Agoa spat over ... for now

The threat of SA los­ing duty free ben­e­fits for ex­ports to the US has been lifted, but a clear state­ment of US power has been made

CityPress - - Busi­ness -

The over­whelm­ing con­sen­sus from aca­demic stud­ies is that Agoa does noth­ing what­so­ever for al­most all African coun­tries.

Dur­ing last year’s “out of cy­cle re­view” of South Africa’s Agoa sta­tus in Wash­ing­ton, DC, the de­part­ment of trade and in­dus­try made the ar­gu­ment that South Africa more or less is Agoa.

The scheme waives US tar­iffs on about 1 500 items, about a third of which are cloth­ing-re­lated, on top of more than 4 000 tar­iff lines cov­ered by the Gen­er­alised Sys­tem of Pref­er­ences tar­iffs for poor coun­tries any­where.

The prob­lem is that Agoa cov­ers things Africans do not make and, even if they did, the of­ten small tar­iffs be­ing waived can’t be the ba­sis for new in­vest­ment.

In money terms, Agoa is es­sen­tially a trade deal with South Africa, along with a spe­cial cloth­ing deal with Kenya, Le­sotho and Mau­ri­tius.

The cloth­ing com­po­nent re­lies on an ad­di­tional con­ces­sion that al­lows some African coun­tries to ex­port cloth­ing to the US tar­iff­free by us­ing fab­ric im­ported from out­side Africa.

It is called the Third Coun­try Fabric Pro­vi­sion.

A ma­jor study of Agoa’s use­ful­ness (to Africans) was com­mis­sioned by the UK gov­ern­ment in 2011.

It found the ben­e­fits out­side of cloth­ing “mod­est”, with “lit­tle or no im­pact on ex­ports”, and added that even the cloth­ing ex­ports were not as eco­nom­i­cally ben­e­fi­cial

PHOTO: BREN­DON THORNE / BLOOMBERG

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