South Africa: Free-trade deal on the line
US poultry producers are lobbying their government to withdraw South Africa's duty-free access in retaliation for anti-dumping duties, which they say are unfair.
South Africa enjoys duty-and quota-free access to the US market for about 6,800 product lines, in part thanks to the Africa Growth and Opportunity Act (AGOA), which grants most African countries preferential market access without any reciprocity required for US goods.
Latest available figures show South Africa exports to the US under Agoa totalled $3.7bn (R40.8bn) in 2012.
Lobbyists in the US have been trying to get South Africa excluded from Agoa, which is vital for the local automotive industry."
The National Chicken Council and the USA Poultry & Export Egg Council have made submissions to the US International Trade Commission (ITC), saying the US poultry industry will strongly oppose another extension of Agoa benefits to South Africa unless “fair trade" in their products is resumed.
The controversial anti-dumping duties on US poultry products, which were calculated using the weighted average cost of production method, were imposed in 2000. Last August, the World Trade Organisation ruled against similarly imposed tariffs by China against US chicken.
South Africa, as an upper middle-income country, is under fire for its inclusion under Agoa.
Critics say it is unfair to give South Africa duty-free access to the US while poor countries such as Bangladesh do not enjoy the same benefits.
David Wolpert, CEO of the Association of Meat Importers and Exporters (Amie), said there was concern that South Africa's protectionist policies, such as the increase in import duties on chicken and restrictive regulations on pork imports, may lead to retaliatory trade practices, harming the economy.
“As we have said many times before, such restrictive trade practices are of great concern, are highly inflationary, and therefore negatively affect pricing to an entire population, especially the hard-pressed poorer segment of our people, and invite retaliatory measures, which themselves harm our fragile economy," Mr Wolpert said.
The International Trade Administration Commission, which hiked import tariffs on a range of chicken products last year, is considering imposing anti-dumping duties on chicken from certain EU countries. The EU has a free-trade agreement with South Africa and normal import duties do not apply on their poultry products.
“The renewal of the special duty preferences applicable to many of our exports under Agoa is of huge value and importance to us, especially in times of poor economic growth and precarious negative trade account balances," Mr Wolpert said.
Catherine Grant Makokera, head of the economic diplomacy programme at the South African Institute of International Affairs, said there was a high likelihood the country would continue to receive the Agoa preferences in the short term.
“I don't think there is significant enough pressure from the agricultural lobbyists. In the long term, however, I think the US will really start putting the pressure on to get a reciprocal trade agreement in place ... particularly if we sign an economic partnership agreement (EPA) with the EU," Ms Grant Makokera said.
The long-running EPA negotiations were expected to be concluded this year, and would replace the existing free-trade agreement with a new deal covering a wider range of issues than trade in goods, such as intellectual property rights.
Negotiations for a free-trade deal with the US failed in 2006 as South Africa saw US demands to include issues such as government procurement, investment and intellectual property rights as too onerous.
Many of these issues would be covered by the EPA, leaving the US at a competitive disadvantage to the EU in the local market.
Business Leadership South Africa asked in its submission to the US ITC for a 15-year Agoa extension. This would give the US time to start negotiations for regional trade deals, such as the case with the EPAs, which could lead to reciprocal, permanent trade deals on the continent, it said.
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