I will lead a delegation comprising of Senior Officials, Business and Labour to Washington to participate in the Trade and Investment Framework Agreement (TIFA) Council meeting with the United States Trade Representative (USTR) and to advocate for the renewal of the African Growth and Opportunity Act (Agoa) with South Africa included. South Africa together with sub-Saharan Africa have been calling for 15 year renewal of AGOA for all eligible countries without any conditionalities. This position was also reiterated by the African leaders at the US-Africa Leaders Summit in Washington last year.
Even congress members they all believe that AGOA should be extended; it is the only programme that enjoys bipartisan support. For us as the African continent we believe the programme should be extended for 15 year renewal for the following reasons:
- AGOA has been successful and it contributed in transforming Africa from a continent that used to rely on development aid to a continent that is today referred as “rising”.
- The programme contributed to revival of industrialisation in the continent following periods of deindustrialisation. Due to AGOA, sub Saharan Africa countries managed to attract new investments in clothing and textile, and other industries.
- It contributed to regional integration and creation of regional value chains as AGOA allows cummulation amongst the countries. Examples here include leather car seats, where South Africa source leather from Botswana and denim clothes, South African textile and clothing industry procures part of its raw materials from other regional garment producers – mainly Lesotho, Swaziland, and to some extent Mauritius. Further, South Africa exports some trims (zips, buttons, sewing thread, wadding, tapes and elastics) to Lesotho for its clothing industry.
- AGOA generated enormous good will for the US in the continent.
- The benefits of AGOA are two-way, estimate indicate AGOA created 100 000 jobs in the USA and 350,000 direct jobs and 1.3 million indirect in sub Saharan Africa. In SA, AGOA is estimated to have created 62 000 jobs
- 15 years is a significant period for African countries to attract much needed investment and for those investments to realise returns.
- Further, the continent needs 15 year renewal of AGOA as most Least Developed Countries (LDCs) in Africa would graduate to developing country status around 2030.
Why South Africa should be included in AGOA
- AGOA is important to balance the structure of trade. SA exports still concentrated around raw materials. 43% of SA exports to US are metals and mineral products. On the other hand, South Africa imports largely value-added products from the US.
- AGOA contributed to the development of automotive industry in South Africa. There is a growing intra-industry trade in the automotive sector between SA and the USA.
- The view that SA is more developed with diverse portfolio of products is misleading as the country still experiences the triple challenges of poverty, unemployment and inequality. The country currently has 56.8% of its population below the poverty line, and 24.3% of population that remains unemployed.
- SA is part of a customs union with a common external tariff; any attempt to exclude SA from AGOA will undermine SACU.
- SA remains an important anchor for regional value chains (RVC) in the continent; any attempt to exclude South Africa will undermine regional integration and RVC.
- Removing South Africa from AGOA will reduce the value of AGOA for other African countries, as they depend on South Africa for key inputs. AGOA will thus become less effective and lose its significance. It is also for this reason that the African Ambassadors in Washington, and the Commissioner for Trade of the African Union (AU), made representations to the US Congress underlining this point. The AU is in full support of South Africa’s continued inclusion in AGOA.
Anti-Dumping Duties on Chicken bone-in cuts
The Poultry issue is a challenge for both countries. This is because of the peculiar nature of the market in the United States. US consumers prefer the white meat (chicken breast) and tend to sell the brown meat (chicken legs) to other countries, such as South Africa. The low price of the chicken legs however tends to undercut the local South African producers, reducing local production and jobs. Poultry has been identified as an important sector for further development in the Agriculture Policy Action Plan (APAP) that was agreed in Cabinet and announced in the 2015 SONA Statement.
In spite of these concerns South Africa has been willing to assist the US Senators, Chris Coons (Delaware) and Johnny Isakson (Georgia), from Poultry producing states, by urging the South African Poultry Association (SAPA) to make market access concessions to US exporters of Poultry. The two Senators have indicated that while they remain supporters of the extension of AGOA they come from Chicken Producing states and their exporters are demanding increased access to the South African market for their surplus chicken legs. These two Senators have thus threatened to block the passage of AGOA through the Congress unless South Africa satisfies the demands of their chicken industry.
It is for this reason that I have urged the South African Poultry Industry to engage with its counterpart in the US (the United States of America Poultry and Egg Export Council - USAPEEC) to engage directly and find a compromise solution. Since my meeting with Ambassador Froman in Davos in January this year, the two industries have exchanged offers. I have engaged with the US Senators telephonically and also had several engagements with Senior US officials from USTR and the US Ambassador in South Africa on the many issues, including poultry that the US has raised as a condition for the passage of AGOA through the US Congress.
The attitude of the South African government remains one of constructive engagement on all the concerns raised by the US constituencies.
A further engagement between SAPA and USAPEEC is scheduled to take place in Portugal at the margins of International Egg Commission meetings, in the week of the 13th of April. I will be meeting with Senators Coon and Isakson in Washington next week as well. South Africa will strive to work for an acceptable compromise on the issue raised.
Enquiries:
Sidwell Medupe
Cell: 079 492 1774
