Agoa benefits both South Africa and US: Davies

The African Growth and Opportunity Act (Agoa) has had a positive impact on both South Africa and the US, and should therefore be renewed, Trade and Industry Minister Rob Davies at a media briefing on Friday.

Minister of Trade and Industry Rob Davies, Minister of Agriculture, Forestry and Fisheries Senzeni Zokwana and the Minister of Health Dr Aron Motsoaledi address the media after the AGOA negotiations. (Image: GCIS)

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“Our key message as South Africa is that Agoa has been something that has been positive for both sides and, if we look at it strategically, we think that the case for continuing with Agoa and continuing to include South Africa is a pretty compelling case,” Davies said.

South Africa’s trade with the US has been growing steadily, he said. “As of last year, we exported R69-billion worth of products to the US, including value added products and we imported R71-billion worth of goods from the US.”

A South African delegation comprising government, business and trade unions will take part in the Trade and Investment Framework Agreement (Tifa) with the US Trade Representative this week, where they will advocate for the renewal of Agoa.

Mutually beneficial

Davies said the general view was that Agoa had delivered and that the case for re- authorisation of Agoa, including South Africa, was a compelling one: “Our view is that Agoa has not only benefitted us but has also benefitted the US.”

“We support the common African position that Agoa should be renewed substantially as it is, although there could be many improvements,” he said.

Agoa is a legislation that provides duty-free market access to the United States for qualifying sub-Saharan African countries by extending preferences on more than 4 600 products. Business Times reported on Sunday that the current Agoa agreement had allowed 90% of South Africa exports into the US duty free for the past 15 years.

The reauthorisation of Agoa is done at US Congress level. The current Agoa will expire on 30 September 2015.

Access to American markets has created 62 000 jobs in South Africa and 350 000 across Africa. (Image: World Bank)

Job creation

Agoa has created 100 000 jobs in the US, and 350 000 direct jobs and 1.3- million indirect jobs in sub-Saharan Africa. In South Africa, Agoa is estimated to have created 62 000 jobs.

Faizel Ismail, ambassador and special envoy for Agoa, said the trip to Washington would “take stock” of issues concerning the two countries and Agoa.

The South African delegation would be going to Washinton to find “solutions to any of the outstanding issues that are related to the extension of Agoa”, which was of regional interest.

“The general view is that Agoa has been of interest to South Africa but, from the information we received from different industries, the evidence is that Agoa is of mutual interest to both the US and South Africa,” Ismail said.

Anti-dumping duties

South Africa has an anti-dumping duty in place on chicken portions coming from the US. “That duty is in the context that consumption patterns in the developed world are different from consumption patterns in the developing world,” Davies said, explaining that people in developed countries eat chicken white meat with brown meat products not saleable in those countries.

“We instituted an anti-dumping duty because we were saying that they were being sold at below the cost of production in South Africa,” Davies said.

According to Business Times, this duty sees US poultry providers pay a 37% import duty of bone-in chicken, along with an extra antidumping duty of R9.80 a kilogram.

Davies said South Africa had assisted US senators from poultry-producing states by urging the South African Poultry Association (SAPA) to make market access concessions to US exporters of poultry.

Two senators – Chris Coons of Delaware and Johnny Isakson of Georgia – have threatened to block the passage of Agoa though the Congress unless South Africa satisfies the demands of their chicken industry.

Davies said he has urged the South African poultry industry and the United States of America Poultry and Egg Export Council to find a solution, which would most likely take the form of a quota.

“There have been exchanges between them. We are not at the sweet spot yet where we find each other, to find an agreement around a quota. Once a solution has been found, government will implement that.”

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