TRALAC - Trade Law Centre

New hurdles block AGOA deal

Tuesday, 05 January 2016 Published: | Banele Ginindza

Source: Business Report (South Afrrica)

The deadline for resolving disputes with the US passed yesterday, leaving South Africa at risk of losing its benefits under the Africa Growth and Opportunity Act (Agoa) that translates into billions of rand in exports and supports thousands of jobs.

At the same time, issues related to bacterial disease Salmonella associated with poultry and the quarantine of non-US originating beef arose as new hurdles to be cleared.

Department of Trade and Industry Minister Rob Davies, Agriculture Minister Senzeni Zokwana and Health Minister Aaron Motsoaledi, said they were hoping to find a solution to issues related to US meat imports despite the deadline having passed yesterday.

Negotiations were still ongoing and there was an expectation that in turn South African exports to the US would be allowed to continue with the preferential treatment.

According to Davies, ballpark figures bandied about were that R25 billion out of R70bn of South Africa’s annual exports to the US had received Agoa preferential treatment and that the trade scheme sustained more than 60 000 jobs in agriculture and other industries.

US threat

US President Barack Obama had in November threatened to halt the import of certain South African agricultural products from the Agoa deal within 60 days unless the dispute over US meat imports was resolved.

Agoa is a trade pact between the US and 39 African countries that provides duty-free access to the US market across 7 000 product tariff lines including apparel and footwear, wine, certain motor vehicle components, a variety of agricultural products, chemicals and steel. Davies said the talks had gone into “extra time” and were “awaiting the final whistle”.

South African government officials have been engaged with their US counterparts during the festive season to finalise all the outstanding technical issues to allow for safe imports of poultry, pork and beef products from the US as a requirement for South Africa’s continued participation in Agoa agriculture trade benefits.

“Our objective is to continue to stay in Agoa for the benefit of this country and for the benefit of the bilateral economic relationship. At the same time we do this in such a way that we do not subject either our animals or our people to any unacceptable risk,” Davies said.

“South Africa believes that with some flexibility from both sides the final touches to the agreement on which 95 percent of the work has been done can be completed with some extra-time,” he added.

Outstanding issues, expected to be at the tail end of discussions slated for Wednesday, include beef imported by the US from neighbouring countries for which South Africa is awaiting a response on if the US agrees that such herds be quarantined in the US for 90 days, as well as procedures to be followed in the event Salmonella is detected in poultry imports from the US.

In September last year, following the expiry of the first Agoa agreement after 15 years, the extension of Agoa was made conditional on South Africa agreeing to imports of certain meat products from the US and South Africa had to declare bovine spongiform catalyties or mad cow disease as no longer applicable to beef imported from the US.

South Africa has already issued an avian influenza certificate and put in place rules for administration of the tariff quota which it gazetted on December 18.

However, concerns have been raised about the exclusion of agricultural products from Agoa as part ransom for full agreement on all issues.

Agreement pending

Davies said South Africa’s automotive exports to the US would not be affected by any halt to Agoa benefits that the country receives.

The exclusions would cover wine, macadamia nuts, citrus, avocado and other products that would be suspended, pending the finalisation of agreements between the two countries.

“The coming exclusion of South Africa’s agricultural exports from Agoa benefits is bleak news for our economy, and is the worst possible way to begin 2016,” the DA said in a statement issued after the media conference.

“Since the negotiations began South Africa has made significant progress on opening its market for the three US meats. This includes an agreement on a quota for bone-in-chicken pieces and a poultry trade protocol on avian flu,” the Department of Trade and Industry said in a statement.

However, SA Poultry Association boss Kevin Lovell said the talks were from a position of weakness because Agoa was a gift.”We are not negotiating as equal partners,” he said.

The local poultry industry last year had to concede to 65 000 tons of poultry being imported into the country as part of the US demands.

 

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