The Department of Trade and Industry (DTI) is confident the US will reverse its decision to suspend some of South Africa’s African Growth and Opportunity Act (Agoa) benefits before the restrictions are implemented by the end of the year.
Trade and Industry Minister Dr Rob Davies said on Friday that, while the “warning” was being taken “very seriously”, South Africa was “tantalisingly” close to resolving the final few issues, which included issues around salmonella and an exit clause for the agreements, that had resulted in the impending suspension of the duty-free treatment of its agricultural products.
Davies assured that the country was committed to implementing the agreement reached in Paris in June, despite the US taking a hardline stance to force South Africa into compliance or face termination from the pact meant to bolster trade with emerging economies.
On Thursday, US President Barack Obama said that, within 60 days, duty-free benefits on all Agoa-eligible agricultural goods would be suspended and that South Africa had until March 1, 2016, to prove to the Western powerhouse that it complied fully with the Agoa eligibility criteria or the benefits would be further limited, held in suspension with an extension into other Agoa-agreed products, or terminated altogether.
“I have determined that South Africa is not making continual progress toward the agreed elimination of longstanding barriers to US trade and investment,” Obama said in a statement.
Agoa’s current eligibility criteria required that beneficiary countries eliminated or were actively working toward eliminating barriers to US trade; however, a number of issues, particularly around sanitary and phytosanitary, surrounding US poultry, beef and pork, had risked South Africa’s continued participation in Agoa.
The loss of benefits had been widely estimated to potentially cost South Africa more than $7-million across several of the affected sectors, with the suspension affecting around R2.4-billion of yearly agricultural exports.
Wine, macadamia nuts and citrus were expected to feel the biggest impact should the suspension move ahead – a move which could cost the Western Cape alone up to 85 000 jobs, the Democratic Alliance (DA) noted.
The Western Cape agriculture sector relied heavily on the trade of citrus fruits and contributed roughly 70% to the total agricultural exports of South Africa, Western Cape Economic Opportunities, Tourism and Agriculture spokesperson Beverley Schäfer said.
“Missing this trade opportunity will have a damning impact on our regional economy,” she said.
Western Cape Economic Opportunities Minister Alan Winde painted a bleaker picture, pointing out that the jobs of 289 000 in the wine industry – 167 000 based in the Western Cape – would be on the line should the suspension go ahead.
Last year, under the Agoa programme, the Western Cape exported R1.47-billion of goods to the US – wine and citrus exports accounted for R719-million.
The South African Chamber of Commerce and Industry (Sacci) echoed the sentiments that the trade balance between South Africa and the US would be hit hard and the loss of revenue as a result would negatively impact an already suffering industry.
“South Africa has been given a lifeline in that US Trade Representative Michael Froman has said South Africa could still avoid the suspension, if it met benchmarks to eliminate barriers. However, if we fail to meet the requirements within the next two months we will lose the benefits,” Sacci warned.
However, Davies stood firm in his view that South Africa had been visibly making continual progress and that the country had complied with “all undertakings” to open its market to the US poultry industry.
South Africa had abandoned antidumping duties to a threshold of 65 000 t/y of US chicken imports into South Africa and resolved to resume imports – without duties – by the end of December after a ban nearly a year ago owing to fears of the impact of an Avian flu outbreak in the US.
South Africa’s veterinary (vets) experts, which have been driving the negotiations, continually engaged their US counterparts during the past few months on the drafting of the necessary trade and animal health protocols for the three meats under contestation.
“Significant progress has been made in this regard and the work is almost complete,” Davies said of the negotiations that were partly facilitated by the DTI, adding that the issues around animal health were “very complex” and that a balance needed to be struck between opening up trade and mitigating animal health.
Further, a ban on boned beef from several countries that had had Bovine Spongiform Encephalopathy had been lifted, including the US. in June, while the animal health authorities of both governments were locked in technical work to ensure safe trade regarding at least three pork-linked diseases, namely Trichinella, Porcine Reproductive and Respiratory Syndrome and Aujesky.
“South African vets have made significant progress and have been able to approve a list of pork cuts. South Africa has submitted a draft pork health certificate to the US. South Africa remains ready to address any other concerns of the US,” Davies noted, believing that the impasse would be resolved “well within” the 60-day deadline.
He assured that the outstanding issues would be discussed with a view to finalising the technical issues at a bilateral meeting scheduled for Friday.