TRALAC - Trade Law Centre

New AGOA deadline set as Obama announces SA suspension date

Monday, 11 January 2016 Published: | Matthew le Cordeur

Source: Fin24 (South Africa)

South Africa has until March 15 to fully comply with the US over its poultry and other meat imports, after US President Barack Obama on Monday ordered the suspension of duty-free treatment to all Agoa-eligible goods in the agricultural sector from South Africa, effective on that date.

The suspension will be revoked should South Africa comply with the requirements to ensure the imports are on SA shelves, source said. It is in effect another 60 day deadline for South Africa, after it concluded negotiations over health issues last week. That could happen within a month, but does put added pressure on the country to comply. 

Obama was expected to make this announcement last Tuesday, after South Africa failed to meet a previous 60 day deadline set by Obama to finalise negotiations around US meat imports, failing which he said he would suspend certain duty free tariffs on goods that benefit from the African Growth Opportunity Act (Agoa).

The act, renewed by US lawmakers in June, eliminates import levies on more than 7 000 products ranging from textiles to manufactured items and benefits 39 sub-Saharan African nations.

“I have determined that South Africa is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by South Africa with such requirements than terminating the designation of South Africa as a beneficiary sub-Saharan African country,” Obama said in a proclamation released on Monday.

“Accordingly, I have decided to suspend the application of duty-free treatment for all Agoa-eligible goods in the agricultural sector from South Africa for purposes of section 506A of the 1974 Act, effective on March 15, 2016.”

While Minister of Trade and Industry (dti) Rob Davies announced on January 7 that the countries had completed negotiations on the various meat imports, US Ambassador Michael Froman warned there were more hurdles for SA.

“While we celebrate the progress we have made in resolving the outstanding technical issues, the true test of our success will be based on the ability of South African consumers to buy American product in local stores,” he said on January 8.

“We will be working to ensure that this final benchmark of entry of poultry is achieved so that South Africa continues to have the advantage of full Agoa benefits, including by working with the US and South African industries to expedite the shipment of eligible product as soon as possible.  

“Our goal is to complete this effort so that South Africa can maintain the full and continued enjoyment of Agoa’s benefits.”

Sidwell Medupe, dti spokesperson, told Fin24 on Tuesday that the department will issue a statement later in the day, responding to this announcement.

Davies announced that after the negotiations over the salmonella issue were concluded on January 7, South Africa was immediately open to 65 000 tonnes of US poultry imports. The agreement means SA will rebate the US on any anti-dumping duties on the meat.

Asked how long it would take for shipments of US chicken to start reaching South Africa, Mike Brown, president of the US National Chicken Council, told Business Day newspaper that it was "just a matter of the South African government issuing import certificates for South African importers and the US government’s food safety and inspection service issuing paperwork to US exporters. I would hazard a guess that we could be in country within … 30 or so days by boat."

New 60 day deadline

The National Security Council in Washington told SABC on Tuesday that it was not suspending South Africa's Agoa benefits, but rather setting a new 60 day deadline for South Africa to comply.

"The office of the US trade representative says if the remaining benchmark - the entry of US poultry into South Africa under the agreed-upon conditions - is met before 15 March, the president will be able to consider a revocation of the proclamation before suspension takes effect," SABC reported. 

Obama can also reinstate full Agoa benefits after a suspension takes place.

"It seems that although the US is happy that the technical barriers were resolved last week, they are not prepared to let up the pressure on South Africa, and the implicit threat of removing the benefits of Agoa remain."

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