If the issues cannot be resolved by September 30, South Africa could be denied – either partly or completely – the benefits of its participation in the African Growth and Opportunity Act (AGOA)
AGOA was to expire on September 30. The US Congress recently extended it for ten years but it singled out South Africa, making its continued participation mainly conditional on South Africa giving greater access to its market for US poultry, beef, and pork imports.
The US administration, legislators, and security industry are also demanding that South Africa amend proposed legislation that would require foreign security companies to sell off at least 51 percent of their ownership to South Africans.
Congress gave South Africa until September 30 – less than three weeks away – to do all of this.
Under pressure from the US, South Africa has promised concessions on most of these issues, particularly in January where it agreed to a quota of 65,000 tons of US poultry imports a year.
But the US believes that South Africa is putting up new barriers to replace old ones. So it is still not letting in poultry because of concerns about an outbreak of avian flu in the US. It has raised similar concerns about diseases in beef and pork.
The US side suggests South Africa is prevaricating and doesn’t understand the urgency in opening up its markets.
US Trade Representative Michael Froman evidently made this very clear to South African Trade and Industry Minister Rob Davies when he met him at the AGOA Forum in Gabon last month.
He “underscored the urgency of finding a resolution to the remaining issues in order to avoid a reduction of AGOA benefits for South Africa”, according to a statement issued by Froman’s office.
This week Trevor Kincaid, the deputy assistant US Trade Representative, underscored the point, telling ANA that: “Without swift action, South Africa risks losing important tariff benefits under AGOA.”
And US Senator Chris Coons, who represents the important chicken-producing state of Delaware, this week told ANA that: “US poultry representatives negotiated an agreement on exports with their South African counterparts in good faith, and while I remain hopeful that this agreement will be implemented, I am concerned that we are not seeing enough progress and that market barriers persist.
“I know the US Trade Representative takes this seriously and Congress has made clear that the United States should not allow other countries to enjoy trade benefits under AGOA while actively undermining our trading interests.”
Last year about US1.6 billion (R21 billion) of South African exports entered the US duty free under AGOA. By far the largest category was autos – US1.3 billion; followed by ferromanganese, US183 million; industrial fatty alcohols (a chemical), US46 million; oranges, US41 million; and wine, US33 million.
The US could deny either all or some of these specific benefits to South Africa.
On Monday veterinary experts and scientists, as well as senior trade policy officials from several different departments of both governments, will take part in the biggest meeting to date on the disputes, talking by telephone from Pretoria and Washington.
The main issue will be poultry imports. Because of an outbreak of avian flu in some US states, South Africa has banned all US poultry imports. The US believes that South Africa should “regionalise” by accepting poultry from states or areas not affected by avian flu. It says this is what many other states do and that South Africa does this for other regions, such as the European Union and parts of Asia.
But South African trade and industry department deputy director general Xolelwe Mlumbi-Peter said on Friday it was unfortunate that the US had experienced an outbreak of avian flu just after the quota agreement. The flu had spread quickly to 20 US states and so South Africa would need assurances from the US that it had put in place controls to prevent it spreading. She added that avian flu was a hazard not only to birds, but also to humans.
Similar issues surround imports of beef and pork. South African officials recently told the US that Cabinet has rescinded the South African ban on US beef because of concerns about mad cow disease. But then South African officials told them they would have to do their own audits of US beef facilities before imports could begin.
The US evidently saw this as moving the goalposts but Mlumbi-Peter insisted it was “standard practice” internationally to insist on audits.
And with pork, the US complains that South Africa is only letting in a very small number of cuts and on top of that is requiring time-consuming and costly special processing.
Mlumbi-Peter presented South Africa’s demands as reasonable, saying South Africa had agreed to let in low-risk pork cuts but was insisting on extra processing for higher risk cuts.
The US says that over 100 other countries accept all its meat products without the same severe restrictions and additional processes which South Africa demands. So it doesn’t see why South Africa can’t.
Mlumbi-Peter said she was confident about a successful outcome of Monday’s meeting – “but both sides have to find a solution. The US will have to assure us it can control the spread of avian flu”.
The US is also demanding that South Africa scrap a clause in the controversial Private Security Industry Regulation Amendment Bill which would prevent foreign owners from having a controlling stake in private security companies by forcing them to sell at least 51 percent of the companies to South Africans.
The bill was passed by Parliament more than a year ago but President Jacob Zuma has still not signed it. US officials had been told by their South African counterparts that Zuma had already sent the bill back to Parliament to make these changes.
But that does not seem to be true as Zuma told journalists this week he was still considering it thoroughly because the bill deals with “very complex” issues.
“You’d not want to disadvantage business on one hand, but on the other, you’d not want to hand over the security of the country,” he said.
Trade and Industry Minister Rob Davies said on Saturday that South Africa was taking the risk of losing AGOA benefits seriously which was why it had negotiated the 65,000 ton poultry quota.
He did not want to say, before talking to South Africa’s veterinary experts, if South Africa was prepared to regionalise imports of US poultry. But he would be meeting the veterinary experts before their meeting “to communicate the consequences” of their decisions – a clear reference to the risk of losing AGOA benefits. Not everything depended upon the outcome of Monday’s meeting because there could be further discussions this month, “but it certainly is an important meeting”, Davies said.
He had gathered from his meeting with Froman in Gabon that the three meats would be the critical issues at Monday’s meeting and not so much the private security bill.