South Africa Seeks to Placate U.S. Over Spat Threatening Exports

  • AGOA agreement still within reach, Trade Minister Davies Says
  • U.S. accuses South Africa of imposing barriers to trade

South Africa’s government is doing all it can to persuade the U.S. to reverse plans to suspend trade benefits on its agricultural goods following a dispute over restrictions on farm imports, Trade Minister Rob Davies said.

President Barack Obama told Congress in a letter on Thursday that South Africa’s government continued imposing barriers to U.S. trade, including American agricultural exports. The suspension of trade preferences under the African Growth and Opportunity Act, or AGOA, will become effective in 60 days, Obama said. South Africa banned poultry imports from the U.S. in December after an outbreak of bird flu.

At the heart of the dispute between the U.S. and South Africa are demands by American chicken and cattle farmers that the government in Pretoria remove trade restrictions they were imposed to protect the local industry from cheaper imports. Obama’s announcement took South African negotiators by surprise because concessions had been made to facilitate U.S. poultry imports and the remaining areas of dispute relating to animal health issues were being addressed, Davies said.

Outstanding Issues

“As I understand it, the substantive issues have all been resolved,” Davies told reporters in Cape Town on Friday. The suspension can still be reversed and outstanding issues “can be resolved well within the 60 days,” he said.

AGOA, renewed by U.S. lawmakers in June, eliminates import levies on more than 7,000 products ranging from textiles to manufactured items and benefits 39 sub-Saharan African nations. To remain beneficiaries, countries are required to eliminate barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.

South Africa's Main Trade Partners
South Africa's Main Trade Partners

The trade program has helped South Africa more than double its exports to the U.S. since 2000. Shipments under the agreement accounted for more than a fifth of the nation’s exports to the U.S. last year, according to data compiled by the Trade Law Centre, based in Stellenbosch, near Cape Town. Total two-way trade between South Africa and the U.S. was about $14 billion last year.

Devastating Impact

South Africa’s failure to retain its AGOA preferences would have a “devastating” impact on the economy, said Carol O’Brien, executive director of the American Chamber of Commerce in South Africa, which represents about 250 U.S. businesses.

“It’s brinkmanship; it’s politicking,” she said by phone from Johannesburg. “South Africa cannot afford this. We think South Africa should have every single country as partners.”

The suspension would affect South African exports such as wine and fruit.

Kevin  Lovell, chief executive officer of the South African Poultry Association, said the trade negotiations need to follow due process and the U.S. should bear some of the blame for failure to reach agreement.

“We also need American industry to participate properly in the process, which they have not been doing in the last while,” he said by phone from Johannesburg. “They can’t actually weaken our bio-security or food safety.”

U.S. Unhappiness

South Africa’s pending loss of AGOA benefits reflects broader unhappiness in the U.S. about South Africa’s policy direction and increasing tendency to prioritize relations with China and Russia, according to Anthea Jeffery, head of policy research at the South African Institute of Race Relations, a Johannesburg-based research institution.

“The U.S. has been saying for a while that they give us trade concessions and we give nothing in response,” Jeffery said by phone. “I think this is America saying we’ve had enough. I expect U.S. companies feel more exposed here and are wondering why in the face of all these negative policies and hostile rhetoric and the refusal to allow American food products into this country, they should continue to give us concessions.”

Besides the limits on agricultural product access, South Africa has also angered the U.S. with plans to force foreign-owned security companies to sell a controlling stake to locals and water down intellectual property rights.

A draft policy document released in August by the ruling African National Congress accused America of using “its aggressive foreign policy to advance its national interests.” It described China’s economic development as “a leading example of the triumph of humanity over adversity,” and that it, along with Russia, was helping re-balance global power relations.

“This is not just about agriculture,” Peter Draper, managing director of Tutwa Consulting, which provides advice on trade and investment policy and regulations, said by phone from Pretoria. “We are seemingly going out of our way to alienate our main trade and investment partners. We are always going to have differences, but we should manage them more sensibly.”

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