South Africa Opposition Pleads for Market Access as US Ties Fray

Antony Sguazzin
·3 min read
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(Bloomberg) -- South Africa’s biggest opposition party is lobbying US lawmakers in a bid to preserve the country’s duty-free access to the world’s biggest economy amid a spat between the two nations over Russia’s invasion of Ukraine.

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John Steenhuisen, the Democratic Alliance’s leader, said he met with congressional and senate staff in Washington three weeks ago to persuade them that South Africa should continue benefiting from the African Growth and Opportunity Act. Alan Winde, the DA premier of the Western Cape province, will make the same trip soon, Steenhuisen said.

South Africa, which is governed by the African National Congress, has angered the US by abstaining from United Nations resolutions condemning Russia’s aggression and hosting its warships for naval exercises. This month, the US ambassador to Pretoria accused it of loading arms onto a Russian ship and said this could imperil its access to the US market. President Cyril Ramaphosa’s administration denied the allegation.

AGOA expires in 2025 and US officials have previously said the qualifying criteria for beneficiaries could be revised or the program replaced. South Africa ships cars and agricultural produce to the US under the accord. Last year, it exported $2.7 billion of goods using AGOA and the so-called Generalized System of Preferences.

“This thing is in deep, deep trouble and so we need to do something quickly,” Steenhuisen said in an interview in Bloomberg’s Johannesburg office on Monday. “We seem to have left things very, very late and we seem determined to continue poking sticks into the eyes of our largest trading partners.”

Falling out of the program would disproportionately hit South African regions controlled by the DA. Tshwane, the municipal areas that includes the capital, is a car-making hub that’s run by the party, with Nissan Motor Co., BMW AG and Iveco Group NV operating factories there.

The US became the largest export market for the Western Cape, the only province controlled by the opposition, in 2021 with citrus fruit, wine, steel and jewelry shipped to the US, according to Wesgro, a provincial tourism and trade promotion agency. That year, goods worth 17 billion rand ($884 million) were exported to the US, while American companies invested 4.4 billion rand in the province.

“Our key message to them was don’t punish the good guys while you’re trying to punish the bad guys,” Steenhuisen said.

Reuben Brigety, the US ambassador to South Africa, told local media on May 11 that armaments had been loaded onto a Russian cargo ship, the Lady R, at the South African naval base in Simon’s Town. Brigety spoke after returning from the US with a South African delegation that had sought to ensure the country retains its preferential trade access.

South African Finance Minister Enoch Godongwana has said the row has been resolved and South Africa was unlikely to face repercussions.

The US, UK and European Union account for more than three quarters of South Africa’s foreign direct investment, while investment from Russia and China amounts to about 6%, according to Steenhuisen.

“It doesn’t make sense pragmatically or economically for South Africa to be putting all that at risk by adopting the position it’s taken on the Russia issue,” he said. “We’ve got a lot to lose.”

--With assistance from Paul Richardson, Paul Vecchiatto, Amogelang Mbatha and Gem Atkinson.

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