‘No more Agoa demands’
New bilateral trade deal mooted after Agoa expires in 2025, following last year’s ‘meat wars’
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