U.S. ejects South Africa and Rwanda from trade benefits

The Trump administration has decided to terminate the African Growth and Opportunity Act (AGOA) eligibility for South Africa and Rwanda, signaling the administration's continued use of trade policies as a tool to pressure countries with which it disagrees.

Rwanda and South Africa have drawn the administration's ire for resisting certain policies. Rwanda has refused to withdraw its troops from mining areas in eastern Congo, while South Africa has maintained its land expropriation and affirmative action programs.

U.S. Trade Representative Jamieson Greer announced the decision, stating that President Trump had notified Congress that both countries would be terminated from AGOA on January 1. The program has supported about US$10-billion in annual trade and sustained hundreds of thousands of jobs across 32 African nations.

Greer cited concerns over practices inconsistent with AGOA’s eligibility criteria, including barriers to U.S. trade and investment, corruption, and threats to U.S. national security and foreign policy interests.

U.S. Ambassador to South Africa, Brent Bozell, noted the decision was based on grievances Trump has repeatedly voiced since last year, including the false allegation that South Africa is arbitrarily seizing the farmland of white farmers and perpetrating 'genocide' against them.

South Africa responded by stating it had offered fresh concessions to U.S. officials during their latest trade negotiations, but the Trump administration was now raising 'new issues' that were never tabled in earlier talks. The country pledged to support affected businesses.

Analysts say the loss of AGOA status will add only 3.4 per cent to the cost of goods that had entered the U.S. under the trade preference deal.

South Africa, the biggest beneficiary of AGOA, exported US$1.7-billion in goods to the United States under the program last year. While job losses are expected, estimates range from 3,000 to as many as 125,000, with the agricultural and automotive sectors most affected.

The cancellation of the AGOA benefits 'may not mean a catastrophe' because it might only slightly reduce the competitiveness of South African products in the U.S. market, according to some economists.