TRALAC - Trade Law Centre

AGOA no longer a chicken issue

Tuesday, 28 April 2015 Published: | Banele Ginindza

Source: Independent Newspapers

An amendment to renew the African Growth and Opportunity Act (Agoa) is likely to open a flood of complaints by the US Trade Representative (USTR) on a variety of issues and this is likely to limit Africa’s benefits from the trade initiative.

The amendment in question is to have the out-of-cycle review for South Africa compulsory rather than optional.

The bipartisan amendment sponsored by three senators also would “allow the US Trade Representative to be responsive and flexible in its approach to addressing areas of concern by conducting out-of-cycle reviews and when necessary, having the authority to suspend, limit or withdraw benefits for any beneficiary country not in eligibility compliance”. This has led to concerns that the US would manipulate Africa’s benefits from Agoa.

“That same amendment did not get through the ways and means committee, but it might still come in when it goes to the floor, we are not sure if the amendment is going to be part of the bill, but if it does become part of the bill, then it is not only about chickens, it will allow the USTR to complain about a range of policy issues where they have differences with South Africa,” said South Africa Poultry Association (Sapa) president, Kevin Lovell.

Sapa, unhappy about the prospects of the US regaining the largest market share for bone-in chicken since the pre-tariff days, has been coerced to smoke the peace pipe with the USA Poultry & Egg Export Council.

Last week the association sent a letter of its proposals, which if agreed to will become a formal proposal, but Lovell wondered why an out-of-cycle review for South Africa was on the cards at all.

“What’s of interest to us here is that if we do make an agreement, what will an out-of-cycle review be about? If the chickens are resolved then what’s going to be reviewed? The initial wording in the bill is that Agoa is more flexible and essentially kicks the can down the road and gives Congress more time to resolve the disputes with South Africa. It’s not only chickens, there are other Agoa disputes and a range of other disputes as well,” he said.

Battering Ram

Senior research fellow in the Economic Diplomacy programme of the South African Institute of International Affairs, Peter Draper, pointed out that US policymakers’ concerns used Agoa as a battering ram over the policy direction that South Africa took with regard to imports from the US and foreign direct investment from the US. Demands of Agoa were not merely about chickens.

“On the trade front, poultry is an issue, by no means small, but the other big issue is that SA has just concluded its economic partnership agreement with the EU and the Americans feel certainly discriminated against in the market relative to their European counterparts,” he said.

He said that on the investment front, there was a whole lot of stuff going on, like the private security bill, which the industry was mostly happy with, but it did not like the clause that foreign private security providers must give up 51 percent of their share to South African citizens, which would affect some US companies here.

Lovell said there was a danger of South Africa giving too much away on Agoa as “chickens are not technically speaking anything to do with Agoa, so giving anything on chickens is giving more than we should, because what South Africa needs to understand is that if chickens give in and give the US anything they want, we will not have any more American trade.

“We are merely giving up chickens to safeguard the level of trade. Some people seem to think that additional products can be exported to the US under Agoa – that’s incorrect. You can only export to Agoa what is on the schedule and the schedule will not be changed,” he said.

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