South Africa’s Expropriation Bill Could Prompt AGOA Exit and Threaten Exporters

South Africa’s proposed Expropriation Bill, which advocates for expropriation without compensation (EWC), is encountering significant criticism over the potential risks it poses to private property rights. The Institute of Race Relations (IRR) has cautioned that this legislation could jeopardize the livelihoods of exporters and their employees.

The Expropriation Bill stands in opposition to the requirements set forth by the African Growth and Opportunity Act (AGOA). AGOA offers zero-tariff market access to countries that are moving towards a market-based economy and protecting private property rights. In contrast, the proposed law implements EWC for reasons such as the seizure of hijacked buildings and invaded land.

During the AGOA Forum held in Johannesburg, the possibility of South Africa being removed from AGOA due to the EWC provisions in the Expropriation Bill was largely overlooked. To qualify for AGOA, an African nation is required to uphold private property rights. However, the Expropriation Bill, which has been endorsed by the National Assembly and is anticipated to be enacted before the 2024 elections, poses a threat to these rights by advocating for EWC on multiple grounds.

Although US delegates did not issue public warnings, some American lawmakers have expressed concerns about the bill’s potential impact on trade between the US and South Africa. Congressman Jim Baird raised questions regarding the implications of the bill, whereas Congressman John James characterized EWC as a “disastrous policy” that endangers South Africa’s constitutionally protected private property rights.

The Biden administration, known for its strict AGOA eligibility standards, has recently removed several African countries from eligibility for these benefits, underscoring the seriousness with which the US government views compliance with AGOA criteria. While the Expropriation Bill has yet to become law, its possible repercussions on trade relations and private property rights are already causing alarm among various stakeholders.