President Cyril Ramaphosa warns of devastating impact on jobs after the ANC antagonised the United States

President Cyril Ramaphosa warned that South Africa must prepare for its potential exclusion from the United States’ duty-free trade initiative, AGOA.

The African Growth and Opportunity Act (AGOA) is a United States trade law enacted in 2000 which gives preferential access to the US market.

It allows eligible sub-Saharan African countries to export thousands of products to the United States market duty-free.

It gives participating African producers a competitive advantage in the United States, supporting local industries and job creation.

South Africa benefited from its membership in the African Growth and Opportunity Act, especially in its automotive and agricultural sectors.

However, in recent years, the strained relationship between South Africa and the United States has put its AGOA membership in jeopardy.

Many stakeholders, including political parties, business organisations, and trade unions, have called on the government to restore relations with the United States.

Many, including the Freedom Front Plus, Solidarity, and NEASA, have urged the government to comply with the United States’ requests to repair the relationship.

These requests included condemning the Kill the Boer chant and declaring farm attacks a priority crime.

It also included rolling back the Expropriation Act and creating equity-equivalent investment programs (EEIPs) for American companies.

However, the ANC government doubled down on these issues and even launched verbal attacks on the United States and its leaders.

This, in turn, put South Africa at risk of losing its AGOA status and the benefits associated with it.

President Cyril Ramaphosa warns about losing AGOA

President Cyril Ramaphosa, who is partly responsible for the deteriorating relations with the United States, has now warned of the dire consequences of losing AGOA benefits.

Ramaphosa said the country must prepare for its potential exclusion from the United States’ AGOA, as relations between Washington and Pretoria have soured.

He highlighted that it remained to be seen whether South Africa would remain part of AGOA, and that his government was in discussions with US counterparts.

However, many United States officials have suggested South Africa should be excluded due to its anti-American actions.

These actions include South Africa’s close ties with Russia, China, and Iran, and its ICJ case against Israel.

“I need, as president, to prepare us if it ever happens,” Ramaphosa said, adding that the impact on jobs would be devastating.

Ramaphosa added that he and Deputy President Paul Mashatile have been travelling around the world to explore alternative markets.

Ramaphosa cited a recent trade agreement with China as a positive step. China introduced a zero-tariff scheme for qualifying South African goods in May.

However, none of these new relationships will offset the benefits of tariff-free trade with the United States.

The margins on products sold in the United States, which is the world’s largest economy, are much higher than in other countries.

The United States has a large and rich consumer base which no other country can compete with.

It also offers a reliable legal system with strong contract enforcement, transparent trade practices, and clear dispute resolution mechanisms.

Another benefit is that South Africa has a trade surplus with the United States, which is not the case with countries like China.

It is, therefore, in South Africa’s interest to maintain good relations with the United States to ensure trade benefits.

Call for President Cyril Ramaphosa to save AGOA

Solidarity has called on President Cyril Ramaphosa to demonstrate leadership and present a plan to preserve South Africa’s participation in AGOA.

Jaco Kleynhans, head of public liaison at Solidarity, said that the regret expressed by Ramaphosa and his team may well have come too late.

“Workers need more than a warning from the President. They need action that protects their jobs,” he said.

“The President must do his job and explain what diplomatic and policy measures will follow, who will be responsible for them, and by when they must be implemented.”

He said Solidarity has been warning for years that South Africa’s deteriorating relationship with the US is putting the country’s trade benefits and jobs at risk.

The organisation has also approached the White House to appeal for the preservation of South Africa’s participation in AGOA.

“We already have a plan and want to share it with the government. We want to work together to protect South Africans’ jobs and incomes,” he said.

“However, our approach has been rejected. Now the President himself acknowledges the very danger we have been warning about.”

According to Solidarity, South Africa’s exports to the US support more than half a million local jobs. Approximately half of these are in sectors that benefit AGOA.

“Exclusion could weaken businesses’ competitiveness and threaten export orders, income and job security,” Kleynhans said.

The 250,000 jobs at stake are roughly equivalent to the combined workforce of South Africa’s five largest mining companies.

Kleynhans said that Ramaphosa should therefore recognise that relations with the US are not merely a political game.