Minister Rob Davies: Update on AGOA negotiations

Background

• The African Growth and Opportunity Act (AGOA), enacted in 2001, is a unilateral trade preferential programme for about 6 400 tariff lines the US offers to 48 African sub- Saharan countries.
• President Obama signed the AGOA Extension & Enhancement Act (AEEA) of 2015 into law on June 29, extending AGOA benefits for 10 years.
• South Africa had campaigned successfully for AGOA to be renewed for all sub-Saharan African Countries with our country included.
• However, the US lobbies insisted that some issues of interest to them such as poultry, pork and beef needed to be resolved by South Africa to allow SA to be eligible

The Paris Deal – 5-6 June, 2015

• Agreement was reached on a quota of 65 000 t/a for import of import of US bone-in chicken pieces, in which anti-dumping duties will be waived.
• South Africa reduced demand for exemption of anti- dumping duty from 140 000 tons to 65 000 tons.
• There will be a growth factor, which will be calculated annually as an average of Department of Agriculture, Forestry and Fisheries (DAFF) verified/supplied production and consumption growth or shrinkage, on the 2015 base line.
• As large a percentage as possible of the quota will go to HDI's (to be determined by a consultation process undertaken by DAFF/dti).
• The US will support development via investment in training, skills development, new entrants and processing support.

Poultry SPS

• The US Government has been negotiating a Trade Protocol in the event of any New Outbreaks of Avian Flu – to secure continued exports of poultry from those States/Areas in the US that are not affected by Avian Flu.
• In addition the US has been negotiating a supporting health certificate for poultry
• While strictly not part of the poultry health certificate, the US has insisted on a “side-letter” on Salmonella that clarifies SA’s existing standards and procedures.
• After several months of technical discussions by the Vets a Poultry HPAI Trade Protocol and a Poultry Health Certificate has been finalised.

Beef

On beef, the Cabinet approved the lifting of a ban on boned beef from several countries which had Bovine Spongiform Encephalopathy (BSE) including the United States on the 24th of June, 2015.

Pork

• On Pork, the Animal Health Authorities of both governments have been undertaking the necessary technical work to ensure safe trade from at least three diseases, namely, Trichinella, Porcine Reproductive & Respiratory Syndrome (PRRS) and Aujesky.
• South African vets negotiated a list of pork cuts to ensure safe trade from some potential diseases.

Poultry Quota

• On 18 December 2015, South Africa through the South Africa Revenue Services and the International Trade Administration Commission published the rebate provision and the guidelines for import of 65 000 tons of US bone-in chicken pieces into the South African market, in which anti-dumping duties would be exempted.
• Technically, SA has met the deadline of December 31st set by President Obama.

Conclusion of the negotiations

• On 4th of November, President Obama announced a 60 deadline for a possible Suspension of SA's Agriculture benefits...as the technical work on the SPS issues on the 3 Meats had not been concluded.
• South Africa's vets have worked throughout the festive period to finalise the negotiations on salmonella and the health certificates on pork and beef.
• These negotiations were concluded last evening .. on the 6th of January. US negotiators are happy with the outcome. The signing ceremony took place early today.

Strengthening and Growth Commercial relations

• We can now  work to continue to strengthen SA US trade and investment relations which are deepening and robust...more value added trade.. with Mercedez Exports...and more two way investments with Ford and SASOL.
• In Agriculture there is huge potential for increasing South Africa's exports into the US market...long list of products waiting for market access..incl. avocados, mangoes, chicken breasts, Karoo Lamb, ...in the Poultry Sector the US has offered to work with DAFF and Dti to provide technical assistance and capacity building for small black poultry farmers...

Strengthening and Growth Commercial relations, continued

We want to re-iterate our message on AGOA...it is potentially a win-win...mutually beneficial for both SA and US and SA's participation contributes to regional integration.. and it should be retained for next 10 years as part of Obama's Africa legacy.

SA Benefits under AGOA

• Of total SA exports to USA, 38% went under AGOA (including GSP) in 2014.
• South Africa’s AGOA (including GSP) exports amounted to US$3.1 billion in 2014.
• GSP exports increased from US$1 billion in 2013 to US$1.4 billion in 2014, while AGOA exports declined from US$2.6 billion in 2013 to US$1.8 billion in 2014.
• In 2014, major AGOA/GSP-beneficiary sectors were: vehicles, mineral and metals, chemicals, and agricultural products.

What are the benefits of AGOA for South African exporters?

• Total tariff revenue that South African exporters are relieved of paying as a consequence of AGOA is $46 884 859.70.
• The largest beneficiary of this tariff relief is the automobile industry that gained a benefit of $32 678 025.00, in 2014. (BMW/MERCEDEZ – Ford)
• The second largest beneficiary was the base metals sector that stands to lose $6 284 121.00 of benefits under AGOA. (Manganese)
• The third largest sector is agriculture sector that was relieved  of  paying  duties  amounting  to  $5  715 891.00. (107 000 tons of Citrus)
• The fourth largest sector was the chemical sector that gained $1 186 813.00. (SASOL)
• About 62 000 jobs are created by AGOA in South Africa (TIPS)