The recent announcement by President Donald Trump’s administration that it intends to terminate South Africa’s benefits under the African Growth and Opportunity Act (Agoa), effective January 1, signals Washington’s trade war with Pretoria.
In a rejoinder, South Africa’s Minister of Trade, Parks Tau, said the impact of Trump’s decision, though regrettable, would have a relatively small impact on South Africa’s overall GDP. Historically, the country has been the largest beneficiary of Agoa, exporting about $1.7 billion worth of goods to the US last year.
Agoa-related exports account for about 10% of South Africa’s total exports to the US. When measured against South Africa’s total global exports, they account for only 1%.
Trump’s decision didn’t catch President Cyril Ramaphosa’s administration by surprise.
South Africa’s high-profile genocide case against Israel at the International Court of Justice, the accusation of discrimination against its white minority and land issues have placed Washington and Pretoria on a path of perpetual trade war.
To mitigate the impact of the Agoa fallout, South Africa has pursued new market opportunities across the African Continental Free Trade Area (AfCFTA), the European Union, India, Asian, the Southern Common Market, the Southern African Development Community, the United Kingdom and China.
Of these, China offers one of the best policy plans to trump Agoa for South Africa.
The zero-tariff policy granted to 53 African countries with diplomatic relations with China, which took effect on May 1, has seen the continent reap big benefits. Trade between China and Africa reached $312.11bn in the first nine months of this year, marking a 22% to 22.3% year-on-year increase according to data from China’s General Administration of Customs.
The zero-tariff has enabled South Africa’s trade with China to reach nearly $15bn from May to August, representing a nearly 24% increase year-on-year. Its agricultural exports to China have surged exponentially to nearly $500 million between May and August, up by more than 35% year-on-year.
The zero-tariff policy offers more benefits to South Africa based on its packaging and its long-term predictability.
First, it comes with respect for sovereignty. China has always adhered to its five principles of peaceful coexistence. The internal affairs of a bilateral sovereign state like South Africa don’t affect its strategic relations.
Second, China’s zero-tariff policy offers South Africa access to a consumer market size of more than 1.4 billion, one of the largest in the world. Agoa offered a market size of only about 349.6 million people. The policy will allow South African products to reach the Chinese market and make Chinese companies more aware of the opportunity to invest in South Africa.
Third, it will revitalise South Africa’s industrialisation, unlock its agricultural potential and strengthen its agro-processing supply chain. South Africa is also poised to attract Chinese investment and enhance extraction in mining, with key minerals such as chrome, magnetite and iron ore gaining more access to China’s vast market.
Fourth, the tariff-free arrangement will drive the growth of local value-added manufacturing and automatically improve livelihoods, create jobs, stabilise employment, boost incomes and enhance public welfare.
This will help solve the conflicts in South Africa with other African countries, ensuring that South Africa becomes a gateway for regional integration.
Fifth, the zero-tariff agreements provide the best platform for China and South Africa to fulfil the implementation of the 2024 Beijing Forum on China-Africa Cooperation 10-point partnership action plan. The tariff-free system will create stronger people-to-people bonds, foster friendship and enable ordinary people to share the benefits of development.
Last but not least, the policy will complement and advance South Africa’s strategic trade framework within the AfCFTA, a flagship project of the African Union’s Agenda 2063.
With South Africa being one of Africa’s non-LDCs (least developed countries) whose preferential zero-tariff rate is scheduled to last for a two-year window ending April 30, 2028, the nation will reap tremendous benefits. Luckily, China’s stable governance system under the Communist Party of China could choose to extend this zero-tariff treatment.
• Dr Munene is the executive director of the China-Africa Centre at the Africa Policy Institute, Nairobi.
- The recent announcement by President Donald Trump’s administration that it intends to terminate South Africa’s benefits under the African Growth and Opportunity Act (Agoa), effective January 1, signals Washington’s trade war with Pretoria.
- In a rejoinder, South Africa’s Minister of Trade, Parks Tau, said the impact of Trump’s decision, though regrettable, would have a relatively small impact on South Africa’s overall GDP.
