TRALAC - Trade Law Centre

Figures Show AGOA Has Benefited South Africa

Monday, 05 April 2004

Source: Business Day

South Africa's citrus fruit exports have boomed under the preferential access that many products have been granted under America's African Growth and Opportunity Act (Agoa). SA has become the largest foreign supplier of fresh oranges to the US markets, which recorded imports of the fruit valued at almost $50m last year.

There are still those who may doubt the extent of benefits presented by Agoa, which eliminated import tariffs on about 7000 goods from SA and other African countries.

In a recent South African Institute of International Affairs (SAIIA) paper, the authors say some scepticism is warranted.

They say that bottled wine benefits from Agoa preferences. But prior to Agoa, the import tariff on South African bottled wine was just 1,7% or 0,17 on a $10 bottle of wine.

"The elimination of this tariff is unlikely to have much effect on the preferences of US consumers," says the report.

This argument does not apply to oranges, which became eligible for duty-free access to the US under Agoa when the initiative was introduced about four years ago.

OrangesOranges did not previously qualify under the US's generalised system of preferences. So South African exporters saved $0,019/kg in import tariffs on their orange exports under Agoa last year.

"Considering the nature of the product, especially its weight, the removal of this import tariff provides exporters under Agoa with a considerable competitive advantage," says Eckart Naumann, economist and associate of the Trade Law Centre for Southern Africa (tralac).

Of all the oranges imported into the US last year, a whopping 48% or about $24m worth came from SA.

"SA's dominance of the US import market for oranges is spectacular, considering that the US has preferential trade agreements with a host of other countries too where oranges also qualify," says Naumann.

The chairman of the USA Citrus Alliance in SA, Piet Smit, says the US is a new and lucrative market for citrus growers in SA. The alliance was established by growers, exporters and service providers to enhance the benefits derived from Agoa.

It is the most strict market in terms of sanitary and phytosanitary requirements, but it is also the market that yields the highest returns, says Smit.

"The US is very lucrative for us. It gives better returns that any other export market," he says.

Only citrus growers in the Western Cape can export from SA to the US, as only this region complies with the US's strict requirements.

exportsThe region is now expanding is production of "easy peelers", the variety that has proved popular in that market.

The second largest source of imports into the US is Australia, whose exports have declined slightly, while SA's orange exports grew in leaps and bounds.

"All this proves that we can be successful exporters of agricultural products despite a strong rand and widescale US agricultural subsidies," says Naumann.

SA is the only one of all the Agoa- eligible countries that exports oranges to the US.

The difficulties around rules of origin requirements are also less problematic with oranges, as there are no other inputs. They are "wholly obtained" in SA, Naumann explains.

Exports of naartjies, which also qualify for the Agoa benefit, have also increased dramatically since the introduction of the US initiative.

Naartjie exports from SA to the US more than doubled last year. These exports were valued at $12,4m last year, up from only $5,6m in 2002.

Citrus fruits seem to be performing better than most other agricultural exports agricultural trade between SA and the US is generally low. In 2002, agricultural exports constituted just 3,9% of SA's total exports to the US.

And just 1,5% of total US agricultural and food imports come from sub-Saharan Africa, says SAIIA.

The international affairs institute says in its latest Agoa research that perhaps the greatest opportunity for South African exporters lies in those niche sectors where tariffs were prohibitively high for all exporters, but, as a result of Agoa, may now be open to African imports.

There are 77 non-clothing products with most-favoured-nation import tariffs greater than 20% that qualify for Agoa.

"Not surprisingly, US imports of these products are currently very low," says SAIIA.

Among the highly protected goods that qualify for duty-free access into the US under Agoa are brooms, footwear, citrus juice, melons, grapefruit, dried onion, dates, nuts and seeds.

Supporters of the Agoa scheme are hoping for an expansion of products covered by Agoa and an extension of the 2008 deadline. This is being proposed in the draft Agoa III bill, which will be considered by the US congress this year.

Meanwhile, SA hopes to lock in the benefits of the programme in the free trade area which is being negotiated by the Southern African Customs Union with the US.

South African negotiators have said they would seek to do this. Agoa concessions can be withdrawn at a whim as this is a unilateral initiative.

Already, there are warning signs that citrus growers in the US feel threatened by South African imports.

Naumann says the Florida Citrus Mutual of Florida, which represents more than 11000 growers, has made noises to this end, and has raised concern about the free trade agreement being negotiated between the US and the Southern African Customs Union.

Smit says all the treaties negotiated by the South African government to date "are highly appreciated and very useful".



“AGOA Latest AGOA Trade Data on AGOA.info


Click here to view a sector profile of South Africa’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include:

  • AGOA-beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.