AGOA: ‘SA is embarrassing Obama’ - analyst
Bilateral Trade by Sector: United States - South Africa
Value ('1000 dollars) / Year-to-date to September
South Africa is embarrassing US President Barack Obama, who has been advocating for the country’s continued inclusion in the African Growth and Opportunity Act (Agoa) preferential trade agreement, by not complying with the agreements it has committed to, says Nils Flaatten, director of Blue Viking Advisory Services.
In his previous capacity as CEO of Wegro, the Western Cape Destination Marketing, Investment and Trade Promotion Agency, Flaatten was closely involved with trade relations between South Africa and the US.
Flaatten says the US Congress has long been arguing that South Africa has matured and should graduate out of the agreement that allows duty-free access to US markets for more than 7 000 products.
For at least the last two years the Obama administration has taken a strong stand to keep South Africa as a beneficiary of the agreement, he says. “Representatives of South Africa met with Congress and agreed to certain conditions more than two years ago, but there has not been as sense of urgency within the South African government to meet these conditions.”
Flaatten reacted to Obama’s letter dated November 5 warning South Africa that if outstanding issues were not resolved by December 31, the US would suspend its duty-free treatment of South African agricultural goods into the US under Agoa.
Bloomberg reported that the value of duty-free South African farming exports to the US market was $176 million in 2014, a fraction of the $1.7 billion of trade under Agoa, according US Department of Commerce data.
According to Bloomberg the trade programme has helped South Africa more than double its exports to the US since 2000. Shipments under the agreement accounted for more than a fifth of the nation’s exports to the US last year, according to data compiled by the Tralac Trade Law Centre, based in Stellenbosch, near Cape Town.
Minister of Trade and Industry Rob Davies held a media briefing on Friday to respond to Obama’s ultimatum. In a statement issued at the briefing, he said South Africa’s negotiators have been aware of the authority of the US to suspend a country’s trade benefits in terms of the Agoa Extension and Enhancement Act where the US believes that a beneficiary of Agoa is “not making continual progress toward the elimination of barriers to United States trade and investment”.
Davies however denied that that was the case with regard to South Africa. “The main issues to be resolved are the opening of the South African market to US exports of the three meats: poultry, beef and pork,” he said, outlining progress to date and ongoing negotiations between technical teams from both countries.
It mainly relates to animal health issues, which he said are complex.
South Africa banned the import of poultry from the US in December last year, after an outbreak of bird flu. This followed after a break-through was made in trade negotiations between the two countries in June last year that resulted in South Africa scrapping punitive import duties on US chicken. This seems to be a serious bone of contention for the Americans.
Davies on Friday said South Africa believes that it is “on track” to meet the December 31 deadline to resume imports of US poultry into South Africa.
Flaatten questioned why the South African government allowed disagreement about meat regulations to put an agreement at risk that affects many other products and industries.
He says the agreement enables export of products that would not be viable unless it was duty free. A lot of money and effort has been invested in developing markets for South African exports to the US and all of that will be lost if South Africa’s participation is suspended.
It could be a slippery slope for trade relations between the two countries, and US investment in the local economy would also be affected, he says.
“Government is playing a high stakes game of chicken with the US government,” he says. To add insult to injury, the US has just concluded preferential trade agreements with some of South Africa’s biggest competitors as well.
Flaatten says any decision on South Africa’s continued participation in Agoa will also affect neighbouring countries, since the economies of the region are intertwined.
AgriSA CEO Omri van Zyl agrees that other countries of the South African Development Community (Sadec) will also be impacted by any negative decision by the US about South Africa’s Agoa benefits.
He says AgriSA considers Obama’s warning in a very serious light, but got the assurance from the Department of Trade and Industry that it is being urgently addressed. Van Zyl says the parties should now be allowed the space to do what has to be done.
AgriSA will however keep a close eye on the process and assist wherever it can to remove any remaining stumbling blocks.
“In order to grow we have to make our markets accessible to other countries. In this regard the US is a very valuable partner,” he says.
Read related news articles
South Africa walks a tightrope on US relations
South Africa has been conducting a high-wire act in its relations with the United States (US). It is maintaining friendships with Washington’s enemies like Russia, Iran and China while trying to avoid disrupting its economic relations with America. Tensions came closer than ever to breaking point this month as the US House of Representatives’ Committee on Foreign Affairs passed the US-South Africa Bilateral Relations...
28 March 2024
Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship
As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country. I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...
13 March 2024
South African president Ramaphosa meets with US congressional delegation
South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...
21 February 2024
US congress receives Bill to review South Africa relations
A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...
09 February 2024
Fitch research unit expects better AGOA deal for South Africa
Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...
09 January 2024
South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities
Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...
20 November 2023
US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa
President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...
09 November 2023
US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility
Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...
07 November 2023
AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]
Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...
06 November 2023
South Africa pins its hopes on an early 2024 US Congress renewal of AGOA
South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy. This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...
05 November 2023
SA trade minister Patel expresses confidence at media briefing about South Africa’s continued inclusion in AGOA
Ahead of South Africa hosting the US-AfricaTrade and Economic Cooperation Forum – also called the AGOA Forum – from November 2 to 4, Trade, Industry and Competition Minister Ebrahim Patel on October 26 briefed the media on the state of readiness for the forum, expressing confidence that the South African government’s relations with the US were strong. Various South African stakeholders have been motivating for...
26 October 2023