TRALAC - Trade Law Centre

Minister Davies, government urged to avert 60-day US ultimatum

Friday, 06 November 2015 Published: | Carin Smith

Source: Fin24 (Media 24)

SA has only 60 days to avoid a profoundly negative impact on its economy after the US threatened to suspend its duty-free farm trade status, industry role players warned on Friday.

The DA's shadow minister of trade and industry Geordin Hill-Lewis, said in a statement South Africa's suspension from the African Growth and Opportunity Act (AGOA) will affect roughly R2.4bn of SA's annual agricultural exports, covering products like wine, fruit juice, citrus fruit, pulp and more.

It could also cripple the already drought-hit agricultural sector and threaten thousands of farm jobs, warned Hill-Lewis.

"The consequences for farmers and farmworkers are profoundly negative in a year in which they are already suffering the effects of a devastating drought.

"SA's loss of AGOA benefits for agricultural products will cost thousands of jobs," he said.

The SA Agricultural Business Chamber (Agbiz) called on the government to push beyond current efforts to ensure that the impending suspension of SA’s duty-free quota-free access of agricultural products is avoided.

The US issued a notification on Thursday in which it gave South Africa 60 days to save its benefits from AGOA. 

This comes after US President Barack Obama informed Congress on Thursday of his intention to suspend SA’s AGOA benefits for all agricultural products.

A dispute over SA’s restrictions on farm imports has sparked a "poultry war" between local farmers and their US counterparts.

According to Obama's letter to Congress, new, higher tariffs on SA's agricultural exports will only take effect in 60 days' time - January 5 2016. South Africa, therefore, theoretically still has until then to sort out the remaining market access barriers to certain agricultural imports form the US - like poultry.

In the DA's view the reason for Obama's action is because Minister of Trade and Industry Rob Davies "has had months of warnings and reminders to honour the commitments made to the US on market access for chicken, pork and beef, but has failed to do so".

Hill-Lewis pointed out that just three days before Obama's letter to Congress, Davies told the Department of Trade and Industry's portfolio committee in parliament that “AGOA is secure” and that South Africa had met all of the commitments made to the US earlier this year.

Agbiz echoed this, saying there was no indication of this happening at the Nedlac Trade and Industry Chamber strategic session held this week, despite questions posed to Davies by Agbiz on the matter.

"It was in fact indicated that good progress was being made in negotiations on the issue and that government was confident that an agreement was imminent," said Agbiz.

Agbiz CEO Dr John Purchase has called on government to be transparent in its dealings with the private sector and explain the legitimate reasons for the impasse, "if there are any”.

Hill-Lewis said even if AGOA benefits are saved for SA, the country’s image and standing as a trade partner of the US have been damaged.

Both the DA and Agbiz warned that, should South Africa fail to meet the 60-day deadline, more severe restrictions, or total exclusion from AGOA, may follow.

Although "not entirely unexpected", Agbiz said the "unfortunate development" was extremely disappointing.

The chamber said it understands that if the South African government manages to resolve outstanding animal health issues for poultry, pork, and beef before the 60 days lapse, there may still be an opportunity for this suspension to be withdrawn.

Meanwhile, Agriculture Minister Senzeni Zokwana told eNCA television on Friday that he was surprised by the US announcement. "I am surprised because our veterinarians were meeting with the Americans last week. 

"They exchanged information. We are waiting for the Americans to respond to the suggestions we have made."

Davies is due to brief the media about the AGOA issue at 12:00 on Friday.

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