Deepening Trade and Investment Relations post-AGOA – Three Options for South Africa

This briefing by the South African Institute of International Affairs (SAIIA) examines how South Africa can maximize the benefits of the African Growth and Opportunity Act (AGOA) before its 2025 expiration and evaluates three potential frameworks for future trade relations with the United States: a 'simple' approach, a Partial Scope Agreement (PSA), and a comprehensive Free Trade Agreement (FTA).

• The United States has become a critical economic partner for South Africa, with total trade growing from under $3.3 billion in 1985 to a peak of $16.8 billion in 2011, and US foreign direct investment (FDI) nearly doubling over the last 15 years. By 2014, US FDI accounted for almost 7% of total FDI into South Africa, with roughly 600 US companies contributing over 10% of the country's GDP and employing more than 100,000 people by 2015.
• South Africa's utilization of AGOA and Generalized System of Preferences (GSP) benefits is low. In 2015, South Africa used only 110 (6%) of the 1,835 duty-free lines under AGOA and 459 (13.5%) of the 3,400 lines under the GSP. Combined, these preferences accounted for approximately 20% of South Africa's total exports to the US in 2015, totaling more than $1.5 billion out of $7.4 billion in total exports.
• The US Trade Representative's March 2016 report identified several barriers to US business in South Africa, including technical barriers regarding food labeling, sanitary and phytosanitary barriers (notably in agricultural produce), high tariffs compared to the EU, bureaucratic non-tariff measures, inadequate intellectual property rights protection, and investment barriers such as black economic empowerment requirements and the Protection of Investment Act.
• A 'simple' post-AGOA option involves allowing the program to expire in 2025 without a replacement, reverting trade to WTO rules. This would reduce South Africa's duty-free access to the US market from 85% (combining AGOA, GSP, and MFN lines) to 69%, and potentially down to 36% if GSP status is also lost. This could risk over 60,000 jobs in the automotive, metals, and agriculture sectors.
• A 'moderate' option is a Partial Scope Agreement (PSA), which allows for reciprocal concessions on selected products or sectors. A PSA could be tailored to South Africa's production realities and provide a 'building block' for future expansion. However, its viability is challenged by the US's potentially limited interest in a narrow scope and potential WTO compliance issues, as PSAs under the Enabling Clause are reserved for 'developing' countries, which would exclude the US.
• The most 'comprehensive' option is a Free Trade Agreement (FTA). While a 2003-2007 attempt by the Southern African Customs Union (SACU) and the US failed due to US inflexibility on 'new generation' issues (investment, services, and intellectual property), the current economic environment—marked by WTO stagnation and a focus on export-led growth—warrants reconsideration. FTAs could increase market access and attract investment, though they require significant resources and may limit policy space.

APA

Prinsloo, C., & Ncube, C. (2016). Deepening Trade and Investment Relations post-AGOA – Three Options for South Africa. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2016/09/Policy-Insights-36.pdf

Chicago

Prinsloo, Cyril, and Charisma Ncube. Deepening Trade and Investment Relations post-AGOA – Three Options for South Africa. South African Institute of International Affairs, 2016. https://saiia.org.za/wp-content/uploads/2016/09/Policy-Insights-36.pdf.

Wikipedia

{{cite report |last1=Prinsloo |first1=Cyril |last2=Ncube |first2=Charisma |title=Deepening Trade and Investment Relations post-AGOA – Three Options for South Africa |publisher=South African Institute of International Affairs |date=September 2016 |url=https://saiia.org.za/wp-content/uploads/2016/09/Policy-Insights-36.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{prinsloo2016deepening, author = {Prinsloo, Cyril and Ncube, Charisma}, title = {{Deepening Trade and Investment Relations post-AGOA – Three Options for South Africa}}, institution = {South African Institute of International Affairs}, year = {2016}, month = sep, url = {https://saiia.org.za/wp-content/uploads/2016/09/Policy-Insights-36.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }