TRALAC - Trade Law Centre

South Africa hits AGOA ball back into US court

Wednesday, 07 October 2015 Published: | NTSAKISI MASWANGANYI

Source: Business Day (South Africa)

South Africa 'should not be excluded from the African Growth and Opportunity Act (Agoa) as it has done everything it can to address the concerns of US businesses about the openness of the local economy for their goods', says Trade and Industry Minister Rob Davies.

"We have addressed their concerns, including on chicken import quotas. The ball is now in the US’s court," Mr Davies said while acknowledging that the US could "in whole or in part exclude SA from Agoa benefits, but we think we should continue to be part of the arrangement and we hope that will be the outcome of the review".

His comments came as a new study showed SA’s exports to the US and European Union could fall 10% if firms from these countries reduced trade ties in retaliation for SA’s controversial private security bill.

The signing of the Private Security Industry Regulation Amendment Bill into law in its current form was "economically very dangerous", warned independent economist and Gordon Institute of Business Science lecturer Roelof Botha, author of the study.

A section of the bill, which is awaiting President Jacob Zuma’s signature, would require multinational private security companies to reduce their shareholding in local subsidiaries to 49% or less.

The industry fears this would result in a fire sale of assets at less than fair market value.

The bill is at the centre of lobbying by some US congressmen who are pushing for SA to be excluded from Agoa benefits.

Last week US officials said they feared a deepening breach in relations if Mr Zuma signed the bill into law in its present form.

But Security Industry Alliance executive director Costa Diavastos said on Tuesday the fact that the bill had been sitting with Mr Zuma for more than a year meant the government was probably considering the opposition to it.

Implementation of the bill with the clause on 51% local ownership would precipitate trade alienation, which would not only affect exports but could lead to a combined loss in taxation revenues of R52bn, said Dr Botha. This in turn would threaten fiscal stability, he said.

Investments by the big foreign-owned private security companies operating in SA — ADT, Securitas, G4S and Chubb — totalled R4.5bn over the past eight years.

security industry bill parliament640px

The proposed private sector security bill could scare investors

 

South African Chamber of Commerce and Industry president Vusi Khumalo said the signing the bill into law in its current form would disadvantage SA as an investment destination. The controversial ownership clause set "a dangerous precedent" that could spill over into other industries.

Other issues that had concerned the US trade lobbyists included access by US pork and beef exports, along with content requirements imposed by changes in black empowerment codes; perceived threats to US agricultural exports from the European Union-Southern African Development Community Economic Partnership Agreement; and concerns about the draft Cybercrimes and Cybersecurity Bill.

 

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