TRALAC - Trade Law Centre

Letter from Washington: 'Turning to East poses no solution for South Africa’s woes'

Thursday, 14 January 2016 Published: | Simon Barber

Source: Business Day

...I refer to African National Congress spokesman Zizi Kodwa’s response, as reported by the official Chinese news agency, Xinhua, and tweeted by Sidwell Medupe, spokesman for the Department of Trade and Industry, to Obama’s Monday night proclamation regarding SA’s continued enjoyment of US trade preferences under the African Growth and Opportunity Act (Agoa).

The precise words Xinhua attributes to Kodwa are these: "We cannot allow to be bullied, that’s why many countries are looking at South-South relations and looking East because you can’t use the size of your economy to squeeze small economies." There seems to be something missing after "allow" — "ourselves", perhaps. But the sense is clear.

The US is bullying no one with Agoa, Mr Kodwa. Agoa is a unilateral gift of US market share that many in the US Congress including members of the Black Caucus, were at first unwilling to grant, seeing it as a threat to their own constituents’ livelihoods.

Yes, the gift comes with a few strings attached, but SA does not have to accept Agoa preferences if it believes the strings are too costly to its own interests or impinge upon its sovereignty. Agoa’s purpose was never to prise open SA’s markets, let alone wipe out South African manufacturing and agriculture with cheap imports. It was, and is, to help all Africa’s economies — or at least the majority that meet basic eligibility criteria — grow by giving their exports a leg-up against competitors, including China, in the US market, still the world’s largest.

It is true that SA has always been something of a outlier among Agoa beneficiaries. Its economy is by far the most sophisticated. That is why, from the outset, the US wanted to move on to a free trade agreement. Talks deadlocked. Rightly or wrongly — the truth lies between — the US came away feeling SA was happy to freeload off Agoa rather than engage in the tough give-and-take of a free trade agreement negotiation.

Well before Agoa came up for renewal last year, there was talk of graduating SA, or at least using the process to get SA’s attention on market access issues lobbies had been flagging to Congress and the US Trade Representative’s office, in some cases for years without result. There was nothing secret about Washington’s impatience.

Or surprising. After all, here was the US and its hyperproductive poultry sector all but shut out of the SA market since 2001 by questionable antidumping duties, while SA imports quadrupled to about 400,000 tonnes a year, principally from Brazil and the European Union. All the US wanted was the chance to compete for a reasonable share of SA’s import requirement. And since SA needs imports to supply demand, wouldn’t more competition between exporters be in SA’s interest to keep the price of those imports down?

Now I suppose if the US intention really was to destroy SA’s poultry industry while spreading disease to consumers and livestock, you might reasonably characterise Obama’s threat to reimpose normal duties on SA’s oranges as bullying.

But all he is asking is that SA implement undertakings from which SA itself gains. When someone willingly beats their head against a brick wall, as SA has been doing, you cannot accuse the wall of not playing fair.

As for Kodwa’s suggestion that the East — read China — does not put the squeeze on small economies, he might like to ask Vietnam why it has been so eager to join the Trans-Pacific Partnership with the US. He might ponder how voluntary has been his party’s surrender of Nelson Mandela’s commitment to a foreign policy rooted in human rights. By the way, how many jobs in SA has China created, net?

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