AGOA a potential no-go for South Africa?
President Jacob Zuma has claimed the US African Growth and Opportunity Act (Agoa) is “all systems go”, but there is growing uncertainty over its renewal.
South Africa’s inclusion in the agreement, which governs duty- free trade between the US and sub-Saharan Africa, is shaky.
Chicken freeze
New Agoa legislation could include a new eligibility requirement that – to be discussed by the US Congress next week – allows benefits only to countries not discriminating against the US.
The US is concerned that it’s facing higher tariffs on a range of products in South Africa compared to the EU – most prominently frozen chicken, which has been a target of local anti-dumping duties for the past 15 years.
Trade and Industry Minister Rob Davies, who is in the US for Agoa talks, has acknowledged South Africa is being pressured to give America the same preferential access granted to the European Union.
Zuma told parliament last week the process to reach an agreement with the US had been successful.
But the South African Chamber of Commerce and Industry (Sacci) has disputed this, saying the chicken disagreement is a possible deal breaker.
It’s been reported the US poultry council had demanded 125 000 ton imports a year, while the local association wants 45 000.
The South African Poultry Association had agreed to negotiate, but the US is concerned about the lack of progress.
Economist Mike Schussler describes the matter as a form of US bullying. But he’s worried about the country’s losses without Agoa, saying the motor industry will suffer.
He cites the example of costs to ship car parts between South Africa and the US, which may have a direct impact on consumers.
Limited benefits
Agoa has been criticised on the continent, with some saying the pact has benefitted South Africa the most in Africa.
Only a few of the 40 participating African countries are able to use meaningful amounts of the programme.
Some sub-Saharan African countries are concerned over a decline in trade after volumes peaked in 2008.
Sacci chief operating officer Peggy Drodskie says it’s only natural this view exists – because South Africa has better resources and infrastructure at its disposal than other African countries.
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