6 January 2016

South Africa: More to Agoa Dispute Than Meets the Eye

Photo: Department of Trade and Industry
Rob Davies, South African Minister of Trade and Industry

There's more to the conflict over the African Growth and Opportunity Act (Agoa) than just the US poultry imports, according to Tutwa Consulting managing director Peter Draper.

Agoa is a US law that enhances market access to the US for qualifying sub-Saharan African countries including South Africa. The US is expected to suspend South Africa from Agoa after it missed a December 31 deadline to resolve a health-related dispute on meat imports. The suspension will hit the agricultural sector first.

Draper said South Africa could still avert the suspension by removing unnecessary health barriers to imports of US chicken and beef.

Draper, who is an expert in trade and investment policy, said while disagreement over US poultry imports was the proximate issue, behind it was a range of US government and business concerns about SA's respect for private property rights and associated protection of US business interests in SA.

"The Private Security Bill, draft IPR policy, Promotion and Protection of Investment Act, and more, are in the mix. Furthermore, the US is unhappy that we grant the EU privileged access to our market, but not the US, yet they offer us a non-reciprocal benefit," he said.

US will move on to other issues

He said if the poultry issue was solved, attention was likely to move to the other matters, especially if the US gets fed up with the South African government's responses.

"There is a foreign policy dimension, with the SA government, led by the president and foreign minister consistently poking a finger in the US's eye (over Libya, Syria, and other global issues), while forging closer links with the Brics (Brazil, Russia, India and China)," Draper said.

He said, with hindsight, there are certain things the South African government could have done differently. For instance, government could have been less in thrall to the domestic poultry lobby and instead could have been open to foreign direct investment.

"Generally (they should have been) less protectionist and (more) inward-looking."

While cosying up to the Brics, do not lose sight of the need to nurture our crucial trade and investment relations with the West, in this case the US," he said.

Agricultural workers the first to bear brunt of suspension

Agricultural workers will be among the first to bear the brunt of South Africa's suspension from Agoa, said Draper.

"Currently, only certain benefits are likely to be suspended. This may broaden should the US judge SA is being too recalcitrant. So, at the moment we are primarily talking about exports from the Western Cape of citrus, macadamia nuts, and wine.

"Obviously the first to suffer would be workers, since bottom lines would be negatively impacted. But at the same time, our high import barriers to chicken mean that chicken prices remain high - and this is the primary source of protein for poor consumers," Draper said.

Source: Fin24

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