Goading the US on AGOA

Here’s a question I have about the time the South African government is taking to remove barriers to US chicken, pork and beef exports. Is Pretoria acting in good faith? Or is Minister of Trade and Industry Rob Davies deliberately trying to provoke the Obama administration into suspending South Africa’s benefits under the African Growth and Opportunity Act? Publicly, he keeps insisting that SA is doing every it can to get things resolved. And yet one hears that every time there’s a meeting, the SA side raises some new complication.

Davies sits on the central committee of the SA Communist Party whose fingerprints are all over a draft ANC policy document which all but declares the US a hostile power. The chapter on international relations asserts that Washington has launched a new cold war against China and Russia and accuses the US of working to destabilise SA’s “progressive” friends the world over. The SACP might well consider it a propaganda coup if the US were to reimpose tariffs on key SA exports for what Davies would claim was no good reason. Look, the wicked imperialists are trying to destabilise us too!

It’s a tough one for the Obama administration in so far as it puts much store by its relationship with SA at this point. Notwithstanding the best efforts of SA’s excellent fiscal and monetary authorities, the Zumacrats are doing their best to run to the SA economy into the ground and Washington would not want to add to the misery. Beside, as irritating as the rest of Africa increasingly finds SA,  the continental consensus is that AGOA works better with SA in rather than out.

Then’s there the Private Security Industry Regulation Amendment and its Clause 20 that would require US and other multinationals to surrender control of their local subsidiaries if they wished to continue operating in SA.  Arguably this would result in a fire sale of assets to local interests tantamount to expropriation.  If President Zuma signs the legislation which has been sitting on his desk since May, the constitutional court okays it and the result is expropriation without compensation or arbitration, US law would require the administration of the day to throw SA out of AGOA altogether, and vote against — effectively veto —  IMF and World Bank loans to SA.  The process would take a long time to unfold and many conditions would have to be met before the Washington dropped the hammer.

Said hammer would be the least of SA’s worries, I’d say. It would still, after all, have access to the new BRICS fund and bank. However, if it became apparent the ANC government was using local ownership requirements to steal property for the president’s friends, the South African value proposition for legitimate international investors would take a fatal hit. But again, it’s hard to know whether the proponents of the National Democratic Revolution would care all that deeply.

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