TRALAC - Trade Law Centre

South Africa to call for 15-year Agoa extension at upcoming Washington gathering

Tuesday, 29 July 2014

Source: Engineering News (South Africa)

South Africa will use the upcoming US-Africa Leaders' Summit, which will also encompass the 2014 edition of the Africa Growth and Opportunity Act (Agoa) Forum, to appeal for a 15-year extension of the nonreciprocal trade arrangement, as well as South Africa’s ongoing inclusion as a beneficiary.

The inaugural summit arose following President Barack Obama’s visit to Senegal, South Africa and Tanzania last year and will take place in Washington DC from August 4 to 6, under the theme ‘Investing in the Next Generation’.

President Jacob Zuma will lead the South African delegation and will be accompanied by Trade and Industry Minister Dr Rob Davies, who will focus primarily on the summit’s trade and economic themes, while International Relations and Cooperation Minister Maite Nkoana-Mashabane will offer a South African perspective on issues relating to peace, security and good governance.

Davies will also participate in the Agoa Forum, where it is anticipated that the US administration will reaffirm its support for extending Agoa beyond its September 2015 expiry date.

Then-President Bill Clinton signed Agoa into law in May 2000, extending qualifying African countries preferential access to the US market. The Act was amended by Clinton’s successor, President George W Bush, in 2004 and 2006 and was last extended by Obama in August 2012.

During his three-country African tour last year, the US President indicated that his administration remained supportive of a further extension, possibly with some adjustments. However, it will fall to the US Congress to vote for any renewal during the course of 2015.

South Africa will make the case not only for extending the arrangement for a significant period, but also for the scheme’s architecture to remain largely intact and for no new conditions to be introduced.

Crucially, it will also argue that no country should be “graduated” from the arrangement, as a unified legal framework between sub-Saharan Africa and the US would be supportive of the continent’s regional-integration aspirations.

Davies argues that Agoa is “not broken and does not need to be fixed”.

He believes that a “holistic” rather than a “line-by-line” analysis demonstrates not only the “goodwill” spinoffs for the US, but also that Agoa is delivering a “balanced” trade outcome. For instance, South Africa, which some assert has outgrown Agoa, imported $7.3-billion of US goods in 2013, while exporting $8.5-bllion in return.

“Trade statistics indicate that Agoa has truly transformed the way the US and Africa interact on trade and economic issues. The US total trade with sub-Saharan Africa has grown more than 250% from $28.2-billion in 2001. Agoa exports from sub-Saharan Africa increased from $8.15-billion in 2001 to $34.9-billion in 2012, representing an increase of 328% in exports.”

However, South Africa will still need to deal with concerns being raised by sections of American business about a perceived uneven playing field for American exporters to South Africa, particularly when compared with some of the country’s other trading partners, including the European Union (EU).

In mid-July, the so-called Southern African Development Community European Partnership Agreement (EPA) group and the EU initialled the EPA, which is a reciprocal trade arrangement.

The deal offers EU firms better access on some products than is the case for US companies. However, Davies notes that these benefits, which were negotiated in the late 1990s as part of the Trade, Development and Cooperation Agreement, predated Agoa.

He also says that South Africa is willing to deal with some of the sanitary and phytosanitary measures that South Africa currently has in place for US agricultural products.

In November last year, a group of 15 major US agricultural associations, representing 120 000 farmers and 8 000 agribusinesses, drafted a letter expressing “strong opposition” to Agoa benefits being sustained in the face of South African barriers against US pork, beef and chicken exports.

Davies reports that processes are under way to address some of the “long-standing” disputes, particularly around pork and beef.

“While we can look at some of these matters and while we are starting to look at some of these matters, we really need to look at those against the background of some kind of assurance that we will continue to get Agoa. If that happens, we can probably address those one or two matters that have been raised with us.”