News Archive July 2014

Extend Agoa, urges SA

South Africa wants the African Growth and Opportunity Act (Agoa) to be extended for a 15-year period.

“Our views as South Africa are very similar to the views of Africa, Agoa eligible countries. We believe that Agoa has been a useful platform for cooperation between Africa and the US, and we are calling for an extension for 15 years,” Trade and Industry Minister Dr Rob Davies said on Monday.

Briefing reporters ahead of next week’s United States-Africa Leaders’ Summit (USALS), Minister Davies said the summit will be held in two parts, with one aspect focusing on trade and investment and the other focusing on security and human development.

President Jacob Zuma will lead a delegation to USALS, which includes Minister Davies and International Relations and Cooperation Minister Maite Nkoana-Mashabane, among others. USALS will take place from 4 - 6 August and will include an Agoa ministerial meeting.

Agoa provides trade preferences for quota and duty-free entry into the United States for certain goods.

South Africa would like to see itself included in the rollover of Agoa, which expires in 2015.

The extension, said the minister, should be for a 15-year period as a shorter timeframe will create uncertainty.

“An extension of 15 years will allow certainty for investments that are going to be made in African countries to take advantage of the Agoa opportunities. We believe that a rollover for that period of time on more or less the existing architecture would be a mutually beneficial and developmental decision that could be taken by the US,” he said.

On a question of South Africa’s possible exclusion from Agoa because of its perceived middle income status, Minister Davies said government is arguing for South Africa’s inclusion.

“At this point in time, we are arguing for South Africa’s inclusion. One of the points we’ve made is that what will be the alternative if we are left out? As SACU [Southern African Customs Union] some years ago, we explored the possibility of a Free Trade Agreement (FTA) and we all decided, including the US, that that wasn’t really going to work, given the different levels of development and the non-existence of policies in some of our fellow SACU countries on some of the matters that the US was seeking commitments on,” he said.

The impact of South Africa’s exclusion from Agoa – which was signed into law in May 2000 – would not be a “train smash”, but there would be a jobs capacity in some parts of the South African economy that would be affected.

“We sometimes do confront the reality that people at the level of [US} Congress won’t look at this line by line and our approach has always been to suggest that people look at this holistically. The existing trading relationship with the US, including Agoa, has supported a growing, diversified and relatively balanced trading relationship.

When negotiating any kind of trade agreement, South Africa does so as SACU.

“We don’t do it as South Africa on its own. Our argument would be that this is big differentiation between us and will undermine the coherence of SACU if there are to be suggestions that we have a supposedly a bigger and stronger economy. We have an economy that is characterised by high levels of unemployment, poverty and inequality,” said Minister Davies.

Future of Agoa

At the summit, South Africa will be expecting to hear the US views on the future of Agoa, which is the decision of the US Congress.

Figures of bilateral trade between SA and the US have shown consistent growth. In 2009, the combined trade between the two countries was R88 billion and increased to R130 billion in 2013.

“It’s reasonably balanced. Our view is that this relationship has been underpinned by Agoa and therefore this is an arrangement that isn’t broken and doesn’t need fixing. It needs to be continued,” Minister Davies said.

There are about 600 US companies that are active in the South African market.

On the question of labour unrest in the country, Minister Davies said he doesn’t think the issue will directly be dealt with in Agoa.

“In terms of investments and not just US investors but other investors, it is an issue that we have to talk to from time to time. Mostly in the manufacturing space that we are involved and where we look at value added activities, I haven’t seen a single investor that has said that because there is a labour situation in South Africa, we are withdrawing,” said the minister.

His comments come on the back of the five-month-long strike in the platinum sector.

“That has not happened and instead, the pipeline has been increasing. We had one extraordinary strike in SA, in the platinum sector, [but] it doesn’t mean that when we have other strikes [they] are going to be five-month strikes. The government seeks to do what can be done to facilitate the conclusion of strikes. We are monitoring them,” he said.

The summit will include a Congressional Reception and a Business Forum culminating in the heads of state meeting.

Click here to read the Media Briefing by Minister of Trade and Industry Dr Rob Davies on the AGOA Forum/US-Africa Leaders Summit.


Extend Agoa, urges SA

30 Jul 2014
South Africa wants the African Growth and Opportunity Act (Agoa) to be extended for a 15-year period. “Our views as South Africa are very similar to the views of Africa, Agoa eligible countries. We believe that Agoa has been a...
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Economic policy threat to trade deal

South Africa risks being left out of the lucrative African Growth and Opportunity Act – a preferential trade programme, writes Peter Fabricius.

US ambassador to South Africa Patrick Gaspard has warned that the country’s economic policies and chronic strikes are discouraging American investors and traders, and could jeopardise its participation in the lucrative African Growth and Opportunity Act (Agoa) preferential trade programme.

He was speaking on the eve of US President Barack Obama’s US-Africa summit in Washington next week, which President Jacob Zuma and 49 other African leaders are due to attend.

Creating the right climate for investment in Africa will be high on the summit’s agenda and there will be a separate forum on Agoa, which gives duty-free access to the US market for most products of most African countries. Trade and Industry Minister Rob Davies will participate prominently in this forum.

