The expiry of the US preferential trade framework the African Growth and Opportunity Act (AGOA) on September 30 means that South Africa must aggressively pursue alternative trade partnerships through the BRICS bloc and the African Continental Free Trade Agreement (AfCFTA), says business organisation Business Leadership South Africa CEO Busi Mavuso.

While there remains a possibility that AGOA could be extended, it is unclear whether South Africa would be included, given the broader issues that have arisen between the two countries, she notes.

In April, when new US tariffs came into force, the US-South Africa trade relationship was under threat. Diplomatic missteps, including the Lady R debacle in 2023, had already damaged relations between the countries prior to the Trump administration taking office.

“While trade negotiations with the US are ongoing, and AGOA’s renewal should remain an objective, we must confront the reality that AGOA may be consigned to history.

“The US trade policy uncertainty means many countries share our ambition to build new, more reliable trade relationships. We must engage while this window of opportunity is open.

“The loss of goodwill and perceptions about South Africa's stance on Russia have contributed significantly to this strained relationship. Foreign policy decisions have direct economic consequences, and ambiguity rarely serves national interests,” she notes.

Further, from May 2000 until its expiry, AGOA enabled about 17% of South African exports to the US to enter duty-free, although some products, particularly raw materials, already enter duty-free under standard trade rules.

During this time, AGOA was critically important for South Africa's vehicle manufacturing industry, as well as significant segments of the agriculture, apparel, chemicals and equipment sectors, Mavuso notes.

South Africa also accounted for 54% of all AGOA exports to the US, being the largest beneficiary during the 25 years the Act was in place, and the scheme supported high-value jobs in the vehicle, agriculture, apparel and equipment sectors, she adds.

Crucially, AGOA supported industries with high domestic value-added content and created substantial numbers of high-quality jobs in South Africa, she emphasises.

“Government remains intensely focused on achieving a breakthrough in trade talks with the US. Business stands firmly behind these efforts and works directly with US customers and partners towards mutually beneficial trade arrangements.

“In the meantime, South Africa must pivot to focus on forging strategic relationships with the wider world.”

Meanwhile, AGOA's expiry is also sharply negative for other African countries, with nations like Eswatini, Kenya, Lesotho and Madagascar having built competitive apparel and textile industries that could challenge Chinese manufacturers in supplying the US market.

In Lesotho, about one-third of exports were tied to AGOA, predominantly in the apparel sector that employed between 30 000 and 40 000 workers, primarily women.

US soft power has dramatically weakened on the continent with the expiration of AGOA, risking access to African resources, many of which, including rare earth minerals to manganese and chromium, are critical to US industrial and technological ambitions.

The US risks ceding strategic ground to competitors at a time when African nations are actively seeking reliable trade partners, she states.

China announced duty-free access for all African nations with which it maintains diplomatic ties, which represents a fundamental realignment of trade patterns that could reshape Africa's global orientation, she points out.

Additionally, the BRICS structure also promises several trade opportunities, as does the AfCFTA, though the latter faces significant implementation challenges around infrastructure and regulatory harmonisation, Mavuso notes.

“Businesses will actively pursue these new opportunities, but government can dramatically accelerate progress through forming trade deals that facilitate duty-free or preferential access to major markets.

“It is critical for our trade and international diplomacy efforts to work in lockstep with business to open new markets. We are ready to work alongside government to achieve this success,” she adds.

However, while managing international trade relationships, South Africa must focus on what lies within its control, namely domestic reforms.

An accelerated reform agenda can significantly lessen the negative effects of AGOA's end, she states.

“Certain regions, particularly the Eastern Cape with its concentration of automotive manufacturing, have been seriously affected by these developments. We need to drive reform as rapidly as possible to create new opportunities and strengthen our competitive position,” recommends Mavuso.

The steady improvements achieved in logistics, including port efficiency to freight rail performance, must be dramatically accelerated and is the most obvious pathway to increasing South Africa's international competitiveness that is entirely within its power to deliver.

“When South African products can reach global markets more reliably and cost-effectively, we become more attractive trade partners regardless of tariff regimes.

“Our engagements with potential trade partners are important, and business and government need to work in focused partnership to ensure we capitalise on every opportunity, whether with the US, China, India, the EU or African neighbours.

“We can build momentum by focusing relentlessly on domestic reforms and ensuring the world can efficiently access our high-quality products.

“Then we can work systematically to ensure those international markets are open to us with minimal tariff barriers. The path forward requires clarity of purpose, diplomatic skill and unwavering commitment to economic reform.”