AGOA and the Dinosaurs

Rob Davies, the minister of trade and industry, is a member of the South African Communist Party’s central committee whose collective signature is on an article in the current African Communist. In it we learn that the African Growth and Opportunity Act, which helped SA run a $2 billion trade surplus with the US last year, is a tool devised by newly confident “monopoly capital” to force neo-liberal policies down the throats of SA’s working class.

“Imperialist” America, say Mr Davies and his friends — prime exhibits all in SA’s Jurassic Park of failed ideology — are “pushing South Africa very hard” by attaching “conditionalities” to AGOA’s just enacted 10-year renewal.

The SACP dinosaurs acknowledge “the US is not necessarily keen to drop its AGOA relationship with South Africa”. On that, at least, they are correct. Shakier, though, is the logic on which they base their conclusion. Call it Sino-manic infantilism.

Ending SA’s AGOA benefits would, they argue, “run the danger of ceding further market space in Africa to China”.

How, exactly? AGOA is a non-reciprocal programme. US exports enjoy no privileged access to the SA market but SA importers buy them anyway. To retaliate for loss of the AGOA gift, SA would have to impose de facto sanctions on US goods and services. All to get back at the US for denying SA trade privileges the nanosaurs have denounced as an “imperialist” plot.

But let’s leave the Park and return to the real world where, at the behest of Congress, the office of the US Trade Representative is reviewing of SA’s compliance with those pesky AGOA “conditionalities”, none of which, by the way, has changed since the Act was passed in 2000.

Four items, I am led to believe, top the US agenda. Three are agricultural, relating to chicken, beef and pork. The disputes involved concern non-tariff phytosanitary barriers. On their face, they are hardly the stuff of ideology.

The other matter is the Private Security Industry Regulation Act Amendment Bill which appears to threaten foreign firms iwith expropriation by forcing them to sell assets at fire sale prices. The Act awaits President Zuma’s signature. The review, giving rise as it could to the loss of some or all of SA’s AGOA benefits, is meant to focus his attention on sending the bill back to parliament for improvement.

The great US-SA chicken spat, theoretically settled in Paris in June, drags on. Not one frozen Delaware or Georgia drumstick has since been shipped to SA notwithstanding Davies’ agreement to let in 65 000 tonnes of the things each year at the normal tariff rate (as opposed to the protectionist rate imposed to punish alleged US dumping).

The Paris agreement is not self-implementing. Administrative t’s have still to be crossed. That the US understands. Not so the total ban SA has imposed on US chicken because of an outbreak of avian influenza in the Pacific Northwest. The US wants SA to let in chicken from unaffected regions as 130 other nations do. Pretoria’s refusal, thus far, could be viewed as a case of SA not making the “continual progress” towards opening its markets required by AGOA.

The beef beef is similar. The Americans thought SA agreed in Paris to join much of the rest of world in accepting that the risk of catching mad cow disease from US livestock is negligible. US pork was shut out of SA by a new health regulation in 2013. Although progress is being made on a list of permissible cuts, the US thinks SA is being needlessly dilatory on both scores and will use the review to chivvy it along.

Disagreements of this nature are not driven entirely by science. The US is dropping heavy hints that if SA plays nicely on chicken, beef and pork, it will look favourably on South Africa’s lamb, beef, avocado, litchis, persimmons, cooked ostrich and citrus.

The US Department of Agriculture thinks those items could earn SA $175 million year in the American market. It reckons SA’s bans are costing US farmers $120 million a year in potential exports. To put things in perspective, worldwide US exports of the meats in question run around $13.4 billion.

USTR has invited submissions covering all aspects of SA’s compliance with AGOA’s requirements. These include the threshold condition that beneficiaries not treat the exports of other developed countries more generously than those of the US. SA is in breach of that rule because of its free trade agreement with the EU.

Unless specifically raised by aggrieved parties, this issue, though hot earlier in the year, looks like being shelved for later. The US would prefer not to the give the Jurassics the pleasure of seeing SA kicked, fully or partially, out of AGOA.

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