Without AGOA South African citrus loses its edge in the US
US imports of oranges by sub-heading in 2000, 2010-2022
South Africa’s citrus exports to the United States have over recent years grown to a value of $132m (2022), a consistent performer during the past few turbulent seasons – but it is at risk if the United States decides not to extend their free trade agreement with South Africa due to the latter’s recent closeness to President Putin.
During the Clinton administration the United States introduced AGOA, the African Growth and Opportunity Act, a preferential trade agreement with many African countries of which South Africa is by far the largest beneficiary, notes Dr Mmatlou Kalaba of the Bureau for Food and Agricultural Policy.
“The current US tariff on citrus for countries without any trade arrangement is within the range between $1.5/kg to $2.5/kg. That would be approximately between R30 and R50 per kg but of course, currently South African citrus does not face those tariffs in the United States,” he says.
South Africa is better off with AGOA than without it
“South Africa is in a more advantageous position than other AGOA beneficiaries in the sense that we are able to produce and export a whole range of products, close to 50 different products plus processed products like cheese which gives the country the benefit of scale."South Africa’s participation in AGOA – due to be extended (or not) in 2025 – is under discussion because last year South Africa hosted Russian vessels currently under UN embargo at South African ports for reasons the South African government has not been willing to divulge.
The US Ambassador to South Africa dropped a bombshell two weeks ago when he claimed that Russia had come to South Africa load up arms for, the Ambassador maintained, the war in Ukraine.Ambassador Reuben Brigety made specific reference to AGOA at the press conference which has been widely interpreted as veiled threat to South Africa’s trade of close to R60 billion in vehicles, metals, light manufacturing, wine and fresh produce with America.
AGOA makes South African exports competitive
South Africa doesn’t have a trade deficit with the USA in agriculture. After citrus exports from the Western and Northern Cape, the second largest category of agricultural exports to the US is nuts (R1.30 billion) followed by grapes in the third place, earning South Africa just under R570 million. South African dried fruit is the fourth largest category exported to the USA.South Africa also exports berries, cut flowers, litchis and stonefruit to the US.
“Entering a developed market like the US – the single biggest consumer market in the world - at lower cost makes South African producers with their lower production costs competitive. However, a developed market like the US is as a rule very protective of its economy, especially around agriculture. They often protect local growers through difficult conditions for instance phytosanitary barriers to trade which makes it extremely expensive to comply. However, through AGOA those conditions are substantially reduced.”
He continues: “AGOA has become very important for South African trade to the US, it has definitely made a difference. Without AGOA South Africa would not have been able to export so much volume to the United States but it has not been without its own challenges.”
Domestic fruit producers in the US have lobbied against citrus imports from South Africa and a promise to widen access for all South African citrus has been stalled through lobbying by US poultry, pork and beef sectors.
Dr Kalaba, who has been part of AGOA negotiations, remarks that the previous round was different from before.
African countries want greater decision-making in AGOA process
“For the first time, African countries went to the US as a bloc under the auspices of the African Commission, not as individual countries even though the US would still offer different packages to individual countries. African countries under AGOA are recipients and therefore have very little say in what gets decided.”
There are very strict conditions set for beneficiary countries.
The US has no similar trade agreements with Latin America or the European Union.
“Without AGOA, South Africa would probably still export to the USA but probably at the same tariffs as for our competitors. South Africa will not have that edge any longer. We will start paying higher tariffs, even higher inspection, eventually we’ll send less to the US, affecting profitability of farmers.”
He observes that South African farmers would then have to find new markets to replace what was lost in the US, further pushing down domestic prices of, for instance, citrus with an impact eventually evident on employment on farms and spill over, he says, into the ability of producers to repay longterm loans.
Bureau for Food and Agricultural Policy
Read related news articles
AGOA bill good news for South Africa's citrus growers
There is good news for South African citrus exports to the US. Moves in US Congress to review South Africa’s participation in AGOA, the US Growth and Opportunities Act, have been dropped. South African citrus growers who ship their fruit to the US are breathing a sigh of relief after reports that senators have introduced a bill to extend AGOA, which is meant to boost trade between Africa and the US until 2041. Reports from the US have...
17 April 2024
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