Thought Leadership

BLSA CEO Letter – 3 July

03/07/2023 | By Busiswe Mavuso

Next week the process begins in the United States Congress to review eligibility of countries for benefits under the African Growth and Opportunity Act. This legislation provides duty free access for certain African countries, including South Africa, to the enormous US market. The legislation has been key to building our exports ranging from vehicles to citrus fruit. Billions of rands of economic activity and tens of thousands of jobs in South Africa depend on those exports.

The US legislation was originally drawn up under the Clinton presidency and has been renewed once since then. It is widely expected to be renewed again for another 10 years when it expires in 2025, but the key question is whether Congress will use the renewal to redraft it such that South Africa is no longer eligible. The eligibility debate is one matter and the renewal debate is another but in both, South Africa stands to lose.

Our country’s ambiguous stance on Russia has upset many in Washington.  A letter written earlier this month by senior members on both sides of the aisle, from the House and the Senate, called on the White House to remove the hosting of this year’s AGOA Summit from South Africa. It had been due in August. The letter also remarked that the docking of the Lady R in Simon’s Town naval base and joint military drills with Russia “call into question [South Africa’s] eligibility for trade benefits under AGOA due to the statutory requirement that beneficiary countries ‘not engage in activities that undermine US national security or foreign policy interests’.”

Submissions can be made next week to Congress regarding eligibility and Business Unity South Africa is preparing a submission. However, the key factor that has undermined American goodwill is the various confusing actions and statements from our government. If we care about AGOA eligibility and the tens of thousands of jobs it creates, then the time has come to clarify how we as a country do not threaten US security interests. We must come out with the facts about the Lady R, what it was doing docking in secret in South Africa and what was loaded on to it before departure. We must explain the landing of Russian aircraft at Waterkloof. We must set out a clear policy on the supply of weapons to Russia and why the US should be able to trust that our stance of neutrality means at minimum that we will not in any way fan the flames of war in Europe.

This clarity needs to be backed up by a capable diplomatic effort by our foreign service in the United States. When AGOA was last renewed in 2015, African nations worked together to convince American politicians that it was wise to renew AGOA. South Africa played an important part in that effort. Our Department of International Relations and Cooperation now needs to put in place an equivalent strategy, drawing on our most experienced trade negotiators, wherever they may be. South African business stands ready and willing to support that effort with the data and research that may help.

Eligibility will be determined before the end of the year and the White House will announce which countries will continue to benefit under AGOA from next January. We have a narrow window of opportunity to make the case that it is in US interests to continue to give South Africa access to US markets.

Business will do what it can to support that case, but ultimately it is our elected representatives and diplomats that must advance the South African cause. If we don’t get it right in the next few months, it will result in another significant blow to the economy.

 

BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.