v
You can also listen to this podcast on iono.fm here.
Download the free LiSTN audio app on Google Play, Apple or here.
JEREMY MAGGS: The Africa Growth and Opportunity Act [Agoa] is up for discussion over the next few days with some calls for it to be turned into a longer-term pact. So where has the benefit principally been for South Africa and, more importantly, what do we want to achieve?
First up on the programme is Dr Kingsley Makhubela, director at RiskRecon and a former ambassador. So firstly, how has Agoa specifically benefited this country since its inception?
KINGSLEY MAKHUBELA: Well, it has been good to a very large extent, Jeremy, because it allows South Africa to import certain goods into the American market, duty-free, and the American market is quite huge.
The economy of the US is huge and the appetite for consumption in the United States is huge. The spending power of the American is quite huge.
So it provides very good opportunities, very sustainable markets in terms of [sending things], it’s not one of those markets that are periodic. Even during the difficult times, it remained very strategic because of the spending powers of the Americans.
Listen/read: Agoa Forum: How will SA navigate the diplomatic minefield?
JEREMY MAGGS: Are you able to tell us what products have specifically thrived under the act?
KINGSLEY MAKHUBELA: Well, the motor industry has been doing very well. About three, four years ago, because South Africa exports the left-hand drive motor vehicles to the US, particularly the BMW X3 that has been assembled in this country and exported to the US. The C-Class Mercedes Benz has done very well.
When they started to export the X3 a few years ago to the US market, the defects of those cars were zero rated. There were no defects, which really met the [FDA] standard and really surpasses anyone because in the motor industry you do find very minor defects that are not critical. But in terms of that South African products were doing well and there was big praise for the South African labour force and the quality of the labour who are responsible for assembling. So that has been a very big one.
The agricultural sector has done very well. I know, Jeremy, now there’s a concern that the Americans should expand the goods into the market. I don’t think it’s realistic at this time to expect that, particularly when the US is going through elections. The agricultural lobby in the US is quite big, it has been to a large extent opposed to some of this duty-free, but because of the appetite of the American and the demands in the market, it’s not a problem now.
Read:
US committed to ‘seamless’ Agoa renewal, Tai says
Agoa needs at least 10-year extension, AU says
Key facts ahead of the Agoa Forum
JEREMY MAGGS: Considering the current trade landscape then, what outcomes would be ideal for South Africa?
KINGSLEY MAKHUBELA: I think one thing that South Africa has to be very firm about during this discussion, I know there’s a review of the geopolitical tension that exists, it’s really to avoid the either/or, that you deal with the Americans or you deal with the Chinese. I think both markets are too critical for South Africa. But I think the American market, because it’s not a charitable thing, it’s because there’s a demand in the US and it’s because these products that are going into the US, in turn, they help South Africa.
But one of the issues that the Americans are going to be firm on this time around is around corruption because it’s part of the conditions of the services that the government must be able to deal with corruption.
We’ve seen really corruption spiralling out of control. You may have seen now the president [Cyril Ramaphosa] is deploying the military to deal with the construction mafia.
I think there’s pressure really to deal with both corruption at the government level, private sector, and the lawlessness that is starting to really emerge within our economic sector. So those are the issues that the Americans would expect.
I think what we would expect is to have bilateral relations as South Africa within the Agoa framework that is not influenced with how South Africa deals with other partners, including how we deal with the US, the European Union, how we deal with China, how we deal with Russia because the US does business with all these global powers. So we must be able to really affirm our position about that.
Read:
South Africa eyes exiting FATF grey list in 2025
Agoa talks: SA needs to carefully manage relations with the US and China
SA-US relationship is ‘healing’
JEREMY MAGGS: And how do we do that? How do we navigate that fine line, for instance, between China and the United States where there are competing ideologies?
KINGSLEY MAKHUBELA: You’ll recall sometime last year, August I think, when Secretary Antony Blinken was here, he launched a document that was called the US Strategy Towards Sub-Sahara Africa. If you look at that document, part of what the Americans have decided to do is that they’re going to manage and try to communicate what they think is negative behaviour of China and Russia. Those are purely ideological at a certain level.
But I think what we need to be firm about is the trade between the United States and China, for instance, is huge. Take the semiconductor market, the semiconductor market is half a trillion dollars that the US buys from China. Why can’t we do that? Why can’t we have a similar trade arrangement?
The US buys about 20% of its uranium from Russia for its energy sector and they buy 14% of that is enriched uranium, and they continue to do that despite this tension that exists.
It’s how do we manage the global tension and really focus on what is strategic for the country. I think what South Africa should resist in this case and should resist the same if China or Russia raises this, is to come up with this idea of either/or.
I think at a political level it requires some level of backbone because countries like India are succeeding in doing this and now Saudi Arabia is succeeding. So I think we need to reassert ourself at the bilateral level.
The problem is that South Africa has been communicating cold and hot air about a host of issues without making it quite clear, and in the process opening itself for more lobby and for more indirect blackmail. So far, Jeremy, you’ll recall, I haven’t heard the Americans saying that they’re going to stop the Agoa preferential treatment for South Africa.
There has been something that emerged out of here and I think to a large extent it has to do with competition of business, those who are dealing with China and Russia, and those who are dealing with the US. The Americans haven’t said that. They haven’t [made] anyone quite open, but we know the Americans use the economic diplomacy very well.
JEREMY MAGGS: I’m going to leave it there. Dr Kingsley Makhubela, thank you very much indeed.
