The impasse between the US and South Africa over meat exports and imports has highlighted the need for a shift in approach with regards to the negotiations over a free-trade agreement (FTA) when the current African Growth and Opportunity Act (Agoa) expires in 2025.

While South Africa gained a reprieve and continued to enjoy the benefits of Agoa recognition, an axe would remain over the nation until a fair, mutually beneficial, reciprocal trade agreement with the US was signed.

This was the message that emerged during a Mandela Institute-hosted panel discussion unpacking the unilateral Agoa programme at the University of the Witwatersrand on Tuesday.

A potential South Africa-US FTA, moreover, seemed to be in sight, with the US assuring that it would maintain its trade relationship with South Africa when the current ten-year extension of Agoa lapsed in 2025.

With South Africa unlikely to secure another Agoa renewal, US Embassy trade and investment officer Edward Winant said the Western powerhouse aimed to formalise the relationship and pursue a bilateral agreement.

An Agoa replacement agreement would provide certainty as South Africa graduated from the US-led Act, in effect ending the benefits currently afforded to South Africa.

The prolonged, now resolved, recent stand-off between the US and South Africa over South Africa’s continued participation once the unilateral trade agreement was renewed, highlighted the need for a reciprocal deal with dispute resolution platforms, said Agricultural Business Council international trade and investment intelligence manager Tinashe Kapuya on Tuesday.

Those engagements needed to start now, he warned, as the uncertainty surrounding the latest amendments to Agoa called for engagement and a rapid response.

Discussions were currently under way to secure an FTA for the Southern African Customs Union (Sacu), for a more mutually beneficial relationship with the US; however, focus would continue to be on supporting industrialisation ambitions and the regional integration of Africa, Department of Trade and Industry international trade and economic development division deputy director-general Xolelwa Mlumbi-Peter said.

“We have to figure out new ways to engage, outside of the structures [through which] we normally engage,” Kapuya pointed out, citing South Africa’s near ejection from Agoa based on market access for three meats.

The current framework of the Act could be used as a basis for a reciprocal post-Agoa arrangement, with South Africa able to strategically build and expand on the preferences already in existence.

“We cannot depart from the [Agoa] agreement now, from a trade and goods agreement [from which] South Africa is benefiting, but need to find common ground and flexibility around the agreement [going forward],” he commented.

Lessons learnt from failures of the past should be applied to address the initial breakdown in discussions for a Sacu FTA.

“We still don’t have that common set of ambitions,” he said, pointing out that a more “flexible” arrangement was required.

Following South Africa’s concession, in part, to the US’s poultry, pork and beef demands, South African industry had showed a fairly firm hand in putting their needs on the table as well; however, the modalities of the engagements needed to change and, in certain aspects, there was a need to redefine the terms of engagement.

While South Africa relied heavily on Agoa, a departure from which would be detrimental, the country did not need the “axe over its head” of its participation remaining subject to yearly and out-of-cycle reviews.

South Africa remained somewhat hostage to the unilateral laws of the US, with the suspension of the Agoa benefits an ever present “sword over South Africa’s head”, said XA International Trade Advisors director Dr Donald Mackay.

“There really is no free lunch with Agoa; without reciprocity, there is no negotiating power. The US, to a large degree, set the terms,” he said.

This resulted in an unbalanced position arising between the US and any country that takes the benefits offered by Agoa, particularly as they lose the ability to dispute any matter at the World Trade Organisation as it would equal an automatic suspension.

Bowman Gilfillan corporate department partner Virusha Subban explained that the intention behind it was to stimulate access to markets and South Africa had seen significant benefits.

However, she also pointed out that Agoa was not a negotiated agreement, leaving the nation at the mercy of the US, and with a reformed Agoa equipped with stricter criteria, South Africa was not out of the woods yet.

The reform of certain legislation could also risk South Africa’s future eligibility.

With several reforms in legislation under way, including that of the private security industry regulations and intellectual property rights in law, the country was likely to be challenged again.

“We are sitting on the fence, waiting . . . with a possible out-of-cycle review hanging over our heads,” she commented.

However, Winant assured that, as a review took around four to six months to conclude, it was unlikely South Africa would be treated to another out-of-cycle review prior to the annual review.

An out-of-cycle review can be requested by stakeholders, subject to legitimate eligibility concerns and assessment, with a 60-day notice provided should the US agree to pursue.

Both reviews examined the barriers to US trade, workers’ rights, a country’s efforts in combating corruption and reducing poverty, the rule of law, a country’s market-based economy, child labour reduction efforts – all things that South Africa did anyway as it was embedded in the country’s Constitution, he explained.

The only threat was the barrier to trade – more specifically, the import restrictions and antidumping duties on poultry, pork and beef – which had sparked the initial out-of-cycle review late last year.

In November, the US vowed to lift South Africa’s duty-free benefits on all Agoa-eligible agricultural goods should it fail to implement, by December 31, 2015, the agreement reached in Paris in June 2015 to ease restrictions on three meats and improve market access for the US.

The outstanding issues that had hampered negotiations included protocols around salmonella, such as tolerance levels and protection procedures, and issues over imported beef that initially originated from outside the US, as South Africa refused to concede to anything that could risk the health of its citizens.

South Africa also opened its market for the agreed-upon 65 000 t/y quota for bone-in-chicken pieces and a trade protocol on Highly Pathogenic Avian Influenza was reached, with the pork health certificate negotiations concluded to ensure that appropriate scientific measures were taken by the US to manage the risk of transmission of the Avian Flu strain.