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AGOA at risk?

US President Donald Trump tweeted on 23 August 2018 that he had asked his Secretary of State to “closely study the South Africa land and farm seizures and expropriations and the large scale killing of farmers”.

It is rumored President Trump’s tweet comes on the back of an editorial that the Cato Institute published. The editorial, entitled “Trump Should Warn South Africa on Land Expropriations”, suggests that South Africa’s eligibility under the African Growth and Opportunity Act (“AGOA”) may be under threat.

The Cato Institute postulates that South Africa’s AGOA eligibility may be at risk as a result of Article 104 which states that a sub-Saharan African country is eligible for AGOA membership if it “protects private property rights, incorporates an open rules-based trading system, and minimizes government interference in the economy through measures such as price controls, subsidies, and government ownership of economic assets; (b) [respects] the rule of law, political pluralism, and the right to due process, a fair trial, and equal protection under the law.” Article 104 goes further to state that when an eligible country is not making progress to meeting the requirements of Article 104, the President shall terminate the designation of the country as eligible for AGOA membership and the resultant benefits.

AGOA is a unilateral piece of legislation in terms of which certain eligible sub-Saharan African countries, including South Africa, obtain duty-free and quota-free access to the US market. South Africa’s trade with the US, as a result of AGOA, is worth several billions of Rands and have created thousands of jobs. As such, and as Article 104 of AGOA illustrates, the decision as to whether a specific country should be entitled to the AGOA benefits or remain entitled to these benefits rests with the US President. This doesn’t imply that any US President will terminate a country’s designation based on a tweet. Instead it should be based on a determination or finding that the progress towards achieving the eligibility requirements is in fact not being made.

Rian Geldenhuys
© Trade Law Chambers 2018

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