Leading US trade officials expressed optimism this week that the conditions would be met by the March 15 deadline for South Africa’s continued preferential access for agricultural products under the African Growth and Opportunity Act (Agoa).

Speaking in Johannesburg during a panel discussion hosted by the South African Institute of International Affairs, Assistant US Trade Representative for Agricultural Affairs and Commodity Policy Sharon Bomer Lauritsen said there was significant interest being shown by chicken importers and exporters following the “breakthrough” January 6 negotiations.

In terms of the deal, South Africa and the US agreed to a quota, allowing for the shipping of 65 000 t/y of bone-in chicken, which would not be subject to the antidumping duties that had been applied to US poultry for the past 15 years.

“It takes about a month for product to leave Atlanta and get to South African ports. There is huge interest on the part of South African importers and there is a lot of interest on the part our industries to export. So I am optimistic, but we will have to make sure that the poultry meat gets in and we need final resolution on some technical issues on pork and beef,” Bomer Lauritsen said.

Should the conditions be met, South Africa would continue to enjoy preferential market access on a range of agricultural products. Using the Agoa preferences, the country exported $176-million of agricultural products to the US in 2014. During the same year, Africa as a whole exported $14.2-billion worth of products under Agoa, $4.7-billion of which was non-oil-related trade.

South Africa remained the largest non-oil beneficiary of the scheme, exporting a wide-range of products, including automobiles, mining and chemical products, as well as agricultural goods such as citrus, wine and macadamia nuts.

ANNUAL ELIGIBILITY REVIEW

However, even if all the conditions were met by mid-March, South Africa’s Agoa eligibility, along with the eligibility of all other beneficiaries, would remain subject to a yearly review over the ten-year extension period for Agoa to mid-2025.

In the case of South Africa, the review would place particular emphasis on the requirement that the country continue making progress towards being a “market-based economy with open, rules-based trading and minimal government interference”.

Therefore, America’s current unease over various pieces of pending legislation, notably the Private Security Industry Regulation Amendment Bill and the Expropriation Bill, could still pose a risk to South Africa’s ongoing Agoa eligibility.

Assistant US Trade Representative for Africa Florizelle Liser said the priority for the US would be to have an “open exchange and dialogue” with South Africa regarding its concerns with certain pieces of legislation and to then assess the response of Parliament and government to those concerns.

“So we are waiting to see what kinds of responses we will get to the concerns we have; there is no sense that we will want to rush immediately to Agoa. But, again, I would remind you that, if there are going to be new barriers to US trade and investment, we have an annual Agoa eligibility review,” Liser cautioned, stressing that the review had been conducted every year since Agoa’s introduction in 2000.

In response, South Africa's Department of Trade and Industry (DTI) noted that during a bilateral meeting between Minister Rob Davies and the US Trade Representative, Ambassador Michael Froman, only three issues were linked to continued participation of South Africa to receive Agoa benefits.

"South Africa shares the US optimism that the deadline of March 15, 2016, will be met, thus facilitating South Africa’s continued participation in Agoa. It is important to note that the Agoa legislation has always included an annual eligibility review for all beneficiary countries," the department said in response to Engineering News Online questions.

PERMANENT SOLUTION?

She also indicated that the US would be initiating discussions with South Africa and other African countries on a more permanent trade arrangement beyond the unilateral extension of preferential market access through Agoa.

In fact, when extending Agoa in June last year, Congress stipulated that the US government provide it a report by June 29, 2016, as to which African countries were expressing an interest in negotiating free-trade agreements (FTAs) with the US.

“We are in the process of having a dialogue with stakeholders in the US and in Africa,” Liser reported, noting that a hearing on government’s ‘Beyond Agoa agenda’ had been held in the US in late January.

She stressed that America had an “open mind” as to the models that could be pursued, but “the world and Africa have changed since Agoa was put in place”.

She also highlighted that the US and the Southern African Customs Union had already attempted to negotiate a FTA in 2003. While the talks were terminated in 2006, “a lot of progress” was made in those three years of negotiation.

“For South Africa, which is one of our largest trading partners in sub-Saharan Africa, which is the largest beneficiary of Agoa in the non-oil sector . . . and taking account of the fact that South Africa has about 40% of its exports to the US entering the US duty-free, either under Agoa or our generalised system of preferences programme . . . one would assume that South Africa has a major stake in trying to see how it can continue to have duty-free access to the US market once Agoa ends.”

For its part, the DTI highlighted that South Africa and the US met on a yearly basis to address issues of mutual interest under the Trade and Investment Framework Agreement.

"In addition, the future architecture of Africa-US trade relations will be an outcome of stakeholder consultations both within South Africa and with the rest of the continent and should contribute to Africa’s integration agenda."