US President Barack Obama has given South Africa 60 days to show it
is meeting the requirements of the African Growth and Opportunity Act
(Agoa) before he imposes normal tariffs on South African agricultural
products.
Mr Obama said on Thursday that South Africa had until
January 4 to satisfy him that it was complying with the eligibility
requirements to enjoy duty-free access for its agricultural products
under Agoa.
Losing the duty-free status afforded by Agoa could
affect US orders for South African citrus, which were valued at $57m
through the first nine months of this year; macadamia nuts, worth $43m
in 2014; and wine, worth $33m in 2014.
According the US
International Trade Commission’s website, the "normal trade relations"
duty on shelled macadamia nuts is $0.05/kg; on citrus, $0.019/kg; and on
wine, $0.063 a litre.
However, the weakness of the rand against
the dollar could mitigate the effect of duties on the competitiveness of
those products in the US market.
"I
am taking this step because South Africa continues to impose several
longstanding barriers to US trade, including barriers affecting certain
agricultural exports," Mr Obama said in a letter announcing his decision
to Congressional leaders.
"I have determined that South Africa is
not making continual progress toward the elimination of barriers to US
trade and investment as required by section 104 of Agoa."
In
renewing Agoa for 10 years last June, Congress ordered the office of the
US Trade Representative to undertake an "out of cycle review" of
whether South Africa, by far the largest user of Agoa benefits, was
eligible to continue enjoying them.
This was primarily on the
initiative of senators from states with large poultry interests chafing
against the antidumping duties South Africa imposed on US chicken wings
and drumsticks in 2000.
The senators, Chris Coons of Delaware and
Johnny Isakson of Georgia, encountered no opposition, reflecting broader
bipartisan concern about South Africa’s treatment of US exporters and
investors.
Without going into detail, Mr Obama did not limit his
reasons for threatening suspension of SA’s Agoa benefits to what the US
sees as foot-dragging on undertakings to open the South African market
to US chicken, beef and pork.
US officials have indicated that if
President Jacob Zuma were to sign the Private Security Industry
Regulations Amendment Act as it stands, South Africa could lose Agoa privileges on the grounds that US companies would face de facto expropriation.
In
a separate statement, the US Trade Representative focused exclusively
on the meat issues. It said the president would reimpose normal duties
on currently tariff-exempt South African farm products "unless South
Africa meets certain benchmarks to eliminate barriers" to US exports of
the three meats.
In Paris in July a deal was struck under which US
exporters were to be allowed to sell South Africa 65,000 tonnes a year
of the contentious chicken parts before punitive antidumping tariffs
kicked in.
The agreement was subsequently undermined by ongoing
South African bans on imports of US all poultry, plus beef and certain
pork cuts, on grounds of animal health and food safety — grounds the US
regards as specious.
The US Trade Representative said that
following the launch of the eligibility review on July 21, South Africa
had "committed to benchmarks on poultry, pork and beef that it would
need to meet in order to demonstrate compliance" with Agoa.
"South
Africa failed to meet October 15 benchmarks related to US poultry,
including finalising an avian influenza trade protocol for the export of
US poultry meat, as well as a US Department of Agriculture export
certificate for poultry to enable poultry shipments to occur by the end
of the year."
Mr Coons and Mr Isakson, in a statement hailing Mr
Obama’s announcement, said South Africa had been slow to meet
commitments it made in Paris.
"South Africa does not deserve to
receive benefits under Agoa as long as they refuse to drop unfair trade
policies that have effectively slammed the door on American chicken
imports for over a decade.
"There is still time to address these issues, and we hope the president’s action today spurs South Africa to open their market to American poultry immediately."
In renewing Agoa, Congress gave the US Trade Representative and the White House the option
— which they are now threatening to exercise — of suspending
noncompliant countries’ benefits on a product-by-product basis.
Previously, countries were either in or out.
The US Chamber of
Commerce and other US business groups have urged the US Trade
Representative to keep South Africa in Agoa despite some of their
members’ frustration with South African policy.
Ahead of the US
move, Trade and Industry Minister Rob Davies told Parliament’s trade and
industry portfolio committee that South Africa had sent the US
proposals to settle outstanding issues and was awaiting a response.
The US has now responded.
by Simon Barber,
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