Obama gives SA final warning on agricultural produce
United States President Barack Obama has officially notified the South African government and the US Congress that he intends to suspend the duty-free access of all South African agricultural products into the US market under the African Growth and Opportunity Act (AGOA), from January.
But Obama gave Pretoria 60 days to eliminate its health barriers on imports of US poultry, pork and beef to avoid the implementation of the suspension.
In effect his move on Thursday was a final warning to South Africa to allow US meat imports into the country.
Obama’s move would mainly hit South Africa’s lucrative exports of citrus fruits and wine to the US. Last year SA exported USD41 million worth of oranges and USD33 million worth of wine to the US.
The US decision to suspend South Africa’s benefits, provisionally, came after years of tough negotiations between the two countries over the health restrictions which South Africa has put on the meat imports.
In a statement on Thursday, the US Trade Representative Michael Froman said that Obama had made the decision to suspend South Africa’s AGOA benefits because of its “failure to meet the eligibility requirements of the Act.
“Specifically, the President determined that South Africa is not making continual progress towards eliminating barriers to US trade and investment.”
Froman’s statement noted that Obama’s decision was the result of an “out-of-cycle” review of South Africa that was mandated by Congress in the Trade Preferences Extension Act of 2015 (TPEA) which was enacted in June this year.
The law extended by another 10 years, the benefits of AGOA – which allows most exports of eligible African countries into the US duty-free. But South Africa’s continued participation was made conditional on a successful outcome of the out-of-cycle review which was to take no more than 30 days.
That spurred the protracted negotiations which were already underway between the two governments to lift the South African health barriers which have kept US poultry, pork and beef out of the South African market for many years.
The two sides came close but could not overcome all their differences. US officials complained that their counterparts kept promising to lift barriers but then introduced new ones and missed three deadlines to comply.
On Thursday night, the US ambassador to South Africa Patrick Gaspard said in a statement; “I am optimistic that the two sides will resolve the few remaining issues that would allow trade to resume, and hope that this will happen before the changes go into effect in 2016.”
However his statement also warned that if South Africa did not comply with AGOA requirements by March 1 next year, the US would consider limiting, suspending or withdrawing its duty-free benefits on other products beyond those in the agricultural sector.
Though he did not say so, these would likely include automobile exports which last year amounted to USD1.3 billion, 74 percent of the total of about USD1,75 billion of South African exports under AGOA.
Business Report on Friday quoted South African Minister of Trade and Industry Rob Davies as saying that South African and US vet officials would iron out the outstanding issues on Friday “and that the first consignments of US poultry, pork and beef could be imported by South Africa before the end of the year”.
The paper also quoted the Vice-Chairman of the Citrus Growers Association Piet Smit as saying that a loss of AGOA benefits would have a severe impact on citrus growers in the Western and Northern Cape.
“The US market is the most important market for us as 30-40 percent of our exportable fruit is exported to the US. If our privileges under AGOA were to be revoked and we had to pay duties, we would be uncompetitive against Latin American nations such as Chile, Argentina and Peru which enjoy privileges under free trade agreements.”
Smit told Business Report that about 10,000 jobs in the Cape were dependent on the citrus sector, and if each employee has five dependents, it would mean 50,000 people could be severely affected.
Froman said: “We are disappointed that South Africa has yet to resolve these issues.
“We do not take this decision lightly, and, in fact, have been working hard over many months – indeed years – to help South Africa avoid such action.
“Unfortunately, the issues persist. We have, however, seen some important engagement by South Africa in recent days and remain hopeful that it will meet the mutually-agreed benchmarks relating to eliminating barriers to U.S. poultry, pork, and beef to avoid a suspension of AGOA benefits.” - ANA
(File photo: Gallo Images)