AGOA: Billions (of Rands) in agri trade on the line for South Africa
Bilateral Trade by Sector: United States - South Africa
Value ('1000 dollars) / Year-to-date to September
The US will cancel South Africa’s duty- and quota-free access for agricultural products on 4 January unless sufficient progress is made to ensure market access to SA for American poultry meat, pork and beef.
Prof. Nick Vink, chair of the department of agricultural economics at Stellenbosch University, explains some of the complexities around the negotiations.
finweek: South African agricultural exports stand to lose full beneficiary status of the African Growth and Opportunity Act (Agoa) by 4 January. Can this still be prevented?
Nick Vink: President Obama’s letter [on 5 November] to the US Congress stated that progress in negotiations about access for American (specific cuts of) poultry meat, pork and beef to the SA market has not been satisfactory.
He gave SA 60 days to consider its negotiating position, after which the status of SA agricultural exports as a beneficiary of Agoa will be withdrawn (the rest of SA’s $1.7bn exports of non-agricultural goods have not been put into play – or at least not yet). If SA were to come with a counter-offer within 60 days, the US would consider retracting the statement about lack of progress.
fw: Can SA afford to lose its Agoa beneficiary status?
NV: There are geopolitical considerations to this dispute that go far beyond the issue of trade in three agricultural products between the two countries. But the economic costs are also quite serious.
SA benefits substantially from duty-free access to the US market via Agoa – according to the Trade Law Centre (tralac), SA exported $176m worth of agricultural products to the US under the duty-free concession, which is virtually all of our agricultural exports to the US (valued at R2.3bn in 2014). The US is our sixth-biggest export destination for agricultural products, and key sectors such as the wine industry have started to target this market.
South African citrus: soon to be deprived preferential access to the US market?
fw: If SA removes the contentious trade barriers, what implications would it have for the local agriculture sector?
NV: The current negotiations are asymmetrical, in the sense that the USA is not asking SA to remove all barriers to trade in especially poultry meat, pork and beef, but rather to improve the offer that SA has made with regard to these three products.
The US currently gives SA duty-free access on virtually all agricultural exports into the US – but on the other hand is prepared to deny us duty-free access on all agricultural exports that currently benefit from Agoa. As a result, South African exporters have gained much, and stand to lose much. But what the offer does is to pit South African exporters of poultry meat, pork and beef against South African exporters of all other agricultural products – a clever negotiating tactic.
The industries in the direct firing line, and especially the poultry industry, are being pressured to make more concessions to US exporters (but not to go all the way). The technical complexity of the industries is but one of the complexities in a negotiation within SA that has to balance the interests of different industries, of producers and consumers, and of the state in terms of the wider geopolitical considerations.
It is therefore difficult to say offhand whether SA will benefit or not by any new offer to the USA – it will depend on the extent of access to the South African market that is being offered, on which products are in play, and on how South African and US traders (exporters and importers) of other commodities react.
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