Opinion | Agoa extension offers relief but risks remain

In an unexpected twist amid strained diplomatic relations, U.S. President Donald Trump has extended the African Growth and Opportunity Act (Agoa) for one year. It is a decision that carries significant implications for South Africa’s economy.

The Agoa extension arrives at a precarious time for South Africa, which has faced scrutiny from U.S. lawmakers. Nevertheless, South African Trade Minister Parks Tau expressed relief over the extension, recognising its potential to bolster business stability at a time when the economy is in dire need of growth.

For South African exporters, the Agoa agreement has traditionally facilitated duty-free access to the U.S. market, thereby supporting sectors such as agriculture and manufacturing. However, the context presents a paradox: While the extension technically exists, it feels almost irrelevant given the existing tariffs that undermine its benefits.

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As a result, businesses in these sectors face the grim prospect of losing market share in the U.S. Due to the high tariffs, firms may face closures and significant job losses, exacerbating an already challenging employment landscape. The agricultural sector, employing around 920000 individuals, represents a vital part of South Africa’s economic fabric.

However, recent government policies have introduced additional layers of complexity. New Broad-Based Black Economic Empowerment (B-BBEE) requirements stipulate that agricultural exporters must meet specific racial criteria to access export permits. Critics argue that these measures unfairly disadvantage white-owned farms and could stifle the very growth that South Africa requires urgently.

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