South Africa at risk of losing AGOA agriculture benefits over poultry row

11 November 2015

The US could revoke South Africa eligibility for duty-free treatment for all agricultural goods under the African Growth and Opportunity Act (AGOA) if the country continues to impose longstanding barriers to US trade, including barriers affecting certain US agricultural exports. The duty-free treatment previously given to the products of South African farmers will be suspended within 60 days from 5 January 2016 if South Africa does not conform to AGOA requirements, explained US President Barack Obama. 

The U.S. issued the warning last week following a drawn-out dispute over U.S. chicken and meat exports, citing that South Africa is not making continual progress toward the elimination of barriers to US trade and investment as required by the AGOA.

“While the United States and South Africa have made significant progress in resolving outstanding issues, our trade in all three meats remains blocked,” declared US Ambassador to South Africa Patrick Gaspard.

SA’s compliance with AGOA under scrutiny

In June, President Obama signed into law a bill reauthorising AGOA for an additional 10 years. The bill included an amendment requiring a review of South Africa’s eligibility within 30 days. A month later, an out-of-cycle review of South Africa’s AGOA eligibility was initiated, during which the U.S. notified the South African government that South Africa needed to take concrete steps eliminating barriers to US trade and investment in order to remain eligible for AGOA trade benefits (see Bridges Africa, 16 September 2015).

Following the out-of-cycle review, President Obama determined that South Africa has failed to meet AGOA eligibility requirements—specifically that “it has not eliminated or made continual progress towards eliminating barriers to US trade, including long-standing barriers to U.S. poultry, pork, and beef.”

According to a statement from US Ambassador to South Africa Patrick Gaspard, the US will continue to monitor South Africa’s compliance with AGOA requirements. Should initial suspension of duty-free treatment not result in compliance with AGOA eligibility criteria, the US will consider “further action to limit, suspend or withdraw duty-free treatment for additional AGOA-eligible products from South Africa beyond those in the agricultural sector” by 1 March 2016.

South Africa confident about the situation

South Africa Trade and Industry Minister Rob Davies said that he was "confident they can fix this within 60 days and reverse the suspension notice."

A letter issued by the South Africa Department of Trade and Industry indicates that South Africa has been making “continual progress during the past few months to implement the agreement reached in Paris.”

“These issues are about animal health and are very complex—a balance has to be found between trade opening and animal health,” reads the letter.

The letter mentions that a draft trade protocol and animal health protocol is almost complete and that technical issues should be resolved shortly.

“South Africa believes that it is ‘on track’ to meet the 31 December deadline to resume imports of US poultry into South Africa,” said the letter.

Longstanding issues

Since 2000, imports of certain US poultry products into South Africa had been subject to anti-dumping duties of above 100 percent, which US exporters deemed unfair. After representatives signed the Paris Agreement in June, South African Trade and Industry Minister Rob Davies announced that South Africa will end punitive duties on US chicken and renew imports (See Bridges Africa, 10 June 2015).

A meeting between South African and US veterinary experts in September culminated in a set of actions intended to resolve the remaining sanitary issues related to poultry, pork, and beef after South Africa raised concerns over an avian influenza outbreak—an infectious viral disease of birds which can sometimes spread to poultry—in 15 US states.

In a letter addressed to South African President Jacob Zuma beforehand, two US senators of major poultry producing US States had requested that Pretoria follow the World Organization for Animal Health (OIE) guidelines, and made specific reference to the review of South Africa’s eligibility under the AGOA (see Bridges Africa, 16 September 2015).

According to various online sources, South Africa missed an October 15 deadline to agree on new animal health and food safety rules, which also affect US beef and pork exports, prompting the US to warn that its eligibility for the AGOA trade programme was at risk.

Other concerns in the pipeline

Other concerns were raised at a separate Trade Policy Review of the Southern African Customs Union which took place at the WTO on 4 November in Geneva, Switzerland. One issue, for example, was related to the nature of certain South African policies which may deter foreign investment in South Africa, particularly a provision in the Private Security Industry Regulation Amendment requiring at least 51 percent South African ownership and control of foreign-owned private security firms.

If signed into law, the bill’s local ownership requirement would create a “disturbing precedent” for firms in a wide area of sectors, as stated by the Geneva-based US Representative at the Review, Michael Punke. According to a report by the US Senate Finance Committee, South Africa had already indicated its intention to renegotiate its commitments under the WTO’s General Agreement on Trade in Services requiring foreign-owned companies to relinquish 51 percent ownership to South Africans (see Bridges Africa, 15 May 2015).

Sources: “US - South Africa: Poultry war threatens AGOA deal as Obama issues warning,” The Africa Report, 6 November 2015. “Analysis: Playing Chicken on the AGOA Speedway,” Daily Maverick, 9 November 2015. “AGOA: Obama turns the screws on SA,” BusinessReport, 9 November 2015. “South Africa's Statement on the African Growth and Opportunity Act (AGOA),” AllAfrica, 7 November 2015. “Obama gives SA 60 days before revoking Agoa privileges,” Rand Daily Mail, 6 November 2015. 

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