On Monday evening came the news from Washington that South Africa's political leadership has been dreading for months: The country is being kicked out of the Agoa free trade agreement, which has given duty-free access to the US market for a range of selected goods.
Just over 60,000 jobs are directly dependent on Agoa in the South African export sector, but in total around half a million jobs are believed to have been created in surrounding industries. All these jobs may now disappear after the turn of the year.
The announcement came on Monday from US Trade Representative Jamieson Greer, who claims that the two countries are not acting in line with US demands.
Agoa – the African Growth and Opportunity Act – was launched in 2000 by then-President Bill Clinton. The countries in Africa that work for the development of the market economy, increased political pluralism and the fight against corruption can obtain favorable trade terms with the United States.
An initiative that was then seen as a carrot has become a whip in Donald Trump's hand.
The decision about Rwanda appears reasonable in the context, but is at the same time more surprising. The regime in Kigali is a pure dictatorship with a thin layer of democratic veneer and has been singled out by a number of UN bodies and independent institutions as responsible for the M23 rebel group's ravages in the Democratic Republic of Congo. The US believes that Rwanda does not stand for pluralism and also threatens US security interests.
But why now? Rwanda's destructive actions in the Congo have been well documented for decades. Rwanda's exports to the United States during Agoa were only worth around SEK 40 million in 2023, and these are vanishingly small amounts in the context. For President Paul Kagame, it is primarily to be seen as a political nosebleed.
In South Africa it is worse. Their exports during Agoa amount to nearly SEK 16 billion. President Cyril Ramaphosa said at a lunch with journalists the other week that it would be "devastating" if Trump's threats came true.
Ramaphosa has invested a lot of political capital in creating jobs in the export sector. Under his leadership, the financial framework has been strengthened following the misrule of representative Jacob Zuma. After being hit hard by the covid pandemic, South Africa's economy has started to show signs of recovery. The Agoa jobs are also not just any jobs. They have largely been created in export zones that South Africa has established with a conscious focus on free trade with the rest of the world. In the long run, other trading partners may replace the US, but this is believed to take many years.
The USA has mid-term elections on Tuesday and on Wednesday South Africa will hold local elections. The Agoa announcement is not believed to affect any of the elections and the election results are not likely to affect the future of the collaboration. Even if Trump were to lose control of Congress, he is the one who decides which countries qualify for Agoa.
There is a straw for South Africa to cling to: the word "intent" in the title of Jamieson Greer's statement. Trump is known for creating uncertainty in the opponent in negotiating situations and with the wording that this is an intention, he leaves little room for maneuver for South Africa in the period until the turn of the year when the decision comes into force.
Beneath the surface, however, there is a greater dissatisfaction from the United States, and it is also shared by Democrats
If South Africa were to try to appease Trump in the Count's time, they must act on two areas singled out as stumbling blocks by the US. Trump's previous claims that there would be a genocide of white farmers in South Africa are pure falsehoods that are difficult for Ramaphosa to relate to. Beneath the surface, however, there is a greater dissatisfaction from the United States, and it is also shared by Democrats:
● In a time of geopolitical competition, the US is provoked by South Africa trying to keep channels open to US rivals and South Africa has had economic and military collaborations with both Russia and China.
● The US has also criticized South Africa's quota laws, which require all companies operating in the country to share ownership with black South Africans or set aside part of the turnover for social initiatives. This legislation is supposed to correct historical injustices after the apartheid years but is also criticized by the business community in South Africa.
However, it does not appear likely that the ruling party ANC and Ramaphosa will change both their domestic economic policy and at the same time cut ties with countries that currently appear to be better friends than the United States. Rather, it may be that Pretoria finally gives up all attempts to maintain close ties to the US and moves in a different direction.
In that respect, Trump's decision appears directly counterproductive.
