AGOA might not be as benefical as we are led to believe Photo AGOA
South Africa – The African Growth and Opportunity Act (AGOA) stands as a crucial alliance between African nations and the United States, primarily concentrating on trade, human rights, and economic development. However, amid rising geopolitical tensions, notably concerning the ongoing genocide in Palestine, South Africa faced a significant dilemma. The question lingers: was it necessary for South Africa to host the event over the weekend, given these urgent global concerns?
The term “realpolitik” encapsulates the politics of powerful nations exerting immense pressure on smaller players like South Africa. Against the backdrop of the US Congress approving a $14.5bn in military aid package to Israel, the disconnect between AGOA’s focus on human rights and the realities of global politics became starkly evident. “One of its key platforms supposedly is human rights and trade, so if you connect the dots you can see a massive disconnect on anything but human rights,” said Ashraf Patel, Senior Researcher at the Institute for Global Dialogue
AGOA: A Double-Edged Sword
South Africa, as a member of BRICS (Brazil, Russia, India, China, and South Africa), navigates a delicate balance between Western and Eastern blocs. The country’s participation in AGOA and its collaboration with BRICS partners underscore the intricate diplomatic manoeuvres demanded by the fractured world order.
AGOA, with its 25-year history, offers both opportunities and challenges for participating nations. While it fosters trade and economic development, it competes with other influential forums, such as the China-Africa Forum on China-Africa Cooperation (FOCAC). South Africa hosting AGOA could be a way for the United States to sort of mend ties with the country.
“There was a fallout between South Africa and the US around our supposed support for Russia or our voting pattern at the UN and then the whole Lady R saga. That has put a damper on relations. I think it’s also a kind of public relations push from the US side to host it in South Africa to mend those relations. There’s multiple objectives when we have such forums between a large power like the US and a middle kind of income power such as South Africa. There’s always going to be a number of objectives when hosting such a forum.”
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AGOA and human rights
While AGOA is supposed to emphasise on human rights, it sends out mixed messages. In 2022, the United States removed Ethiopia, Mali, and Guinea from the AGOA trade preference program due to actions violating AGOA’s rules. The Biden-Harris Administration expressed deep concern over unconstitutional government changes in Guinea and Mali, as well as human rights violations in Ethiopia’s conflict. However, not every country is treated the same.
“A country like Swaziland, which has one of the most draconian oppressive dictatorships, because it’s a US ally, its access to AGO has increased. That sends out different signals to Africa on a kind of human rights framework. There should be a human rights frameworking trade but then it’s important to apply it uniformly so it doesn’t send different messages to Africa as a whole and different leaders. I think that is the problem with the US approach. Human rights is used in an arbitrary fashion and not as a principle. That’s where the US has lots of deficits in its IR policy towards Africa and the developing South.”
Additionally, special economic zones and export processing zones, touted as investment magnets, often lead to relaxed labour laws and environmental regulations, raising concerns about worker exploitation and environmental degradation.
“In all these agreements, AGOA and others, you find special economic zones, export processing zones. These are zones where you get investment from large corporations across the world and they then can relax labour laws, health and safety regulations. Then one asks is it really about human rights in development or is it another form of extraction and labour and environmental exploitation? I think when we unpack all these subsets of AGOA and other agreements, we find that in net terms Africa loses out again in big ways. This is the sad part of global trade in the world today.”
Economic stimulus
Historically, International Monetary Fund (IMF) bailout packages have served not only economic but also political objectives. While these financial aids provide much-needed resources, they often come with conditions that may not align with a nation’s priorities. South Africa’s reliance on Western loans, including those from the IMF, has created a dependency that affects its fiscal policies.
“The IMF bailout of South Africa has been a huge dent on our fiscal. It has provided the fiscal stimulus during the pandemic years but it has left us in a huge debt. Therefore the Minister of Finance announced that our largest payment on our budget at 28% is interest on loans which includes the IMF payouts and therefore it shows you the dependency that’s created and of those loans, the conditions were that we procure vaccines from multinational corporations like Pizer. Therefore that created a non dependency in the health system where those vaccines were not effective and 35% of them had to be disposed of.” so
On one side, the loans demand good governance from South Africa but also bind them to buying goods from specific producers without ensuring accountability. According to Patel, this creates another contradiction in trading with major powers.
AGOA: Good or bad?
While AGOA presents export opportunities for small and medium enterprises, the broader implications cast a shadow on its benefits. The lack of substantial industrial development potential within the AGOA framework raises doubts about its long-term impact. In comparison, platforms like the BRICS Forum emphasise industrialization, offering a more comprehensive approach to economic growth.
“There are pros and cons of each model but I think in the current situation where US budgets are going into wars I don’t see any hope for Africa to gain. In fact, the US needs more resources so they’ll be more extractive in their foreign direct investment because they need to fund these large wars that’s currently taking place. It’s very sobering at this point in time.”
