US agrees to revival of bilateral trade agreement with SA

SA and the US had agreed on reviving the bilateral trade and investment framework agreement (Tifa), governing trade relations between the two countries, trade, industry & competition minister Parks Tau said on Tuesday.

This would be in addition to the African Growth and Opportunity Act (Agoa), which Tau is confident will continue to include SA. The act gives designated products from Sub-Saharan African countries preferential access to US markets.

Tau and deputy minister Andrew Whitfield briefed the media on their recent trip to Washington to participate in the Agoa Forum and engage with US legislators on the continued inclusion of SA in Agoa.

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The US and SA signed a Tifa in 2012, which amended the agreement originally signed in 1999. Tifas provide strategic frameworks and principles for dialogue on trade and investment issues between the US and the other parties.

Independent economist and associate of the Trade Law Centre Eckart Naumann said a bilateral free trade agreement with the US would provide SA with more certainty than Agoa, which comes up for regular review, but would involve SA having to reciprocate market opening and other concessions in the context of a comprehensive free trade deal, which is not the case with the nonreciprocal preferences it enjoys under Agoa.

Also, a bilateral agreement would be difficult to negotiate in the context of the Southern African Customs Union (Sacu), the members of which are at different stages of industrialisation. SA could negotiate with the US only as a member of Sacu, said Naumann. Sacu countries could not go it alone when it came to trade negotiations and market access concessions. But negotiating as a bloc with common positions which would be difficult, said Naumann.

Traditionally, Tifas are more statements of general principles rather than detailed trade agreements, though they do provide a measure of investor protection. Another aspect is SA’s emphasis on regional and continental integration rather than bilateral agreements.

Tau said SA was keen to align its participation in Agoa with the African Continental Free Trade Area (AfCFTA). This would require a relook at eligibility criteria the US imposes on Agoa participants as well as rules of origin, to take into account trade between SA and African countries to achieve value chain integration. “Proposals presented by our delegation included the extension of Agoa for stability, improved rules of origin and adjustments to the eligibility review process to preserve regional value chains and enhance Africa’s manufacturing capabilities.

“The importance of maintaining these value chains was emphasised, with calls for Agoa enhancements to support the AfCFTA integration,” said Tau.

“Agoa and AfCFTA should be viewed as complementary forces crucial for Africa’s economic integration rather than as separate entities. Agoa has significantly expanded Africa’s access to US markets, while AfCFTA aims to create a unified continental market by eliminating tariffs and fostering economic co-operation ... To fully leverage both frameworks, Agoa’s provisions should be enhanced to support AfCFTA’s goals.

“By aligning Agoa with AfCFTA, Africa can create a more cohesive economic structure that boosts intra-African trade, enhances manufacturing capabilities and integrates regional economies into the global market, driving sustainable growth across the continent.”

Tau said the SA delegation received strong bipartisan backing from members of Congress and the US administration for the reauthorisation of Agoa. He was confident that Agoa would continue and that SA would continue to be part of it. He said SA’s nonaligned foreign policy — which prompted a bill already passed by the House of Representatives calling for a review of SA’s participation in Agoa because of its stance on Russia and Israel — was explained.

Whitfield attributed some of the positive sentiment to the speed at which the government of national unity was formed but stressed that there was still a lot of hard work and more negotiations to follow.

Tau said that the US was in election mode, which made the situation quite fluid in terms of decision-making. No firm commitments were given on the timeline for the reauthorisation of Agoa. The ideal situation would be for that to happen before the US election in November, but it would require approval by both the House of Representatives and the Senate.

Aspen Pharmacare group senior executive Stavros Nicolaou, a member of the business delegation, said “signals were positive” that SA would remain an Agoa beneficiary. Under consideration for a renewed and modernised Agoa agreement is exporting of manufactured products from African countries. For healthcare, the Biden administration has shown willingness for the US President’s Emergency Plan for Aids Relief (Pepfar) to procure more medication from African producers, said Nicolaou.

“The Biden administration in the form of Pepfar are looking to buy the equivalent of 2-million annual patient treatments of ARVs [antiretrovirals] from African companies,” he said.

ensorl@businesslive.co.za