South Africa’s Department of Trade and Industry (DTI) confirmed on Thursday that its so-called ‘three-meats’ negotiations with the US on poultry, beef and pork had been concluded, securing the country’s position as an African Growth and Opportunity Act (Agoa) beneficiary.
Agoa was extended last year by ten years to mid-2025, but South Africa’s eligibility was immediately subjected to an out-of-cycle review, owing primarily to concerns over restrictions on American poultry exports, as well as health and safety restrictions on other meat products.
DTI confirmed that the first shipment of 16 t of frozen chicken legs arrived at the Port of Durban on Friday, February 26. The consignment’s clearance by Port Health Authorities meant that US poultry was available on retail shelves ahead of the March 15 deadline set in January by President Barack Obama.
In terms of an eleventh-hour deal struck on January 6, South Africa and the US agreed to a quota arrangement, whereby South Africa would accept 65 000 t/y of bone-in chicken from the US and these imports would not be subject to antidumping duties that had been applied to US poultry since 2000.
Obama then set a 60-day deadline for the actual arrival of US chicken into the South African market, with an indication that a failure to meet the timeframe would result in South Africa losing some of its duty-free Agoa benefits for other farm products.
US Trade Representative Michael Froman confirmed on March 2 that South Africa had met the agreed-upon benchmarks and that, if sustained, Obama’s threat of suspending South Africa's Agoa benefits would be revoked.
Using the Agoa preferences, South Africa exported $176-million of agricultural products to the US in 2014. During the same year, Africa as a whole exported $14.2-billion worth of products under Agoa, $4.7-billion of which was non-oil-related trade. South Africa is the continent’s largest non-oil beneficiary of Agoa, exporting a wide-range of products, including automobiles, mining and chemical products, as well as agricultural goods such as citrus, wine and macadamia nuts.
Trade and Industry Minister Dr Rob Davies thanked all the South African stakeholders in the poultry, beef and pork sectors for their role in completing “a very complex negotiation”.
“I have to pay tribute to the South African poultry industry. They had nothing to gain, they were the ones who were having to pay [for South Africa’s continued Agoa eligibility]. But they went along with it and negotiated a reasonable deal,” Davies said.
He added that the deal was in South Africa’s national interest, as it protected a “valuable” market-access arrangement, which was “paid for” through improved market access to South Africa for US poultry, beef and pork.
He also lauded the “patience and understanding” of the wine, macadamia nuts and citrus sectors, whose benefits had been threatened.
“At the end of the day, we have come out of here with a deal which, I would want to argue, is a reasonable enough deal . . . and we have managed to secure the continued participation of South Africa in Agoa,” Davies said, stressing that safeguards had been put in place to ensure that the health of South Africans was not threatened by the imports.
DTI said the conclusion of the discussions secured South Africa’s Agoa position for the next ten years. However, the country, as well as the other African beneficiaries, would be subjected to yearly eligibility reviews by the US.
Therefore, America’s current unease over various pieces of legislation, notably the Private Security Industry Regulation Amendment Bill and the Expropriation Bill, could still pose a risk to South Africa’s ongoing Agoa eligibility.
Assistant US Trade Representative for Africa Florizelle Liser said recently the priority for the US would be to have an “open exchange and dialogue” with South Africa regarding its concerns with certain pieces of legislation and to then assess the response of Parliament and government to those concerns.
“So we are waiting to see what kinds of responses we will get to the concerns we have; there is no sense that we will want to rush immediately to Agoa. But, again, I would remind you that, if there are going to be new barriers to US trade and investment, we have an annual Agoa eligibility review,” Liser cautioned, stressing that the review had been conducted every year since Agoa’s introduction in 2000.
Davies, however, said South Africa would continue seeking improved market access for South African agricultural products, reporting that discussions were under way to facilitate exports of South African chicken breast, ostrich meat, avocados and mangoes.
Progress had already been registered, with South African litchis accessing the US market at the beginning of 2016.
“The understandings reached will also create new opportunities to deepen the trade and investment relation between the US, South Africa and the African continent as a whole,” Davies said, adding that South Africa also intended seeking improved market access to the US for South African chicken white meat.
The US indicated recently that it would be initiating discussions with South Africa and other African countries on a more permanent trade arrangement beyond the unilateral extension of preferential market access through Agoa.
In fact, when extending Agoa in June last year, Congress stipulated that the US government provide it a report by June 29, 2016, as to which African countries were expressing an interest in negotiating free-trade agreements (FTAs) with the US.
“We are in the process of having a dialogue with stakeholders in the US and in Africa,” Liser said during a recent visit to South Africa, noting that a hearing on government’s ‘Beyond Agoa agenda’ had been held in the US in late January.
She stressed that America had an “open mind” as to the models that could be pursued, but “the world and Africa have changed since Agoa was put in place”.
She also highlighted that the US and the Southern African Customs Union had already attempted to negotiate a FTA in 2003. While the talks were terminated in 2006, “a lot of progress” was made in those three years of negotiation.
“For South Africa, which is one of our largest trading partners in sub-Saharan Africa, which is the largest beneficiary of Agoa in the non-oil sector . . . and taking account of the fact that South Africa has about 40% of its exports to the US entering the US duty-free, either under Agoa or our generalised system of preferences programme . . . one would assume that South Africa has a major stake in trying to see how it can continue to have duty-free access to the US market once Agoa ends.”
For its part, the DTI highlighted that South Africa and the US met on a yearly basis to address issues of mutual interest under the Trade and Investment Framework Agreement.
“In addition, the future architecture of Africa-US trade relations will be an outcome of stakeholder consultations both within South Africa and with the rest of the continent and should contribute to Africa’s integration agenda.”
US Ambassador Patrick Gaspard also indicated that, having resolved the issues involving Agoa, “we are focused on developing a broader, stronger economic partnership with South Africa, and we believe that expanding trade and investment in both directions is the best way to do so”.