SA agric exports to US losing AGOA duty-free status – further R23bn at risk

We should have expected as much when the ANC installed a Communist with deep-seated anti-American prejudices as South Africa’s Trade Minister. The US’s Africa Growth and Opportunity Act, signed into law by President Bill Clinton in May 2000, was a political move with good intentions – offering a helping hand to the continent. AGOA allows exports from African countries duty-free access into the world’s biggest economy. It’s also a carrot to promote democracy, carrying some rather obvious strings. Al-Bashir’s Sudan and Mugabe’s Zimbabwe never qualified for AGOA and in recent times serial abusers of the democratic process – DRC, South Sudan, Burundi, Swaziland – have been dropped from the fortunate club. In recent months, with the ANC’s anti-American rhetoric hitting a new high and protectionist laws passed locally, South Africa has continuously tweaked this friendly tiger’s tail. America is about to respond, swatting SA agricultural products off the duty-free list as a warning that the entire R23bn worth of SA exports into the US is at risk. That threatens a few thousand thousand more jobs irreplaceable jobs. Will the Zuma Administration sober up to the fact that corks on economic oceans don’t get to decide the movements of the currents? – Alec Hogg

By Nicole Gaouette and Billy House

(Bloomberg) — The U.S. plans to suspend trade benefits on agricultural goods from South Africa, intensifying a dispute over that country’s restrictions on farm imports that had pitted farmers in the two nations against each other.

The action follows a U.S. review of South Africa’s status as a full beneficiary of a preferential trade agreement under the African Growth and Opportunity Act, or AGOA, which eliminates import levies on more than 7,000 products ranging from textiles to manufactured items.

Agriculture

The U.S. determined that South Africa has continued imposing barriers to U.S. trade, including American agricultural exports, according to a letter President Barack Obama sent to the Congress on Thursday. The suspension will become effective in 60 days, according to the notice.

The value of duty-free South African farming exports to the U.S. market was $176 million in 2014, just a fraction of its $1.7 billion of trade under AGOA, according to U.S. Department of Commerce data. While that proportion may be low, the suspension threatens to strain trade relations between the nations.

The trade program has helped South Africa more than double its exports to the U.S. since 2000. Shipments under the agreement accounted for more than a fifth of the nation’s exports to the U.S. last year, according to data compiled by the Tralac Trade Law Centre, based in Stellenbosch, near Cape Town. Total two-way trade between South Africa and the U.S. was about $14 billion last year.

Pact Assessment

“I will continue to assess whether South Africa is making continual progress toward the elimination of barriers to United States trade and investment in accordance with AGOA eligibility requirements, as well as whether this suspension of benefits is effective in promoting compliance with those requirements,” Obama said in the letter.

South Africa has ignored U.S. concerns about blocking U.S. beef, chicken and pork for years, said Representative Ed Royce of California, the Republican chairman of the House Foreign Affairs Committee, in a statement on Thursday.

Read also: US considers suspending SA’s membership of AGOA, ending billions in exports

“It is important for the South African economy, and our continued strong relationship with the people of South Africa, that they resolve these problems and regain AGOA eligibility,” Royce said.

AGOA, renewed by U.S. lawmakers in June, benefits 39 sub-Saharan African nations. To remain a beneficiary, countries are required to eliminate barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.

Trade Restrictions

At the heart of the dispute between the U.S. and South Africa were American chicken and cattle farmers who wanted South Africa’s government to remove trade restrictions imposed to protect the local industry from a flood of cheaper imports. South African Trade and Industry Minister Rob Davies said in September that his country had done all it could to retain access to AGOA.

Read also: Chicken Tarriffs: US Senators threaten to attack SA’s access to AGOA

African nations that no longer qualify as beneficiaries under AGOA include the Democratic Republic of Congo, Gambia and South Sudan. The U.S. announced last week Burundi will be expelled from the trade pact after deadly violence connected to a political crisis in the East African nation. Swaziland lost its access in January because of an alleged lack of protection of workers’ rights, while Zimbabwe and Sudan aren’t eligible.

South African Trade and Industry spokesman Sidwell Medupe declined to comment when reached by mobile phone late Thursday.

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