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You are here: Home/News/Article/Risks to South Africa's AGOA benefits mount

Risks to South Africa's AGOA benefits mount

Risks to South Africa's AGOA benefits mount
US Senator Chris Coons (right) meets with South African government officials about chicken duties and the African Growth and Opportunity Act in his office in Washington on March 4
Published date:
Monday, 23 March 2015
Ellis Mnyandu

Time is fast running out for South Africa to expeditiously reach a deal to extend Pretoria’s participation in the lucrative US preferential trade scheme known as the African Growth and Opportunity Act (Agoa).

A long-running dispute over access for US poultry products into the South African market could soon result in South Africa being kicked out of Agoa, which must be renewed ahead of its September expiration date.

Through Agoa, South Africa has been able to derive preferential access to the US market for a range of products, including cars, citrus, wine and textiles.

Barring South Africa from Agoa could cost the country as much as $2.5 billion (R30bn) in Agoa benefits and put thousands of jobs in jeopardy.

While President Barack Obama’s administration supports Agoa’s renewal, the decision will be made by Congress and some US business interests and legislators have demanded that South Africa be “graduated” because it is an upper middle-income country and because they say it is discrimi- nating against US imports.

About two weeks ago, a delegation from South Africa, including representatives from government and the South African poultry industry went to Washington as part of the efforts to try to resolve the impasse.

But while meaningful progress has been made in the government-to-government discussions over the last few months, there appears, however, to be no apparent headway thus far in engagements involving the South African Poultry Association (Sapa) and its US counterpart, the USA Poultry and Egg Export Council (Usapeec).

According to Senator Chris Coons of Delaware – a vocal proponent for South Africa to scrap duties on US poultry imports or forfeit its participation in Agoa – the opportunity to salvage South Africa’s participation in the trade scheme is fading fast.

Window of time

In an interview with Business Report on Friday, he said Congress would soon be seized with a much bigger issue of the Obama administration’s deal on Pacific trade, leaving little or no time for resolving South Africa’s future Agoa status.

Coons said Sapa and Usapeec needed to promptly begin formal negotiations over the impasse.

“I am concerned that Sapa does not seem to be taking the private negotiations that they need to have seriously, and does not seem to have a sense of the importance of time,” Coons, a Democrat, told Business Report.

“There is a very short window in which we can get Agoa re-authorised before it begins to have very negative consequences,” he added.

Asked to characterise progress made thus far in trying to resolve the 15-year-long row, Coons said Pretoria and Washington “have had a series of conversations over several years now that have led to stronger and better clarity to what the issue is”.

“On the first point I would say the governments are talking well and respectfully and are engaged,” said Coons. He insisted, however, that South Africa was using anti-dumping duties to block US poultry from the South African market.

Looking ahead, he said apart from government-to-government engagement, “the parties who really have to negotiate are Sapa and Usapeec”.

He said Agoa was an issue that was much smaller than Obama’s initiative about Pacific trade.

“We have to get this done before we take up the much larger, much complex issues… So there is a closing window for us to get the focus of the American Congress on re-authorising Agoa before it has negative consequences for the continent, and I want to see this done,” Coons said by telephone from Washington.

If Agoa is not renewed in time or South Africa is left out of it, there was likely to be costly repercussions, not only for South Africa but possibly for its neighbours as well, especially countries like Lesotho, which have become more reliant on Agoa to access the lucrative US market.

Asked what sort of remedy he would like to see, Coons said he was not in a position to prescribe what the solution ought to be.

But in the short-term, he said, they may be discussions around a quota for US poultry imports, while in the long-term his goal was to see South Africa scrap the anti-dumping duties targeting US poultry products.

Coons said in January he had met with a dozen ambassadors from Gabon to Kenya, from Mauritius to Lesotho, who were desperate that Agoa be re-authorised by March to avoid the loss of contracts and to avoid the loss of jobs.

“But March is already passed. Congress will not take this up and move it overnight. Everything we do, we do slowly. But the window for trade negotiations and the window for legislation on trade is going to be April not September,” Coons cautioned.

“If you think about it, the South African economy has a great deal to lose if Agoa is not extended for South Africa.

“The countries in the region that take advantage of Agoa for textiles like Lesotho are going to begin losing contracts for the holiday season for textiles within a few weeks,” said Coons, adding there were currently no scheduled formal discussions between Sapa and Usapeec.

“I met with the delegation from South Africa. We had a very respectful and constructive discussion, but that was government to government.

“Now we need Sapa to come to the table quickly and formally, and negotiate in good faith with Usapeec,” added Coons.


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