South Africa, Rwanda eye China and other markets after US withdraws AGOA benefits

The United States removal of South Africa and Rwanda from the African Growth and Opportunity Act (AGOA) has renewed pressure on both countries to look beyond the American market, with China emerging as a key destination in their efforts to diversify exports and strengthen trade ties.

Parks Tau, South Africa's minister of trade, industry and competition, said the government would step up efforts to open new markets, identifying China, India, the European Union, the United Kingdom, the African Continental Free Trade Area, and the Association of Southeast Asian Nations as important destinations.

AGOA, established in 2000, allows eligible sub-Saharan African countries to export thousands of products to the US duty-free.

However, Tau said the program accounted for about 10 percent of South Africa's exports to the US last year, while about 89 percent entered under ordinary World Trade Organization most-favored-nation terms.

In a statement released on Monday, Tau said Pretoria would continue to pursue opportunities in new markets while supporting exporters affected by the US decision.

"Government will continue to accelerate the diversification of South Africa's export markets. New market opportunities have also been secured for South African citrus, avocados, grapes and apples," he said.

For Alan Mukoki, CEO of the South African Chamber of Commerce and Industry, the withdrawal should serve as a wake-up call for businesses to become more competitive and pursue opportunities beyond traditional markets.

He identified China as a particularly attractive destination because of the size of its market, while pointing to opportunities in Southeast Asia and Europe.

"China is an exciting market, a big one. There are ASEAN countries like Indonesia, Singapore, Vietnam, Thailand, and Europe. There are major opportunities. This is a wake-up call for us to start working much harder to open up new markets. There is a much bigger world out there than the US," Mukoki said.

Matthew Parks, parliamentary coordinator for the Congress of South African Trade Unions, warned that the AGOA withdrawal could lead to job losses in the agricultural and manufacturing sectors, adding to the country's existing challenges of high unemployment and weak economic growth.

He called on the government to continue engaging Washington while preparing urgent support for companies, workers and communities likely to be affected.

"We need to continue to engage the US; there are countries that were taken out of AGOA and were later reinstated. We have to look for markets in Brazil, China, India, the European Union and African countries," Parks said.

Under China's expanded zero-tariff policy, which took effect on May 1, covering 53 African countries with which it maintains diplomatic relations, the initiative creates opportunities for eligible African products to enter the Chinese market duty-free.

The arrangement could help South African and Rwandan exporters improve the competitiveness of their products, particularly agricultural goods, as both countries seek alternatives to preferential access to the US market.

While Rwanda has yet to publicly respond to the latest US decision, Kigali has previously identified China as one of the markets to be pursued as part of its efforts to diversify trade, alongside the European Union, the AfCFTA and neighboring East African Community countries.

In announcing the removal, Jamieson Greer, US trade representative, said an annual review had found that South Africa and Rwanda were engaging in practices inconsistent with AGOA's eligibility criteria.

Washington cited barriers to US trade and investment, corruption, and concerns over national security and foreign policy interests in the case of South Africa. For Rwanda, the concerns included trade and investment barriers, the rule of law, political pluralism, internationally recognized workers' rights, human rights and US national security and foreign policy interests.

The latest development also comes against a history of trade disagreements between Rwanda and Washington. In 2018, the US suspended some of Rwanda's preferential AGOA benefits after Kigali restricted imports of second-hand clothes from the US in an effort to protect its domestic textile industry.

Victor Raballa contributed to this story.