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'South Africa under-utilising AGOA' - official

'South Africa under-utilising AGOA' - official
Published date:
Friday, 24 June 2016

A South African official said on Tuesday that her country and other Sub-Saharan countries are under-utilizing the African Growth and Opportunity Act (AGOA), thereby not fully reaping its benefits.

Xolelwa Mlumbi-Peter, Deputy Director-General at the Department of Trade and Industry, said this while giving a keynote address at a seminar on ways to unpack AGOA in Johannesburg.

The AGOA, a legislation that was approved by the U.S. Congress in May 2000, is to assist the economies of Sub-Saharan Africa and to improve economic relations between the U.S. and the region. The Act provides trade preferences for quota and duty-free entry into the U.S. for certain products.

Mlumbi-Peter said African countries, including South African, do not have the capacity to supply the required goods for the U.S. market.

“We are under-utilizing the AGOA due to lack of infrastructure (energy and transport) in the continent which affects production. We do not have production capacity to take advantage of all the trade agreements we have globally,” said the official.

The critical issues, she said, are the sanitary and phytosanitary (SPS) measures, which make it difficult to access the U.S. markets even if the African countries have the capacity to produce them.

SPS measures and other regulations seek to protect human and animal life from the risks and threats arising from additives, contaminants, toxins or disease-carrying organisms in food, chemicals, beverages or feedstuffs.

South African products which include citrus, nuts, wine, vehicles and car parts are exported to the U.S. duty free under AGOA.

Mlumbi-Peter said the AGOA agreement has created 62, 000 jobs in South Africa.

“We are negotiating to increase our exports and diversify value-added products. The future relationship with the U.S. should contribute to objective of the country’s industrialization policy and infrastructural development,” she said.

The official said the new AGOA agreement has some out-of-cycle review where besides yearly reviews, any American stakeholders can petition his country and complain of any breach of AGOA.

South Africa experienced these reviews 30 days after the signing of AGOA.

“We are hoping that we are not going to another review given that we have dealt with the key issues of pork, beef and chicken that the U.S. had raised. We hope to increase utilization rate under AGOA to increase the export of products to the U.S. market.”

She said South Africa will conduct road shows in the country to make the South African business community aware of the AGOA benefits.

Dr. Donald MacKay, director at XA International Trade Advisors, told Xinhua that the AGOA is not a trade treatment but one sided with the U.S. dictating what South Africa has to do.

“South Africa is disempowered with no ability to do what she wants or resolve disputes. AGOA is a gift to the country, which is not reciprocal; you just have to accept it,” said Mackay.

The U.S. was making improper comments as part of the negotiations and the talks were done in an aggressive manner, he said.

“In South Africa, you have to accept what the U.S. wants or risk your products being shut out of the U.S. markets,” said MacKay.

He, however, noted that South Africa did benefit by having its products accessing the U.S. markets duty free.

MacKay said South Africa has to negotiate a different trade deal with the U.S. rather than rely on “what she accepted with hands tied”.

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