[Opinion] CHRIS HATTINGH: Donald Trump’s early signals for US-SA trade

Among a raft of executive orders signed by US President Donald Trump on his first day in office was the America First Trade Policy. At its core, it sets up a wide-ranging review of most areas of US trade policy.

Under section 2, “Addressing Unfair and Unbalanced Trade,” two directives are of greatest importance for SA-US trade agreements and relations, with the Africa Growth and Opportunity Act (Agoa) foremost among the arrangements that could be affected.

Section 2(f) states: “The US Trade Representative shall review existing US trade agreements and sectoral trade agreements and recommend any revisions that may be necessary or appropriate to achieve or maintain the general level of reciprocal and mutually advantageous concessions with respect to free trade agreement partner countries.”

In addition, section 2(g) states: “The US Trade Representative shall identify countries with which the US can negotiate agreements on a bilateral or sector-specific basis to obtain export market access for American workers, farmers, ranchers, service providers and other businesses and shall make recommendations regarding such potential agreements.”

This section could open opportunities for SA to benefit from increased US-origin trade. These instructions also firmly open the door to a review of Agoa — including the terms and conditions, provisions therein, and whether (in the Trump administration’s assessment) African countries in the Agoa arrangement should continue to benefit therefrom.

In addition to the new trade review instructions implemented by Trump, the bipartisan US-SA Bilateral Review Act, passed by the House of Representatives in May, could be revived, and if passed by the Senate would place more pressure on US-SA trade and diplomatic relations.

The act cited concerns on the part of US legislators that SA had sided “with malign actors, including Hamas, a US-designated foreign terrorist organisation and a proxy of the Iranian regime, while continuing to pursue closer ties with the People’s Republic of China and the Russian Federation”.

The current version of Agoa, and SA benefiting therefrom, is set to expire by September, although the agreement can be renewed before that date. One possible change could be the length of the agreement, should it be renewed. Select African governments and businesses have requested that the 10-year period be increased to 15 or more years. For its part, the outgoing Biden administration endorsed a 16-year extension.

Should Agoa be renewed but SA not form part of the new version, this would not mean the end of all US-SA trade, diplomatic and other relations. Select sectors in the country, specifically agriculture, automotive, mining and manufacturing, will be those hurt most.

However, the greatest harm will be to SA’s trade and doing-business reputation. The current US administration will be sending a clear signal that it wants to change its trade, investment and possibly diplomatic relationships with SA. US companies operating in the country may also be advised or pressured accordingly.

For an economy that needs to attract more foreign investment, such a development would greatly hobble those efforts. For the government of national unity (GNU), this would be a potentially disastrous development, causing friction between GNU members over relations with the US, and making it harder to secure foreign capital and finance needed for growth.

The US secretary of commerce, secretary of the treasury and the trade representative have the task of delivering respective reports on the various items set forth in the America First Trade Policy by April 1.

Article originally appeared here.