Although publicity is given mostly to the industrial goods-categories that qualify for duty-free access to the US market under AGOA, South African-produced oranges have been one of the star performers during 2003. This is according to data recently published by the United States International Trade Commission (USITC).

“Fresh oranges” are one of the products not previously eligible under the US’ General System of Preferences (GSP) but which qualify for preferential market access when shipped from an AGOA-beneficiary country. Being “wholly obtained” in the exporting country if grown there, oranges are not hamstrung by the sometimes restrictive rules of origin requirements that goods have to meet before given duty-free passage.

In terms of the value of trade, oranges (HTS 0805.10.00) exported to the US under AGOA were the 28th single largest export during 2003. Notably, only South Africa successfully exported oranges under AGOA, having met stringent US sanitary and phyto-sanitary (SPS) requirements that are often associated with agricultural products.

Since AGOA removes import tariffs on qualifying products, this translates into a saving of US 1.9 cents per kilo which is the normal tariff (US 2003 Tariff Schedule) levied on imports of oranges. Considering the nature of the product, especially its weight, the removal of this import tariff provides exporters under AGOA with a considerable competitive advantage.

AGOA has assisted South Africa in becoming the single largest foreign supplier of oranges to the US market. With the value of orange imports into the US valued at just under US$ 50mn during 2003, South Africa captured a 48% share of this market with exports worth US$ 24mn. South Africa’s share of the US import market a year previously was 33%, and was valued at US$ 15.4mn. This represents considerable year-on-year growth, all the more remarkable considering that South Africa’s currency appreciated substantially over that time period. It also proves that African producers of agricultural goods can be successful exporters to the US, despite SPS measures, labelling requirements, US agricultural subsidies and so forth.

South Africa’s main foreign competitor in the US orange market is Australia, whose share of 44% (worth US$ 22mn) during 2003 is closely behind that of South Africa (Mexico lies in third position, with 5% of the US import market for oranges). However, Australian exports of oranges declined by 4.2% from the previous year, while South Africa’s share grew by over 55% since 2002.

With discussions around a Free Trade Agreement (FTA) between countries of the Southern African Customs Union (SACU) and the US currently at an advanced stage, SACU negotiators should take note of the level of success that South African-produced agricultural goods such as oranges have recently achieved in the vast US market. However, AGOA remains a non-reciprocal US trade preference program that can be withdrawn or amended unilaterally, while a FTA can lock in market preferences over a much longer time-frame and thus provide producers an added measure of predictability.

[Eckart Naumann]

Latest AGOA Trade Data on AGOA.info

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