Amid diplomatic tensions with the US over an alleged sale of arms to Russia, South Africa is continuing to make the case for its ongoing designation as a beneficiary of the Africa Growth and Opportunity Act (Agoa), which extends preferential trade access to the giant American market on certain goods and is due to expire in 2025.

In a briefing ahead of his Budget Vote, Trade, Industry and Competition Minister Ebrahim Patel said that he shared the anxiety expressed by Finance Minister Enoch Godongwana about the potential negative effects of any fallout with the US over the alleged sale of weapons or ammunition to Russia, as well as about the prospect of South Africa losing its Agoa designation.

Godongwana said he viewed the allegations in a “very serious light because we are running an economy that is already in junk status and grey listed, and any further action by the international community will exacerbate the problem”.

The Finance Minister noted the allegations, together with the negative perceptions they generated, had already been felt in the currency market.

He expressed concern that the trade and investment channels could be similarly disrupted should the US take punitive measures against South Africa if it was found to have breached its non-aligned policy stance in relation to the war in Ukraine.

Patel noted that a significant share of South Africa’s exports to the US benefitted from the preferences granted under Agoa, even though other products entered the market under the Most-Favoured-Nation treatment provided for under World Trade Organisation rules.

“We will and we should do everything possible to retain that [Agoa access],” Patel said.

“It strengthens the position of South African exporters in the US market and, of course, that helps to create more jobs locally.”

He said that South Africa, along with other African countries, had made the case for an early extension of Agoa during meetings in Washington DC in December and that South Africa would continue to seek an early confirmation, even though historically the US Congress had only granted extensions in Agoa’s final year.

However, this appeal for an early extension was made ahead of the press conference at which US Ambassador to South Africa Reuben Brigety alleged that defence equipment had been secretly loaded onto a Russian cargo ship at the Simon’s Town naval base in December.

While there has since been something of a lull after Brigety was hauled before International Relations Minister Naledi Pandor for making undiplomatic statements, as well as to allow for the inquiry into the matter by a retired judge appointed by President Cyril Ramaphosa to run its course, concerns continue to simmered over South Africa’s status as an Agoa beneficiary.

Patel said South Africa would continue to actively lobby for a continuation of the country’s Agoa designation.

“[But] at this stage what we are able to say publicly is that we value the relationship with the United States enormously.

“We will be working closely with the US administration in making the case for why South Africa should remain in Agoa and we hope that we are successful.”