TRALAC - Trade Law Centre

AGOA row - big losers, but also winners if SA gets boot

Wednesday, 06 January 2016

Source: Fin24 (South Africa)

If South Africa loses its beneficial status in terms of the Africa Growth and Opportunities Act (Agoa), there will be some winners and some losers in the local agriculture and agribusiness industry, according to John Purchase, CEO of Agbiz.

Conflicting interests between different value chains in the broader agro-food system makes it important for the outcome of SA's current Agoa negotiations to result in a good balance, he told Fin24 on Wednesday.

Agoa has enabled duty free, trade access preferences for SA's agricultural products. SA did, however, not meet a December 31 deadline to remove barriers on beef and chicken imports from the US, placing it at risk of losing these US trade preferences.

"If SA is kicked out of Agoa the SA industries that would be the big losers would primarily be fruit (including juice), wine and nuts. The winners would be the SA poultry and pork industries," said Purchase.

"Our position is clear: SA's current Agoa negotiations must aim to bring about a balanced situation where the country's duty free access to the US for its fruit, wines and nuts are maintained, and where SA, in turn, allows certain imports of US broiler meat, pork and beef under certain and strict conditions, both from a tariff quota, sanitary and phyto-sanitary (SPS), and food safety point of view. The process is, however, now out of our hands," said Purchase.

He added that the SA's current situation regarding the Agoa process is a complex issue, which requires a balancing act by government and agribusinesses in general.

"SA's geo-political positioning is, of course, adding to the complexity of the current Agoa trade negotiations and related issues. The geo-political impact cannot be divorced from these types of negotiations," explained Purchase.

Agbiz represents about 80 companies and associations involved in various agro-food value chains, including fruit, nuts, wine, poultry, red meat and grains. It looks at cross-cutting issues which affect various industries and it engages with government on policy and legislation as well as trade matters.

In September 2015 the Department of Trade and Industry (dti) did invite Agbiz to provide some guidance and perspective as part of what Purchase calls "this very tricky" Agoa situation.

"We asked for a balanced situation, which was basically what the dti and government adopted. We even called for partial equilibrium models to be run as some industries would win and some would lose," said Purchase.

These are agro-economic models to determine what the benefits would be and what the losses would be in specific industries. The Bureau for Food and Agricultural Policy (BFAP) was asked to develop and run such models and, according to Purchase, came to the same conclusion as government on where one would have to settle in the negotiations.

Certain sanitary and food safety issues regarding poultry imports from the US have since been resolved and as far as Purchase is aware the only issue left relates to SA's concern about the so-called salmonella food safety issue.

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