Factory pay cheques hang on Agoa, Cosatu warns

For the workers on factory floors in Atlantis, in the Western Cape, the question of whether South Africa stays in the African Growth and Opportunity Act is not an abstract trade debate. It is about whether a pay cheque keeps arriving in January. Matthew Parks, the parliamentary coordinator for the Congress of South African Trade Unions, has spent recent months making exactly that case, travelling repeatedly to the United States to lobby for the country’s continued inclusion in Agoa and to protect the jobs and communities that depend on it.

Parks has been meeting labour constituencies in the US as part of that effort, and he does not mince words about what removal would mean. Estimates he cites point to around 3 000 direct job losses, or close to 10 000 overall, with agriculture and manufacturing hit hardest. The economy as a whole would not collapse, he says, but for the people behind those numbers the blow is severe. Many of the 3 000 jobs are in the Western Cape, and if a company in Atlantis retrenches workers and closes its doors, that is a devastating blow for that community.

His frustration with the government is rooted in a promise that has not been kept. A year ago, officials said measures would be put in place to support companies affected by a possible exclusion. Twelve months later, Parks says, nothing has happened. The government had pointed to Unemployment Insurance Fund support as an option, but he calls that impractical because the process is a mess. Companies need about 14 months of endless red tape to get relief from the UIF. During Covid the system worked differently, because anyone affected could access it; the rules are stricter now, requiring firms to demonstrate how they are struggling. The principle is the same, though: companies just do not get the money. Of the R2.5 billion allocated, barely 10% has been released to assist companies.

That timeline matters because the clock is short. Parks notes that engagement with the US on this issue has been running since 2018, and the UIF will not help in time. Any fix will not happen by 3 November, the first full day of political and market reaction after the US is widely expected to announce its annual Agoa eligibility decision for South Africa. Cosatu has proposed alternatives, including Covid-style tax relief that would let companies claim back losses through Sars, which Parks describes as very efficient and capable of acting immediately. The minister has spoken of subsidies through the Department of Trade, Industry and Competition, which Parks says would be good, but other measures take time, and companies do not have the luxury of time.

The ideal outcome, in his view, remains straightforward: South Africa stays in Agoa. The US Congress extended the programme for two years, which Parks considers a good base given the volatility, especially since it had expired completely last year. Agoa benefits many companies and jobs, particularly in agriculture and manufacturing. If removal does happen, the next step is to keep engaging with the US to reconsider. There is precedent: about 10 years ago South Africa was threatened with removal over pork and poultry issues, which are still live today. Not being removed then gave the government, under then trade and industry minister Rob Davies, space to engage and find a solution. Parks hopes that serves as plan B, and even if removal goes ahead, engagement should continue. Other countries have been removed for different reasons, and their circumstances differ, but the US remains the world’s largest economy, South Africa’s second- or third-largest trading partner, competing with Germany for that spot, and a major source of investment.

Behind the lobbying is a quieter labour diplomacy. Parks has met Cosatu’s sister union in the US, the AFL-CIO, and US steelworkers about 10 times since 2022, including at their congress in June. That support, he believes, is why the Agoa renewal passed Congress with overwhelming bipartisan backing. The review itself, however, is an administration decision, handled through the US Trade Representative before ultimately reaching the president, who would likely weigh political and bilateral relations. That, Parks admits, becomes more complicated.

If South Africa is removed, the decision only takes effect in January, leaving roughly 60 days to try to reverse it. Beyond that, Parks argues, the country must diversify its trade relations anyway, driven by a domestic crisis of 43% unemployment and weak economic growth. Some movement towards Asia has occurred, especially in agriculture, the most vulnerable sector. But he cautions that diversification must not create new problems, because China and India come with strings attached: they want open markets, and South Africa is not in a position to compete equally.

Meanwhile, at the recent Nedlac meetings, where government, business, labour and community organisations gathered to discuss possible exclusion, Parks describes the mood as concerned, clouded by a US relationship that has been in a poor space for the past four years, with different issues even under former president Joe Biden. His broader message is that government must pay more attention to other major economies, and not take for granted relationships with the European Union, China and African countries.

On negotiating leverage with Washington, Parks is blunt: there is not much. The style is largely take-it-or-leave-it, complicated by bilateral issues unrelated to trade. He does not think South Africa is giving in too much with concessions, noting that real negotiation has not even begun in an unusual time when old textbooks do not apply. And on whether constitutional imperatives on transformation and land rights should be sacrificed to appease the US, his answer is firm: outsourcing sovereign choices to another country would be political suicide. Tweaking policy is possible, but it must be guided by South African conditions, such as extending equity equivalents for investors unable to meet the 30% shareholding requirement, or expanding employee share-ownership programmes. Reducing bureaucracy, he adds, would help more than compliance debates: investors complain not about compliance but about waiting 14 months through red tape, a wait he argues should be cut to 14 days. What cannot change, he insists, are labour rights and standards, which have fortunately not come up in this round of discussion. Changes, where they come, must be guided by the country’s real economic challenges, and by the people whose livelihoods hang on the decision.