- Historically, the country has been the largest beneficiary of Agoa, exporting about $1.7 billion worth of goods to the US last year.
- Agoa-related exports account for about 10% of South Africa’s total exports to the US.
- When measured against South Africa’s total global exports, they account for only 1%.
The recent announcement by President Donald Trump’s administration that it intends to terminate South Africa’s benefits under the African Growth and Opportunity Act (Agoa), effective January 1, signals Washington’s trade war with Pretoria.
In a rejoinder, South Africa’s Minister of Trade, Parks Tau, said the impact of Trump’s decision, though regrettable, would have a relatively small impact on South Africa’s overall GDP. Historically, the country has been the largest beneficiary of Agoa, exporting about $1.7 billion worth of goods to the US last year.
Agoa-related exports account for about 10% of South Africa’s total exports to the US. When measured against South Africa’s total global exports, they account for only 1%.
Trump’s decision didn’t catch President Cyril Ramaphosa’s administration by surprise.
South Africa’s high-profile genocide case against Israel at the International Court of Justice, the accusation of discrimination against its white minority and land issues have placed Washington and Pretoria on a path of perpetual trade war.
To mitigate the impact of the Agoa fallout, South Africa has pursued new market opportunities across the African Continental Free Trade Area (AfCFTA), the European Union, India, Asian, the Southern Common Market, the Southern African Development Community, the United Kingdom and China.
Of these, China offers one of the best policy plans to trump Agoa for South Africa.
The zero-tariff policy granted to 53 African countries with diplomatic relations with China, which took effect on May 1, has seen the continent reap big benefits. Trade between China and Africa reached $312.11bn in the first nine months of this year, marking a 22% to 22.3% year-on-year increase according to data from China’s General Administration of Customs.
The zero-tariff has enabled South Africa’s trade with China to reach nearly $15bn from May to August, representing a nearly 24% increase year-on-year. Its agricultural exports to China have surged exponentially to nearly $500 million between May and August, up by more than 35% year-on-year.
The zero-tariff policy offers more benefits to South Africa based on its packaging and its long-term predictability.
First, it comes with respect for sovereignty. China has always adhered to its five principles of peaceful coexistence. The internal affairs of a bilateral sovereign state like South Africa don’t affect its strategic relations.
Second, China’s zero-tariff policy offers South Africa access to a consumer market size of more than 1.4 billion, one of the largest in the world. Agoa offered a market size of only about 349.6 million people. The policy will allow South African products to reach the Chinese market and make Chinese companies more aware of the opportunity to invest in South Africa.
Third, it will revitalise South Africa’s industrialisation, unlock its agricultural potential and strengthen its agro-processing supply chain. South Africa is also poised to attract Chinese investment and enhance extraction in mining, with key minerals such as chrome, magnetite and iron ore gaining more access to China’s vast market.
Fourth, the tariff-free arrangement will drive the growth of local value-added manufacturing and automatically improve livelihoods, create jobs, stabilise employment, boost incomes and enhance public welfare.
This will help solve the conflicts in South Africa with other African countries, ensuring that South Africa becomes a gateway for regional integration.
Fifth, the zero-tariff agreements provide the best platform for China and South Africa to fulfil the implementation of the 2024 Beijing Forum on China-Africa Cooperation 10-point partnership action plan. The tariff-free system will create stronger people-to-people bonds, foster friendship and enable ordinary people to share the benefits of development.
Last but not least, the policy will complement and advance South Africa’s strategic trade framework within the AfCFTA, a flagship project of the African Union’s Agenda 2063.
With South Africa being one of Africa’s non-LDCs (least developed countries) whose preferential zero-tariff rate is scheduled to last for a two-year window ending April 30, 2028, the nation will reap tremendous benefits. Luckily, China’s stable governance system under the Communist Party of China could choose to extend this zero-tariff treatment.
• Dr Munene is the executive director of the China-Africa Centre at the Africa Policy Institute, Nairobi.
