Why Business Groups in South Africa were concerned as the US Examined Trade Program?

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South Africa’s Johannesburg
Business associations in South Africa were pressuring the government to use vigorous diplomatic measures to prevent the country from losing its duty-free access to the American market.

Citing Pretoria’s connections to Moscow, a handful of U.S. senators had questioned South Africa’s eligibility under the African Growth and Opportunity Act. Despite his invasion of Ukraine and the fact that the International Criminal Court is seeking him, South Africa welcomed Russian President Vladimir Putin to a meeting in August.

The state of relations between Pretoria and Washington has gotten so bad in recent months that business associations in South Africa are now rushing to keep their country in a key tariff-free program offered by the United States.

South Africa, which hosted Russian vessels for joint military drills earlier this year, declined to denounce Russia’s incursion, leading to the division of the two nations over the conflict in Ukraine. Pretoria disputes claims made by the US ambassador to South Africa in May that the nation had been covertly supplying Moscow with weapons.

Vladimir Putin, the president of Russia, may or may not have traveled to Johannesburg, South Africa, in August for the BRICS conference. His arrival would have created a dilemma for South Africa. It was required to detain him should he enter the nation as a signatory to the International Criminal Court.

With a decision anticipated by year’s end, the U.S. Congress was already starting to examine the extension of the African Growth and Opportunity Act, or AGOA. In a recent letter, a few US senators stated that South Africa should not be the host of an AGOA summit that was scheduled for later last year. They also hinted at the possibility that the nation would completely lose access to the advantages of trade.

The CEO of Business Leadership South Africa, an independent organization made up of some of the biggest companies in the country, Busisiwe Mavuso, stated that she was getting ready to submit a request asking the United States to extend AGOA membership for South Africa.

With 25% of its exports going to the United States and approximately $1 billion in exports to the United States in just the first three months of this year, Mavuso said that South Africa is the highest recipient nation under AGOA.

Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, said being removed from AGOA would have far-reaching implications, not just on the tariff side but in terms of investor sentiment.

“The AGOA benefits, there are certain industries that really enjoy those,” Sihlobo said. “In the absence of them there could be economic consequences, particularly in the automobile industry and of course the agricultural sector, specifically wine as well as the fruit sector.”

South Africa’s opposition Democratic Alliance, which has expressed strong support of Ukraine, is also worried the country could lose access to AGOA, said the party’s shadow finance minister Dion George.

“If the view is that South Africa is in fact not acting in the interests of the United States and may well be a threat to the national security of the U.S., then yes, of course that will become an issue and may very well be a factor in carving South Africa out of AGOA next year,” George said.

Spokespeople for the presidency and South Africa’s ministry of international relations did not reply to requests for comment. However, they have previously said there’s no evidence South Africa is going to lose access to AGOA, after President Cyril Ramaphosa recently sent a delegation to lobby U.S. officials.

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