‘No more Agoa de­mands’

New bi­lat­eral trade deal mooted af­ter Agoa ex­pires in 2025, fol­low­ing last year’s ‘meat wars’

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­press.co.za

The US will prob­a­bly not use its new pow­ers again in terms of the 10-year Ex­ten­sion and En­hance­ment Act, which falls un­der its African Growth and Op­por­tu­nity Act (Agoa). This af­ter the Western su­per­power forced a chicken con­ces­sion out of South Africa last year.

Ed­ward Wi­nant, the US em­bassy in South Africa’s trade and in­vest­ment of­fi­cer, this week dis­missed the threat of fur­ther “out-of-cy­cle” re­views.

“It is un­likely an­other one will crop up. It could be ini­ti­ated again, but I think not,” he said at a sem­i­nar at the Univer­sity of the Wit­wa­ter­srand’s School of Law deal­ing with the “meat wars” – the pro­tracted im­passe be­tween the two coun­tries over meat im­ports and ex­ports.

Agoa will “most likely” not be re­newed when it ex­pires in 2025, said Wi­nant.

In­stead, at least as far as South Africa is con­cerned, the US would pre­fer a trade agree­ment, he said.

The last at­tempt at ne­go­ti­at­ing a trade deal be­tween the US and the South­ern African Cus­toms Union ended in fail­ure in 2006.

“We are happy to lis­ten to South Africa and the cus­toms union ... some signed and cer­tain agree­ments would be a won­der­ful re­place­ment for Agoa,” he said.

Xolelwa Mlumbi-Peter, the depart­ment of trade and in­dus­try’s deputy di­rec­tor-gen­eral of in­ter­na­tional trade, said at the same sem­i­nar that last year’s re­booted Agoa means it could no longer be con­sid­ered a “non­re­cip­ro­cal pro­gramme”.

“It was non-re­cip­ro­cal; now it has con­di­tions at­tached. We were re­quested to make a payment for it,” she said.

“This is a risk to all ben­e­fi­cia­ries, not just South Africa,” she added.

The new Agoa al­lows “any US stake­holder” to re­quest out-of-cy­cle re­views of African coun­tries.

It was seem­ingly de­signed with South Africa in mind and used on the coun­try 30 days af­ter the new law was passed.

Now, ac­cord­ing to Wi­nant, there is no real rea­son to use it again. The only payment re­quired is “things South Africa does any­way”, he said.

Ac­cord­ing to Wi­nant, the nor­mal an­nual re­view process built into Agoa from the start is enough to deal with most is­sues. This process led to Swazi­land get­ting booted out a year ago.

Ear­lier this year, South Africa re-al­lowed a lim­ited quota of US chicken into the coun­try, free of stand­ing anti-dump­ing du­ties.

This af­ter the US is­sued an ul­ti­ma­tum and threat­ened to with­draw parts of the coun­try’s Agoa el­i­gi­bil­ity – an­other new weapon cre­ated by last year’s act that al­lows it to be used more sub­tly than sim­ply com­pletely cut­ting coun­tries out of the scheme.

The “ob­jec­tive con­di­tions” jus­ti­fy­ing the anti-dump­ing tar­iffs are still there and have been af­firmed by two re­views of the orig­i­nal 2000 de­ci­sion, said Mlumbi-Peter.

“We said we would not let go of that in­stru­ment. It is an in­stru­ment all World Trade Or­gan­i­sa­tion mem­bers are en­ti­tled to.”

South Africa’s poul­try pro­duc­ers made con­ces­sions that would hurt its mem­bers for the good of the coun­try – with­out gain­ing any­thing from Agoa it­self, she said.

Stephen Meltzer, a part­ner at law firm Web­ber Wentzel – which rep­re­sented South African chicken pro­duc­ers in the Agoa talks – also de­fended the du­ties.

“The du­ties were legally re­newed ... the US in­dus­try never sought to chal­lenge them in a South African court or at the world trade body, or par­tic­i­pate in the re­newal process.

“In­stead, they tried to turn a non­re­cip­ro­cal pro­gramme into a re­cip­ro­cal one.”

While ex­ports to the US have in­creased mas­sively since the pro­mul­ga­tion of Agoa in 2000, “not all of that growth is due to Agoa”, said Don­ald Mackay, di­rec­tor of con­sul­tancy XA In­ter­na­tional Trade Ad­vi­sors.

The ac­tual use­ful­ness of Agoa, es­pe­cially out­side South Africa and a hand­ful of coun­tries ex­port­ing cloth­ing to the US, is often called into ques­tion. Most cov­ered prod­ucts are not made in Africa.

The ben­e­fit of zero tar­iffs is also often far too small an in­cen­tive to sud­denly make in­vest­ment into new sec­tors vi­able.

Agoa added 1 700 new “tar­iff lines” to the 4 800 al­ready fall­ing un­der the gen­eral sys­tem of pref­er­ences, where de­vel­op­ing coun­tries en­joy tar­iff ex­emp­tions in the US mar­ket.

South Africa ex­ports 141 of th­ese 1 700 prod­ucts to the US, while the con­ti­nent uses fewer than 400 of the tar­iff lines. There are many prod­ucts Africa would be able to ex­port to the US if they got in­cluded in Agoa, Mlumbi-Peter said. “We need to ex­pand the cov­er­age.” Agoa con­spic­u­ously ex­cludes ma­jor agri­cul­tural com­modi­ties rel­e­vant to the con­ti­nent when they are pro­duced in the US. South Africa, in par­tic­u­lar, wants more of its meat and agri­cul­tural prod­ucts to get into the US.

Here US san­i­tary (an­i­mal hy­giene), phy­tosan­i­tary (plant hy­giene) and la­belling re­quire­ments block ex­ports.

Talks about av­o­ca­dos are ad­vanc­ing af­ter litchis were ex­ported to the US for the first time ear­lier this year, said Mlumbi-Peter, adding: “I dis­agree that Agoa is not ben­e­fi­cial.”

It is un­likely an­other one will crop up. It could be ini­ti­ated again, but I think not

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