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

Finweek English Edition - - THE WEEK | IN THE NEWS -

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.

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