South Africa, US Settle Poultry Row, Averting AGOA Suspension

14 January 2016

South Africa and the US reached an agreement last week on the technical issues which have been blocking US meat – essentially poultry, pork and beef – imports into the African country.

Although the negotiations went beyond the time frame envisaged earlier by US President Barack Obama, uncertainty about South Africa’s continuation within the African Growth and Opportunity Act (AGOA) now appears to have been lifted.

“While we celebrate the progress we have made in resolving the outstanding technical issues, the true test of our success will be based on the ability of South African consumers to buy American products in local stores,” said US Trade Representative (USTR) Michael Froman while lauding the “constructive” efforts of South Africa over the past several months.

US President Barack Obama has set a 15 March 2016 deadline for implementing the deal to ensure that it does indeed function as envisaged. Otherwise, as outlined in a presidential proclamation published on 11 January, duty-free treatment for South Africa’s AGOA-eligible agricultural products will be suspended.

South Africa’s AGOA eligibility

“Our goal is to complete this effort so that South Africa can maintain the full and continued enjoyment of AGOA’s benefits,” Froman added in announcing the deal.

Last year, US President Obama set 31 December 2015 as a deadline for South Africa to comply with AGOA eligibility requirements. With the country failing to conclude the negotiations on this issue by the set deadline, South Africa faced the risk of its agricultural products being suspended from AGOA.

AGOA expands upon the US Generalized System of Preferences (GSP), a set of formal exceptions from the WTO’s most-favoured nation (MFN) principle, which allows developed countries to offer developing countries preferential treatment on specific goods. 

This summer, the US Congress passed legislation to extend duty-free access to the American market for eligible sub-Saharan African countries for another decade through AGOA. Under the new legislation, it was envisaged that an “out-of-cycle” review of South Africa would be undertaken 30 days after the bill’s enactment given specific concerns about the country’s compliance with certain AGOA provisions.

Following the AGOA renewal, the review of South Africa’s eligibility concluded that the country failed to meet certain AGOA requirements since “it has not eliminated or made continual progress towards eliminating barriers to US trade, including long-standing barriers to US poultry, pork, and beef.” (See Bridges Africa, 11 November 2015)

According to US government data, poultry meat is the third largest South African import from the US, with data showing that US$24 million worth of US poultry was imported into South Africa in 2013.

Safety standards at stake

Since 2000, imports of certain US chicken products into South Africa had been subject to anti-dumping duties of above 100 percent. In June last year, South Africa committed to end these import duties, but then raised sanitary concerns in December 2014 over an avian influenza outbreak – an infectious viral disease of birds which can sometimes spread to poultry – in 15 US states (see Bridges Africa, 27 January 2015).

Despite meetings over the past several months between South African and US veterinary experts, they were unable to find a solution on aspects of the dispute related to animal health and food safety standards.

While agreements were reached on time for a quota of bone-in-chicken pieces and a poultry trade protocol in the case of highly pathogenic avian influenza, issues related to salmonella testing of US poultry imports that arose after the deadline remained outstanding.

According to the South African Poultry Association, the salmonella testing protocol implemented by the South African Department of Agriculture, Forestry, and Fisheries is based on that of the European Union and complied with the standards of the World Organisation for Animal Health. The microbiological testing is intended to monitor for disease during multiple steps of the production process.

In an effort to find a solution, US and South African veterinary authorities met again on 6 January.

“We are calling on the US to do the right thing and retain our involvement in AGOA without any interruptions,” said Davies following the meeting.

In the final agreement, South Africa will permit the unrestricted importation of “shoulder cuts” under the condition that the US apply mitigation measures including the removal of risk material before exporting to South Africa.

With regards to beef, South Africa had suggested a 90-day quarantine period for foreign livestock slaughtered in the US. The US has instead guaranteed that such products will comply with US domestic requirements for human consumption. According to the statement, “South Africa has agreed to the assurances given by the USA.”

Both countries have agreed on a protocol to control the risk of transmission of Highly Pathogenic Avian Influenza (HPAI).

Despite government agreements, some stakeholders are not convinced of the parameters of the agreements reached.

However, several private sector representatives came forward to welcome the deal struck between the two nations, with some stressing that the concessions made by South Africa on sanitary standards should be considered in relation to the competitive gains AGOA offers South Africa.

Agricultural, automotive industry reaction

“We have succeeded in achieving a balance in maintaining the trade opening with the US and the animal health in South Africa,” declared Davies.

This announcement came as a relief for the South African agricultural and automotive industries, which stand to benefit considerably from preferential access to the US market through AGOA.

According to the South African government, continued participation in AGOA will maintain numerous trade benefits for key industries exporting to the US market, including the automotive and several agricultural sectors.  In 2013, US$2.3 billion worth of vehicles were exported from South Africa to the US and about US$253 million worth of South African agricultural products were exported to the US in 2013, with fruits and wines in the leading categories.

ICTSD reporting: “South Africa May Lose U.S. Trade Benefit After Target Missed,” BLOOMBERG BUSINESS, 4 January 2015; “South Africa: Agoa - SA Poultry Slammed for 'Protectionism',” ALLAFRICA, 5 January 2015; “Trade: South Africa's AGOA partnership under threat in meat war with US,” THE AFRICA REPORT, 5 January 2015; “South African Farmers See Pain as U.S. Trade Deal Unravels,” BLOOMBERG BUSINESS, 6 January 2015; “Agoa deal cracked: Davies,” TIMES LIVE, 7 January 2015; “South Africa: We Have Cracked the Agoa Deal – Davies,” ALLAFRICA, 7 January 2015; “U.S. Says South Africa May Lose AGOA Trade Benefits in March,” BLOOMBERG BUSINESS, 12 January 2015.

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