Agoa: Billions in agri trade on the line
The US will cancel South Africa’s duty- and quota-free access for agricultural products on 4 January unless sufficient progress is made to ensure market access to SA for American poultry meat, pork and beef. Prof. Nick Vink, chair of the department of agr
President Obama’s letter [on 5 November] to the US Congress stated that progress in negotiations about access for American (specific cuts of) poultry meat, pork and beef to the SA market has not been satisfactory. He gave SA 60 days to consider its negotiating position, after which the status of SA agricultural exports as a beneficiary of Agoa will be withdrawn (the rest of SA’s $1.7bn exports of non-agricultural goods have not been put into play – or at least not yet). If SA were to come with a counter-offer within 60 days, the US would consider retracting the statement about lack of progress.
fw: Can SA afford to lose its Agoa beneficiary status?
There are geopolitical considerations to this dispute that go far beyond the issue of trade in three agricultural products between the two countries. But the economic costs are also quite serious. SA benefits substantially from duty-free access to the US market via Agoa – according to the Trade Law Centre (tralac), SA exported $176m worth of agricultural products to the US under the duty-free concession, which is virtually all of our agricultural exports to the US (valued at R2.3bn in 2014). The US is our sixthbiggest export destination for agricultural products, and key sectors such as the wine industry have started to target this market.
fw: If SA removes the contentious trade barriers, what implications would it have for the local agriculture sector?
The current negotiations are asymmetrical, in the sense that the USA is not asking SA to remove all barriers to trade in especially poultry meat, pork and beef, but rather to improve the offer that SA has made with regard to these three products.
The US currently gives SA duty-free access on virtually all agricultural exports into the US – but on the other hand is prepared to deny us duty-free access on all agricultural exports that currently benefit from Agoa. As a result, South African exporters have gained much, and stand to lose much. But what the offer does is to pit South African exporters of poultry meat, pork and beef against South African exporters of all other agricultural products – a clever negotiating tactic.
The industries in the direct firing line, and especially the poultry industry, are being pressured to make more concessions to US exporters (but not to go all the way). The technical complexity of the industries is but one of the complexities in a negotiation within SA that has to balance the interests of different industries, of producers and consumers, and of the state in terms of the wider geopolitical considerations. It is therefore difficult to say offhand whether SA will benefit or not by any new offer to the USA – it will depend on the extent of access to the South African market that is being offered, on which products are in play, and on how South African and US traders (exporters and importers) of other commodities react.
fw: Is a positive outcome possible?
The SA offer, if there is going to be a new one, will depend on the balance of influence with government amongst the three industries (poultry meat, pork and beef), and the balance of forces between these three industries and other exporters of agricultural products. Importers, local producers for the domestic market and exporters have opposing interests, and producers and consumers also have opposing interests.
Successful negotiation depends on finding that calculus that balances these interests in a way that keeps everyone interested in the outcome. Obviously, the USA has more legal experts, more negotiators and ultimately a bigger defence force than SA, but if we play the game according
What the offer does is to pit South African exporters
of poultry meat, pork and beef against South African
exporters of all other agricultural products – a clever negotiating tactic.