After facing down a summons from the Western Cape’s Standing Committee on Finance, Economic Affairs and Tourism, Minister Ebrahim Patel’s Department of Trade, Industry and Competition (DTIC) has today given several answers on the state of South Africa’s efforts to renew the critical African Growth and Opportunity Act (ALGOA) with the United States. Despite shedding more light on developments in this area, the letter fails to disclose key information on the effects of AGOA on South Africa’s economy, just days before the start of the AGOA summit in Johannesburg.

Under the AGOA agreement, several South African industries benefit from preferential trade tariffs, allowing for the growth of exports, the preservation of US supply lines, and crucially, the creation of South African jobs. According to the letter sent by the Minister's Department, 2022 saw AGOA facilitate the export of billions of dollars’ worth of goods to the United States. Highlights include:

• USD 132 637 459 of citrus;
• USD 110 072 288 of jewellery and other processed materials;
• USD 65 261 205 of wine; and
• USD 1 482 221 468 of cars and automotive parts.

But on the crucial question of the number of jobs affected by AGOA, the Minister’s Department claims that it is unable to answer the question. According to the letter, “disentangling the specific impacts of AGOA on job creation or preservation amid a landscape of various market access strategies necessitates a careful and sophisticated analysis that considers the interconnected and multi-dimensional nature of global trade practices.” The letter ends immediately after this, without engaging in such an analysis or giving any estimation of the jobs lost.

This is troubling given the fact that the Western Cape Government has had no such issue quantifying the potential damage of AGOA’s loss to the provincial economy. Given the fact that 70% of the Western Cape’s agricultural exports flow to the Western Cape, the Western Cape Department of Agriculture estimates that 136 000 jobs could be lost in this sector alone. According to Wesgro, AGOA-related jobs in the Province numbered more than 360 000 as of 2021.

If AGOA were to be lost, all of these would be in jeopardy, setting back the Western Cape’s progress as one of South Africa’s only provinces to drive employment. While the DTIC’s letter emphasises the work of the Department to preserve and extend AGOA through negotiations, the fact remains that the ANC has consistently placed South Africa on an international footing which works to alienate key trading partners. Should the United States choose not to renew AGOA, the blame for thousands of lost jobs will rest solely with the ANC.

It is profoundly concerning that Minister Patel’s Department has proven either unwilling or unable to account for the number of jobs that rest on AGOA. As the Department responsible for securing AGOA’s renewal, the DTIC should be well aware of the stakes of these negotiations, and should feel the pressure of protecting thousands of South African jobs. The DA will not rest until Minister Patel comes to understand the serious nature of the task he faces, and will hold him to his commitment to brief the Western Cape Provincial Parliament on the status of AGOA.

 

Issued by Cayla Murray, MPP - DA Western Cape Spokesperson on Finance, Economic Opportunities and Tourism