Who will chicken out in sim­mer­ing Agoa bat­tle?

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

The US is look­ing to wring more con­ces­sions out of the South African govern­ment af­ter get­ting mar­ket ac­cess for US poul­try in the lo­cal mar­ket, and a sim­mer­ing bat­tle over three pieces of lo­cal leg­is­la­tion could ex­plode at any time.

At an event or­gan­ised by the SA In­sti­tute of In­ter­na­tional Affairs and the US em­bassy in South Africa this week, Florizelle Liser, as­sis­tant US trade rep­re­sen­ta­tive for Africa, said that the three bills, “ac­cord­ing to our read­ing, would have a chill­ing ef­fect on US busi­nesses” based in South Africa.

About 600 US com­pa­nies are do­ing busi­ness in South Africa.

The three pieces of leg­is­la­tion are the Ex­pro­pri­a­tion Bill, the Pro­tec­tion of In­vest­ment Bill and the Pri­vate Se­cu­rity In­dus­try Regulation Amend­ment Sec­tor Bill.

Liser said that the US found one clause in the Pri­vate Se­cu­rity Bill par­tic­u­larly re­pug­nant – the re­quire­ment for the ces­sion of a 51% stake of for­eignowned se­cu­rity firms to lo­cal in­vestors.

She said that de­mand­ing the ces­sion of a 51% stake amounted to ex­pro­pri­a­tion, and the US was ready to fight this law.

Peter Draper, MD of Tutwa Con­sult­ing, said the US had a num­ber of av­enues to ad­dress its un­hap­pi­ness about the Pri­vate Se­cu­rity Bill, in­clud­ing again threat­en­ing to with­draw South Africa’s African Growth and Op­por­tu­nity Act (Agoa) ben­e­fits.

Of the con­cerns raised by the US, the se­cu­rity bill was the most se­ri­ous and could open the door for se­cu­rity equip­ment com­pa­nies to also have to con­cede a 51% stake, Draper added.

“If a US com­pany has an as­set ex­pro­pri­ated, then the coun­try in­volved will im­me­di­ately be barred from Agoa,” he said.

The trade dis­pute could ul­ti­mately end up at the World Trade Or­gan­i­sa­tion, or Pres­i­dent Ja­cob Zuma could also send the bill back to Par­lia­ment, pos­si­bly af­ter the lo­cal govern­ment elec­tions later this year, Draper said.

In an at­tempt to pla­cate the US and main­tain its Agoa ben­e­fits, South Africa has agreed to a quota that would see the US ex­port 65 000 tons of poul­try to South Africa each year.

By March 15, South Africa needs to have put in place all the mea­sures re­quired for the free pas­sage of the 65 000 tons of US poul­try im­ports, oth­er­wise South Africa’s Agoa ben­e­fits would again be at risk of be­ing sus­pended.

How­ever, Draper said the March 15 dead­line was likely to be missed be­cause the South African govern­ment’s win­dow for re­ply to poul­try im­port quo­tas was mid-April, and the state had made the US im­port quota con­di­tional on poul­try im­porters be­ing sup­plied by BEE con­cerns.

“There are no black poul­try im­porters in South Africa. It is go­ing to be an in­ten­sive few weeks ahead,” Draper added.

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