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US set to suspend Agoa and hit SA with trade tariffs

Jan 04 2016 07:13
Fin24 and Bloomberg

Cape Town – The US on Monday is on the verge of suspending South Africa from the African Growth and Opportunity Act (Agoa), after it missed its December 31 deadline to resolve a dispute on trade levies.

NEWS JUST IN: Davies prepares SA for Agoa trade suspension

Agoa, renewed by US 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. Total two-way trade between South Africa and the US was about R217bn last year.

However, South Africa has failed to meet a deadline to resolve various disputes and will now have its trade tariffs re-imposed.

US President Barack Obama is expected to make an announcement as early as Monday, while the Department of Trade and Industry (dti) will hold a press conference on the matter on Monday.

When the deadline expired at midnight on December 31, "outstanding issues" had not been resolved, Trevor Kincaid, spokesperson for the office of the US Trade Representative, told Business Day, which added that talks had continued late into New Year’s Eve.

The suspension will go into immediate effect once it has been announced, affecting all relevant goods not yet landed in the US, including those in transit, the Business Day explained.

Bloomberg reported on December 31 that South Africa was confident of meeting its deadline to resolve a trade dispute that will allow it to retain duty-free access for farm export.

“We are totally committed to finding a resolution,” dti director-general Lionel October told Bloomberg at the time, while dti Minister Rob Davies said “yes and no” when asked by Business Day whether he thought the negotiations would fail.

In a November 6 letter to Congress, Obama said South Africa continued to impose several longstanding barriers to US trade and had been given 60 days to take remedial action or face suspension of some of its trade preferences under Agoa.

Veterinarians from the two countries are in daily contact to try to resolve outstanding issues relating to testing of US imports of poultry and pork for salmonella and other diseases, October said. They hope to issue final protocols in the next few days, he said on December 31.

“We have made the concessions on pork and beef imports,” he said. “We and the US Embassy are getting the vets to issue the final health and safety protocols. We will issue a statement on January 4” indicating what progress has been made, he said.

To remain beneficiaries of Agoa, countries are required to eliminate barriers to US trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.

The trade programme has helped South Africa more than double its exports to the US since 2000.

Shipments under the agreement accounted for more than a fifth of the nation’s exports to the US last year, according to data compiled by the Trade Law Centre, based in Stellenbosch, near Cape Town.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

dti  |  agoa  |  trade


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