Cosatu’s Matthew Parks on Agoa, job losses and SA’s trade options

Matthew Parks, the parliamentary coordinator for the Congress of South African Trade Unions (Cosatu), has been traveling to the US a lot lately, as part of his efforts to lobby for South Africa’s continued inclusion in the African Growth and Opportunity Act (Agoa).

He has been meeting labour constituencies in the US, charting a way to keep South Africa in Agoa and protect the jobs and communities that depend on it.

Read: SA dangles chicken and pork concessions to the US for Agoa continuation 

He warns that SA’s removal from Agoa would hit agriculture and manufacturing sectors the hardest, with estimates of around 3 000 job losses, or close to 10 000 overall.

Parks has also criticised SA’s government for not moving fast enough to support affected companies or diversify its trading partners.

In this interview with Moneyweb, Parks explains why remaining in Agoa is the ideal outcome, what should happen if SA is removed, and why he believes a potential exclusion should spur the government to seek new markets.

Q: Representatives of government, business, labour and community organisations recently met the National Economic Development and Labour Council (Nedlac) to discuss the possibility of SA’s exclusion from Agoa. What was the mood at the Nedlac meetings?

Parks: The Nedlac partners are concerned. That is partly because things are clouded by SA’s relationship with the US, which has not been in a great space for the past couple of years – in fact, not for the past four years. Even under former fresident Joe Biden there were issues, but a different set of issues.

I think government needs to pay more attention to our relationship with other countries, especially the major economies, and diversify our trade.

We should not take for granted relationships with the European Union, China and African countries. We must pay a bit more attention to them collectively.

Q: What do you see as the best outcome in terms of SA’s place in Aoga?

Parks: The US Congress extended Agoa for two years because that is what it decided.

Given the volatility, two years is a good base. Remember that last year it had expired completely. Ideally, SA remains a member of Agoa. That is the ideal option because it benefits a lot of companies and jobs, especially in the agricultural and manufacturing sectors.

If we are removed, the next thing we need to do is continue to engage with the US for it to reconsider its decision.

We were threatened with removal once before, about 10 years ago, around the pork and poultry issues – which are still issues.

That [not being removed] provided space for the government to engage when Rob Davies was minister [of trade and industry] and to find a solution.

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Read: Agoa extension offers African exporters two more years

Hopefully, that is our plan B. Even if we are removed beyond that, we should keep engaging.

Other countries have been removed for different reasons. Their circumstances are very different from ours, but we should still engage because the reality is that the US is the world’s largest economy. It is our second- or third-largest trading partner, competing with Germany for that spot. It is also a major source of investment, and we want to increase trade with the US.

Q: How severe would removal be for jobs and the economy?

Parks: The statistics we have seen talk about job losses of around 3 000, or under 10 000.

About 10% of our trade is with the US, and that has been declining because of President Donald Trump’s tariffs. Out of that 10%, about 20% is through Agoa.

Most of our trade with the US is minerals, and minerals are exempt from tariffs. Manufacturing – like cars and steel – is already at a global 25% tariff when exported to the US.

So the impact would really be around agriculture and manufacturing.

The stats from various economists talk about around 3 000 jobs, but for those 3 000 – many of them in the Western Cape – it is quite devastating. It will not collapse the economy per se. But if you are a company in Atlantis, Western Cape, and you retrench workers, that is a devastating blow for that community.

Q: The SA government promised support for affected companies a year ago, if the exclusion from Agoa becomes a reality. Has the government delivered?

Parks: That is our point of frustration. A year ago, the government said it would put measures in place to support companies. A year later, that has not happened. The losses may not be as much as we initially feared if we exit, but if your contract comes to an end, [and] you retrench workers and you close the doors, that is not much comfort.

The government had indicated that Unemployment Insurance Fund [UIF] support could be an option. I can say that option is impractical because the process is a mess.

Read: UIF under fire, but no administration request yet

It takes companies about 14 months of endless red tape to get relief from the UIF.

During Covid it was slightly different because anyone affected could get it; the rules are now stricter – you must show how you are struggling, and so on. But the principle is the same: companies just do not get it.

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They have allocated R2.5 billion, and barely 10% of that money has been released to assist companies.

We have been having this engagement with the US since 2018. The UIF is not going to help in time. It must be fixed, but that 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 SA].

We have proposed alternatives. The minister talked about subsidies through the Department of Trade, Industry and Competition, and that would be good.

What we have also proposed is Covid-style tax relief – allowing companies to claim back whatever losses they had through tax relief.

At least Sars [South African Revenue Service] is very efficient and can do that immediately. The problem with some of the other measures is that they take time, and if you are a company, you do not have the luxury of time.

Q: You have met Cosatu’s sister union in the US, AFL-CIO, and steelworkers in the US about 10 times since 2022. How important is that labour support, and do you think this will help in having a positive outcome for SA?

Parks: Yes, we are in constant contact with them. I have been to the US about 10 times on this issue since 2022. They are close to us on this issue and have supported us.

In fact, I was there in June at their congress and met with the steelworkers. They are supporting us. That is why the Agoa renewal passed Congress with overwhelming bipartisan support.

The review itself is done by the administration. So it is an administration decision. Then there is the US Trade Representative, which looks at trade issues, but ultimately it goes to the US president, who would most likely look at political and bilateral relations. That becomes a bit more complicated.

Q: If South Africa is removed, can it get back in before the change takes effect?

Parks: If you are removed, that only takes effect in January. So you have 60 days. Is there space to prevent that? Hopefully.

But there are other things we still need to do. We still need to diversify our trade relations. We need to do that because of our own domestic crisis of 43% unemployment and weak economic growth.

They have done some of that, especially in agriculture, which is the most vulnerable sector. You have seen some movement towards Asia.

But it must be done in a way that does not create other issues, because the problem with China and India is the strings attached.

They want you to open up your market as well, and we are not really in a space to compete equally with them.

Q: How much negotiating power does South Africa have with the US?

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Parks: Not much. It is a different style – largely a take-it-or-leave-it approach. And of course it is clouded by bilateral issues that are not related to trade. The US must negotiate from a tough basis because it is looking after its own constituencies, just as SA must do likewise.

Q: Are we giving in too much to the US with concessions?

Parks: I do not think so. The goal of negotiation is about giving something, but it has not even reached that stage yet. This is an unusual time, so the old textbooks do not really apply in the same way.

Q: Should South Africa sacrifice constitutional imperatives, especially on transformation and land rights to appease the US?

Parks: We cannot outsource sovereign choices to another country. That would be political suicide.

That does not mean we do not tweak legislation, policies or regulations, but it must be guided by our domestic economic constraints. If growth is sluggish and unemployment is too high – which they are – then we should look at whether we need to make amendments to our own policies and legislation. That must be guided by South African conditions.

For example, on the B-BBEE review that the government is already busy with, we have said: why not extend equity equivalents for investors who cannot do the 30% shareholding because of their own domestic legislation?

Why not extend employee share-ownership programmes, which many countries prefer, as opposed to the 30% option?

Read: High court sets aside Tau’s decision to gazette legal sector BEE code

You can find ways to complement the transformation journey while also making it easier for investors to come in. That includes reducing red tape.

One of the biggest things we have seen from investors is not so much on the issue of compliance, but that it takes them about 14 months to get through all the bureaucracy.

We should really be discussing how to reduce that to 14 days, for example, not 14 months.

But that must not mean tinkering with labour standards and labour rights. Luckily, that has not really come up in this round of discussion. We cannot compromise on labour rights, but that does not mean we do not make changes. Changes must be guided by our real economic challenges.

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