Freight & Trading Weekly

SA warned of possible early termination of Agoa

6 Oct 2017 - By Lyse Comins

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While South Africa
has continued to
meet the criteria
to benefit under
the United States African
Growth and Opportunity Act
(Agoa) – despite its current
internal political and economic
turmoil – it’s possible the
country’s inclusion under the
legislation could be terminated
earlier than 2025.
This is the view of Virusha
Subban, customs and excise
and international trade
specialist and partner at law
firm Bowman Gilfillan, who
said the country should not seek
to remain a beneficiary to the
detriment of the local economy.
This after the imposition of
conditions regarding US meat
imports to SA which have
devastated the local poultry
industry and could be just the
beginning of additional trade
conditions.
SA is currently a beneficiary
of Agoa which extends dutyfree
access across 6000 tariff
lines to 38 African countries,
although the country only
exports products on 400 of
those lines. Key exports include
cars, transport equipment,
metal and chemical products,
agricultural products and
minerals.
“The current state of
affairs regarding SA-US trade
relations appears to be stable.
These benefits are expected
to remain in
place in 2018,”
she said.
“As things
currently
stand, it is
likely that
Agoa will come
to an end in
2026, and
will not be
passed again.
However,
under the
Trump
administration, South Africa
may be disqualified much
earlier than 2025, particularly
where other politics come into
play, relating to the importation
of chicken from the US and the
impact this has on the domestic
market,” she said.
“If South Africa does not
have access to benefits under
Agoa, many jobs will be lost,
and the economic growth from
these exports will suffer.”
However, there had not been
any official announcement
regarding early termination
and it appeared that the issues
regarding the three meats (US
chicken, beef and pork) exports
had been
resolved, at least
for now, she
added.
“We are
aware, however,
that SA’s
eligibility under
Agoa for 2018 is
being reviewed.
Although the
US views Africa
as a continent
of trading allies
and partners,
if SA does not agree to make
certain economic adjustments,
such as with the American
chicken exports, it does risk
being disqualified,” Subban
said.
“From an SA-US
negotiations standpoint, it
would appear that the issues
have been resolved. However,
the negative impact on local
chicken farmers and with a
few leading supermarkets
boycotting American chicken, it
is too soon to say that the issues
will remain resolved.”
Subban said the country was
still meeting the political, socioeconomic
and other stringent
conditions of Agoa.
“There have been many
submissions by industries in
SA made in support of SA’s
eligibility for 2018. However,
having regard to the negative
impact on the domestic market,
following the decision by SA
to accommodate American
chicken exports, it is unclear
whether SA will continue to
permit the elimination of the
previously imposed barriers for
the sake of participating under
Agoa,” she said.
But in the interests of
jobs and economic growth
in other sectors she said the
country might very well agree
to continue with US chicken
imports.
“However, to continue to
blindly and ‘obediently’ adhere
to US trade policies, is not what
was originally envisioned under
Agoa. As much as it may be
unilateral and non-reciprocal, it
does provide African exporters
an extra advantage and is good
for the economy. However, SA
should not seek to benefit under
Agoa to a point that it is a
disadvantage to the country.”
Subban added that it was
also likely that the US could ask
for further trade concessions
under the 2018 review as the
Trump administration was
committed to aggressively
breaking down all trade
barriers on US exports which it
considered unfair.