AGOA row about a deeper discord
Just as the dispute over chicken imports from the US was not really about chickens, so is SA’s likely suspension from the benefits of the African Growth and Opportunity Act (Agoa) not entirely about trade.
Rather it is a case of the US saying to SA that it cannot have it both ways. Pretoria cannot line up with the Brics (Brazil, Russia, India, China) bloc on foreign policy issues and bad-mouth Washington — while still demanding privileged access to US markets.
It cannot take measures that frustrate trade and investment flows from the US and Europe — but still expect special favours from these regions.
Most of all, if SA cannot get its act together to meet the deadlines in a trade dispute, it should not be surprised if it is punished for its incompetence, or perhaps arrogance.
And even if SA gets away with the kind of poor conduct we’ve seen in recent weeks as it ignored benchmarks US President Barack Obama set out in early November, the outcome can only damage its credibility as a trading partner.
Trade disputes are commonplace, as are concerns about health and phytosanitary issues. SA was not necessarily wrong to put up a fight.
However, SA cannot afford to be arrogant or just tardy in its trade talks at the moment. World trade is growing at just 2% annually, down from about 8% in the boom years between 2003 and 2007. Every country is competing fiercely for market share for its exports.
SA should be doing the same.
The US should be a particular target market because, as the latest trade figures show, by far the bulk of our trade is still going to Asia and Europe, both of which are starting to slow down. The US, by contrast, is a growth market, and still by far the world’s largest consumer market. And SA has since 2000 been gifted with privileged access to that market thanks to Agoa — Pretoria had a special concession even though SA’s economy is way more developed than the rest of the continent, which Agoa was meant to assist.
But the US made clear that SA had to earn the concession. All of which makes it harder to understand why SA hadn’t made sure its conduct in the negotiations was impeccable and that it did everything possible to stay in Agoa.
SA’s exports of citrus, wine and macadamia nuts to the US have grown to well more than R2bn annually. These are the kinds of high-end agricultural products SA should surely be trying to promote internationally at a time when commodity exports and prices are tanking. Without the Agoa tariff dispensation, however, SA has no particular advantage in the US market and is likely to lose out to competitors from Chile, Uruguay and Peru.
It is hard to see how that loss is outweighed by whatever SA may gain by imposing more stringent rules on US chicken imports than 160 other countries to which the US exports.
The US is by no means a major poultry exporter to SA — more than half our imports come from Brazil, with almost all of the rest from Europe.
South African imports of chicken from the US are negligible for the South African market.
But the long dispute over chickens has become a lightning rod for SA’s attitude to trade and investment.
The US is still affronted by the draconian rules SA sought to introduce on foreign investment in the private security industry, just as European investors have been angered by SA’s cancellation of bilateral investment treaties to replace them with the Promotion of Investment Bill.
These measures have sent the wrong signals to countries that wanted to do business with SA and to politicians who in the past had been willing to go out of their way to ensure a good deal for SA.
We are a small, open and vulnerable economy in a very tough world — and our conduct needs to take that into account.
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