US Congress threatens to withdraw South Africa from AGOA

The New Year saw South Africa (SA) and the United States (US) coming to blows over trade agreements on the importation of poultry, pork, beef and other agricultural goods.

This was as a result of South Africa’s failure to meet the US African Growth and Opportunity Act (AGOA) December 31 2015 deadline to remove barriers on meat imports from the US.

According to Sidwell Modupe, departmental spokesperson to South African Minister for Trade and Industry, the import of meat from the US was stalled due to health concerns. The main concern has been the challenge over salmonella and Porcine reproductive and respiratory syndrome of which US meat is prone.
 
Consequently, health authorities have had to take into account the health standard of what is being imported into the country in order to avoid negative health consequences that might follow. But there are concerns that the potential expulsion of the country from AGOA could adversely affect overall trade in South Africa. 

The Implications

With the trade benefits that come with AGOA membership, the potential withdrawal of South Africa will bring with it wide reaching implications for the economy. Reportedly, exports to the United States stood at US $8.5 billion in 2013, and if things are left unresolved it could potentially affect   the automobile, wine and citrus sector which have benefited from duty-free access to the US market, as exports will begin to face extra duties. It has also been argued that should South Africa not concede to the demands of the US congress, significant job losses may occur in other sectors.

In an earlier report, US trade representative Micheal Froman said that South Africa could avoid the suspension which could cost it up to US $7 million in lost trade if a benchmark to eliminate barriers to US poultry are met.

The history

In an earlier development a notice was issued in which President Barack Obama warned South Africa that if the negotiations on the outstanding issues related to the poultry and meat were not resolved by 31 December then the US would suspend South Africa’s Duty Free Treatment of SA’s Agricultural goods into the US.
And with the deadline of 31 December already passed, Rob Davies, South African Minister of Trade told reporters earlier this week that the US could “blow the whistle” on negotiations at any point.  Davies, however, assured reporters on Monday that South Africa is doing everything possible to resolve all outstanding issues. 

“Last year, the United States and South African Veterinary authorities negotiated a Poultry Trade Protocol in the event of any new outbreaks of Avian Flu (HPAI) in the United States to secure the continued exports of poultry from those areas in the US that are not affected by Avian Flu,” said Modupe.

“Aside from the Avian Flu epidemic which has been resolved, issues around phytosanitary standards require greater scrutiny as salmonella and porcine syndromes might equally pose a danger to South African consumers. These are outstanding issues on which South African negotiators are unwilling to compromise,” he added.  

The progress so far

Since the negotiations began South Africa has made significant progress on opening its market for US imports. This includes an agreement on a quota for bone-in-chicken pieces and a poultry trade protocol on Avian Flu. All matters that were on the table for conclusion by 11 November 2015 were concluded, the only outstanding issues relate to issues brought to the negotiating table after the 11 November. 

Although there has been much posturing at the moment, Modupe explained that “95% of the work has been done. During the past few weeks, pork health certificates have been negotiated and only requires signature from both sides.”
He added that much progress has been made on beef with a few issues that can be finalised soon. On Salmonella too, a great deal of progress has been made but with some technical issues still to be finalised.

Along these lines, Modupe revealed that an agreement was reached in June 2015 between South Africa and the US where South Africa agreed to bone-in chicken imports to the tune of 65 000 tons annually in order to sustain its membership in AGOA for the next ten years.

He added that AGOA removes US export levies on sub-Saharan African countries, of which South Africa is a part. In order to remain beneficiaries these countries are required to eliminate barriers to US trade and investment was part the agreement for membership of AGOA.

“Both parties are committed to continuing the negotiations and we are positive that with some flexibility from both sides the final touches to the agreement, on which 95% of the work has been done can be completed with some extra-time, and South Africa is confident that outstanding  AGOA issues  will be resolved,” highlighted Modupe.