26 Sep What is the future of the trade relationship between the US and South Africa?
President Cyril Ramaphosa undertook a high-profile visit to the White House and met US President Joe Biden earlier this month — but what exactly did South Africa’s head of state get out of it?
Discussion between the two leaders was intended “to address opportunities to deepen [the] relationship, identify next steps on issues of mutual importance and discuss regional and global challenges,” according to the White House’s press release.
A key outcome of the meeting was Biden’s announcement of the creation of a South Africa-US investment advisory task force, along with a planned $45-million investment toward the Just Energy Transition Partnership.
This is barely a fraction of what Ramaphosa hoped to obtain — $38-billion, on top of the $8.5-billion already pledged by the US and several other Western nations including France and Germany, as well as the European Union.
Whether the US still has the means to meet this commitment is another matter altogether. So, too, is the definition of “just transition” amid reversals to non-renewable energy sources by European countries. Yet another, more pertinent, question pervades: How long will Africa continue to look to the US for assistance?
There appears to be no visible strategy on the continent for engaging powerful external powers in a way that will eventually break the pattern of dependency, despite many (self-) diagnoses and flashpoints indicating that this is necessary and the only way to safeguard sovereignty. It is also unsustainable.
Crucial here is the US’s relative decline, with Washington embattled by its own economic crises and inability to meaningfully legislate, thanks to gridlock stemming from political polarisation. The South African presidential visit occurred against the backdrop of yet another divisive election season in the US, as the November midterms approach.
The relationship between the US and South Africa is primarily one based on trade. That is the main dimension where it flourishes. This has been the case for decades. Trade between the two partners is resilient, almost to the point of being stubborn, built on South Africa’s unique resource and agricultural endowment — motor vehicles — and the US’s output of manufactured technological products.
This trade resilience partially explains the US’s difficulty in imposing sanctions on apartheid South Africa, for example, and it also explains the record highs recorded in trade under the politically difficult former president Donald Trump years. Despite the lack of a US ambassador to South Africa for most of the period, despite clashes at the behest of those calling for expropriation without compensation and despite Trump’s protectionist America First policy, two-way trade flourished between the two countries.
Indeed, in 2020, Trump’s final year in power and a tough year for international trade due to Covid-19, US-bound South African exports increased by 45.75%. In Biden’s first year, South African exports increased by 38.42%, even with the mildly protectionist “Buy America” order in place. This bodes well for a regional leader of a continent that has been expressly seeking trade instead of aid.
Encouragingly, trade featured prominently in the discussions between presidents Ramaphosa and Biden. Indeed it is the primary point underscored by the South African presidency’s take-aways. In relation to this, South Africa is also set to host the African Growth and Opportunity Act (Agoa) Forum, where the aim is to “map the next phase of Africa-US trade”.
A looming question for both sides is whether Agoa, through which a number of African countries get access to the US market, will continue in its current form. Agoa has been working for many recipients, including South Africa, yet it cannot be business as usual here either. As of 2020, the continent is rolling out its African Continental Free Trade Agreement, meant to liberalise trade within the continent, and manage relations with third parties.
We think three major considerations should inform deliberations on the renewal of Agoa. The first puts the entire renewal under a political microscope — Agoa expires in September 2025, when the US will have had a presidential election.
Congressional elections in November and in 2024 could tip the fine balance that slightly favours Biden’s Democratic party and see either Trump come back into the Oval Office or see those in his Republican party win and reclaim the Senate or the House — or all three institutions could be back under Republican control.
In other words, 2025 may well see Trumpism in power once again to some degree or another. It cannot be assumed that the renewal of Agoa (a policy very much the antithesis of the America First trade policy) is a foregone conclusion, and contingencies must be explored.
The second consideration concerns the very nature of the arrangement. Will it retain its unilateral nature (it is currently an Act of the US Congress), or will it become an Africa-US trade agreement? The latter is unlikely in the foreseeable future due to a lack of groundwork — and so discussions should centre around how it can be made to pave the way for a free trade agreement after the next cycle expires.
This leads to the third key consideration: will the continent see more of its future as lying in unison and thus (using their collective numbers) lead to countries insisting on an arrangement that encompasses all African states, or will the dominoes fall and see the continent falter and witness individual countries entreat bilaterally with the US?
Developments have seen the US conducting one-to-one dealings with African countries, and African states complying. Compare this to other major players such as China, Europe and Japan, who have permanent forums through which they meet with the African leadership collective.
In August, for example, US secretary of state Antony Blinken visited South Africa, the Democratic Republic of Congo and Rwanda. Such visits, with no visible input by or presence of the AU, make the countries on the continent seem disorganised in their dealings with one of the most powerful players in the international arena.
The external face of pan-Africanism is found wanting when countries in pursuit of short-term gains visit the White House instead of engaging the US primarily through the auspices of the AU as much as possible, certainly where commerce is concerned.
Yet opportunity abounds and the pursuit of the African Continental Free Trade Agreement and the taking of advantage of Agoa need not be mutually exclusive. Some researchers have noted that Agoa has the potential to support the integration of the continent’s economies. But a plan, as part of the AU’s Agenda 2063’s first and seventh pillars, will be required to achieve this.
This must be a crucial component of the “mapping” of Agoa’s future to be done next year so that whatever emerges on the other side of 2025 is reflective of the continent’s interests and agency.
It is concerning, therefore, to note that there is no US strategy for Africa under the current administration — as has been the case for successive US administrations since the end of the Cold War.
Original Article: Mail & Guardian South Africa (https://mg.co.za/opinion/2022-09-26-what-is-the-future-of-the-trade-relationship-between-the-us-and-south-africa/)
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