TRALAC - Trade Law Centre

Decision expected shortly - South Africa's AGOA benefits in peril?

Thursday, 05 November 2015 Published: | Shannon Ebrahim

Source: Independent Newspapers (South Africa)

An announcement in Washington DC is imminent that South Africa could lose some of its benefits under the African Growth and Opportunity Act (AGOA) due to repeated missing of deadlines, which could result in the loss of thousands of jobs in key sectors.

US Ambassador to South Africa Patrick Gaspard told Independent Media: “There is a recommendation (from the US Trade Representative) that has been advanced in Washington and which is making its way to President Obama. As a consequence of South Africa missing the last three critical deadlines, in the next few days we can expect the White House to possibly suspend some benefits that South Africa enjoys under AGOA.”

However, South African Trade Minister Rob Davies was sanguine and said: “We believe the negotiating process is on track, and we should expect US imports of poultry, beef and pork by the end of the year.”

When asked to specify which benefits might be affected, the US Ambassador said: “It is understood in South Africa that the two industries which have benefited the most under AGOA are the automobile manufacturing and citrus industries. One would expect the impact to be in either of those worlds.”

Were such a recommendation to be adopted by President Obama, according to Ambassador Gaspard, such a measure could take effect in January 2016. While the ultimate decision lies with President Obama, Gaspard contends that the President will pay close attention to the concerns and guidance of the US Trade Representative.

If such a recommendation were advanced and adopted by the US, South Africa could stand to lose significant duty free market access for the exports of its luxury cars and citrus fruits, with serious implications for the South African economy and the potential loss of thousands of jobs.

AGOA has enabled South African vehicle exports to grow from zero in 2000 to average around $2 billion per year, providing over 30 000 direct jobs and more than double in indirect jobs.

AGOA has also enabled the South African citrus export sector to establish an important base in the US market, which has allowed it to compete against Mexico and Europe. AGOA has resulted in South Africa creating 85 000 jobs in the citrus industry which could also potentially be at risk. Last year the US imported $55 million in fruits and vegetables from South Africa.

From the US perspective, America has created a programme that has helped to develop South Africa’s manufacturing industry to the extent that Port Elizabeth exports $1.7 billion in luxury cars to the US annually. South Africa also exports $250 million worth of citrus products to the US each year. “It is hard to stomach being called a bully when we are busy trying to negotiate even further market access for South African products such as avocados, lamb and parsimons,” Gaspard said.

The dispute between South Africa and the US is over the import of US poultry, beef and pork products into South Africa which would potentially threaten local industries. US poultry has been prevented from entering the South African market for 15 years, beef for 12 years, and pork for the past three years.

While compromises have been made this year and a quota system put in place, poultry continues to be blocked by the fact that the South African Department of Agriculture and Fisheries has not yet issued a health certificate and concluded a protocol on how to treat Avian Influenza in the US. The US is insisting that South Africa agree on “regionalisation” based on US state lines so that if another outbreak of avian flu in some US states, South African can still import meat from those US states not affected.

The US considers it a double standard that South Africa allows these meats to come in from other areas such as the European Union, which does not grant South Africa duty free market access like the US does - to the tune of $2 billion of South African exports. According to Ambassador Gaspard, 138 countries accept US poultry, 100 of them without any protocols, while 38 follow regionalisation protocols. “It would be quite simple for South Africa to do the same,” Gaspard said.

South African Trade Minister Rob Davies is confident that South Africa and the US can resolve these issues, and that South Africa will see the three meats being imported into our market by the end of this year. “The vets from South Africa and the US will be meeting today to hammer out the outstanding issues,” Davies told Independent Media. Ambassador Gaspard also contends that officials on both sides are working night and day to ensure that the President adopting such a recommendation can be averted.

South Africa’s AGOA Special Envoy Faizel Ismail told Independent Media that he is in daily contact with officials in the office of the US Trade Representative, and that he has no evidence to suggest that the US is considering reducing South Africa’s benefits under AGOA. “We are working daily on finalising the last remaining technical issues that relate to poultry, and we are close to completing the process. I am 100-percent confident that by the end of the year we will have the technical process in place,” Ismail said.

While both sides insist that there is the requisite political will to do a final deal before it is too late. “We are at the edge of the cliff, however,” Gaspard has warned.

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