynhans, says the organisation intends to intensify its efforts as Washington prepares to determine which countries will qualify for AGOA in 2027.

“We will intensify these efforts in the coming days and weeks as the White House finalises the list of eligible countries for 2027,” Kleynhans said.

The union says it is also working to challenge what it calls misconceptions about South Africa’s investment climate and to highlight the country’s commitment to international trade standards.

“We believe constructive engagement, rather than exclusion, is the only way to protect jobs and promote economic growth,” Kleynhans added.

For now, South African exporters have been given two more years of breathing room.

But with diplomatic tensions still simmering between Pretoria and Washington, the question remains whether AGOA’s extension marks the beginning of long-term stability, or simply a temporary pause before another trade showdown.

Written by: Odirile Rabalao