Agoa.info - African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/AGOA: US lawmakers up the ante

AGOA: US lawmakers up the ante

AGOA: US lawmakers up the ante
Published date:
Wednesday, 01 April 2015
Author:
Ellis Mnyandu

The United States has ratcheted up its bid for South Africa to grant access to US poultry products, with 13 US Senators writing to Trade and Industry Minister Rob Davies this week to urge him to push for talks to resolve a dispute threatening Pretoria’s participation in a key trade scheme known as the African Growth and Opportunity Act (Agoa).

Agoa must be renewed ahead of its September expiration date. In a letter, also addressed to ambassador Faizel Ismail, South Africa’s special envoy for Agoa, the 13 US legislators said they were concerned that the SA Poultry Association (Sapa), which represents the local industry, was “drawing a hard line on its most recent offer to the US industry and may not be willing to continue negotiations in good faith”.

“We urge you to continue to work with Sapa and encourage its leaders to not shut the door on negotiations,” the Senators said to Davies.

While the letter from the Senators stopped short of saying that South Africa risked being left out of Agoa, it reiterated the course of action sought from South Africa.

“We share your optimism that a fair agreement can be reached,” they wrote to Davies.

Chickens or cars?

The signatories to the letter include US Senator Chris Coons of Delaware, a Democrat, and his Republican counterpart Johnny Isakson from Georgia. The letter echoes what Coons told Business Report in an interview about a week ago.

Coons and Isakson have been vocal in their push for wanting South Africa to scrap the duties on US poultry products or risk being kicked out of Agoa, a preferential trade scheme that allows duty-free access into the US of various South African exports, including cars, wine, citrus and textiles.

In the interview with Business Report Coons had warned that the opportunity to salvage South Africa’s participation in the trade scheme was fading fast, and called on Sapa and its US counterpart, the USA Poultry and Egg Export Council to urgently begin formal negotiations. The letter to Davies, dated March 30, also contains the same plea.

The 13 Senators said the work to resolve the dispute “needs to be done urgently”.

Through Agoa, South Africa has been able to derive preferential access to the US market for its products.

Barring the country from Agoa could cost Pretoria 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. 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 discriminating against US poultry imports.

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

In the letter, the Senators said while preliminary offers were made between the two industries, there had been little progress to reach a solution and formal negotiations had yet to take place.

Efforts to get comment from Davies’s office were unsuccessful yesterday.

But Sapa, whose critics have accused it of holding South Africa hostage to the whims of the poultry barons by standing firm, said that the inclusion of a 15-year-old dispute in Agoa renewal was an attempt by the Americans to bypass the mechanism for resolving trade disputes, “in this case a dispute relating to the dumping of chicken, specifically bone-in portions, into the South African market”.

SA poultry

In a response to Business Report, Sapa chief executive Kevin Lovell said: “That the application of these duties has never been challenged by the US in the courts or at the World Trade Organisation – the correct forum for this kind of remedy – speaks for itself.”

Lovell said Sapa was mindful that Agoa offered opportunities for South Africa to develop new trade ties and deepen existing ones, and had supported the renewal process since early last year, “even though it is to our own detriment”.

“The Americans have a natural advantage over us as they source maize and soya at lower prices than we can. Now they want an unfair advantage as well,” said Lovell yesterday, referring to the two critical inputs for raising poultry.

Last week, Lovell had told Business Report that the US demands were tantamount to asking South Africa to shrink its economy. “For as long as the Americans dump we will defend our right to be protected from unfair trade.”

He said the US approach thus far was akin to asking South Africa to make a choice “as to how we would like to shrink our economy – chicken or cars”.

According to Lovell it was not true that US poultry products were shut off from the South African market.

“The anti-dumping duties apply to only one tariff line, so the rest of the poultry import market (about 250 000 tons per annum) is freely available to them and the part for which the anti-dumping duties apply (about 150 000 tons) is also available as the principle of an anti-dumping duty is that it is corrective, not punitive – for example, it levels the playing field so that the two parties can compete equally and fairly.”

Urgent summit

Even so, David Wolpert, the chief executive of Association of Meat Importers and Exporters of SA, said it was high time for Davies to call an urgent summit of all interested affected parties to resolve “this completely avoidable crisis”.

“We simply cannot have SA poultry magnates holding the tens of thousands of South African jobs that Agoa creates to ransom,” said Wolpert.

“The South African Poultry Association continues to use nonsensical arguments in defending anti-dumping duties on US chicken.

“Sapa contends that dropping anti-dumping measures would have devastating effects on the South African economy. This is simply not true. When dumping duties are dropped on US bone-in chicken, all that will change is the source of our imported chicken and not the quantity of chicken imported.

“The big loser in the maintenance of dumping duties is the consumer.”

South African poultry, Wolpert said, was acting in their own self-interest, with no regard for the consequences.

“Surely it is time for the Minister to do what is right for South Africa as a whole?”

 

Read related news articles

Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship

As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country.  I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...

13 March 2024

South African president Ramaphosa meets with US congressional delegation

South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...

21 February 2024

US congress receives Bill to review South Africa relations

A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...

09 February 2024

Fitch research unit expects better AGOA deal for South Africa

Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...

09 January 2024

South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities

Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...

20 November 2023

US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa

President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...

09 November 2023

US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility

Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...

07 November 2023

AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]

Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...

06 November 2023

South Africa pins its hopes on an early 2024 US Congress renewal of AGOA

South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy.   This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...

05 November 2023

SA trade minister Patel expresses confidence at media briefing about South Africa’s continued inclusion in AGOA

Ahead of South Africa hosting the US-AfricaTrade and Economic Cooperation Forum – also called the AGOA Forum – from November 2 to 4, Trade, Industry and Competition Minister Ebrahim Patel on October 26 briefed the media on the state of readiness for the forum, expressing confidence that the South African government’s relations with the US were strong. Various South African stakeholders have been motivating for...

26 October 2023

Business Leadership SA calls for business to capitalise on South Africa’s hosting of AGOA Forum

It is notable that South Africa will still host the African Growth and Opportunity Act (AGOA) Private Sector Forum next month, given that several US lawmakers have called for it to be moved elsewhere, and have questioned the country’s preferential trade terms with the US under Agoa as such preferential access to the US markets is open only to African countries that do not threaten American security interests. This is...

24 October 2023

You are here: Home/News/Article/AGOA: US lawmakers up the ante