Agoa has helped South Africa to substantially boost exports to the US including considerable volumes of manufactured goods, notably about 60 000 vehicles a year.

But some US legislators and businesses are increasingly demanding that South Africa should amend trade and investment policies if it wants to remain part of Agoa when or if it is renewed next year.

In a tough letter to South Africa’s ambassador to the US, Ebrahim Rasool, last month, Senator Orrin Hatch, the most senior Republican on the powerful finance committee, said although he supported the renewal of Agoa, “South Africa’s recent move away from participation in the global economy and violation of its international trade commitments severely complicates that task”.

He cited the Private Security Industry Regulations Amendment Bill – which restricts foreigners to minority ownership of security companies; South Africa’s recent termination of several bilateral investment treaties with European states and problems with aspects of the general 2013 Promotion and Protection of Investment Bill which will replace the treaties; the draft Intellectual Property Policy which he said would not protect innovative pharmaceuticals adequately; and the stance by African governments as a group that the World Trade Organisation’s Trade Facilitation Agreement should not be implemented until the Doha international trade negotiations had been completed.

Hatch asked the South African government to revise these measures. Charles Rangel, a veteran Democrat in the House of Representatives, also wrote to Rasool proposing that the government remove the restrictions in the Private Security Industry Bill regarding foreign investment

In an interview last week Gaspard said Hatch’s letter “just amplifies the concerns that we have consistently raised for some time now”.

He added that US agribusinesses had also written to the US Congress recently, raising concerns about the renewal of Agoa “based on the lack of market access for beef, poultry and pork to South African markets for reasons that we deem to be completely unscientific”.

Asked if he believed South Africa’s participation in Agoa was really in jeopardy, Gaspard said that Hatch was “a serious member of the US leadership” and that he and agribusiness leaders should be taken seriously.

He stressed that Obama had pledged the administration’s support for the renewal of Agoa as a whole and also for South Africa’s continued participation, but that it was Congress and not the administration which would decide.

Gaspard said part of the problem was that South Africa’s free trade agreement with the European Union was giving the EU “pronounced advantages” in market access over US companies.

“And given the tens of millions of dollars of duty-free access of South African products entering the US market (through Agoa), it seems altogether reasonable that we would ask for some consideration.

“You know that Agoa has been chiefly responsible for the success in the manufacturing sector in the last decade in South Africa.

“Particularly in Port Elizabeth where you’ve got factories that are employing thousands of South Africans that are churning out, last year alone, 60 000 automobiles which made it into US markets.

“So there’s thousands of direct jobs from Agoa. And then there’s all kinds of peripheral economic benefits for the surrounding communities because those workers have disposable income that goes right back into the South African economy.

“We think this is really central in the bilateral relationship. And so we hope we’ll all find the right kind of condition for renewal and continue the success and investment there.”

Gaspard said he had also frequently raised concerns about the South African investment climate more generally, especially the protracted strikes.

Gaspard, who was himself once a trade unionist in the US, said he was “profoundly sympathetic” to the demands of workers still struggling to overcome the legacy of apartheid.

“But one would hope that there would be responsible leadership in organised labour, in industry and in government who would have the ability to communicate in a transparent forthright way around these issues, and would be working diligently to resolve them at the bargaining table in advance of the employment of the ultimate tool which is a strike.

“We all know what just happened in Rustenburg with thousands of workers out of work for five months. And the calamitous impact that has had on industry and that ultimately threatened the sustainability of the very jobs that are the real economic engines in rural parts of the country in particular. So it’s right that everyone ought to be concerned about the long-term impacts of some of these protracted strikes.

“It’s clear that the labour situation here in South Africa is already having an impact on the investment decisions of major US companies. For example, the US automaker Ford has had to close its plant in Silverton during this Numsa (National Union of Metalworkers of SA) strike. That’s over 2 000 Ford Rangers that have been lost so far to this strike. This labour volatility may have a negative impact on Ford’s decision to expand production of their Everest SUV here in South Africa.”

Gaspard said that for a long time international investors had been “rooting for the success of South Africa” because of the goodwill which the late Nelson Mandela inspired. “A lot of industry leaders put a stake in the ground here into South Africa as a port of entry for the rest of the continent.”

But the Mandela goodwill was fading and now manufacturing had become more mobile than ever before. And there were many foreign competitors who were more than happy to absorb investment that was deterred from entering – or staying in – South Africa.

The surest way to the transformation of society which the government was promoting in its National Development Programme was though investment, Gaspard said.

He suggested the problem around these issues had been exacerbated by a lack of transparency in making policy and a lack of access to the right people in government to discuss them.

But he had been encouraged by recent meetings he had had with Davies on the Private Security Industry Bill and other concerns.

“There’s been a recognition that the concerns raised in the States are not superfluous and there’s an understanding that we need to get to resolutions on some of these matters.

“We’ve heard a little bit more flexibility in the conversations that we’ve had around market access for our agribusinesses. So that’s given us some real encouragement.” Though Gaspard would not elaborate, Davies told Independent Newspapers a few months ago that his government was ready to address the US grievances about lack of access to the South African market if that was what it would take to save South Africa’s participation in Agoa.


Economic policy threat to trade deal

30 Jul 2014
South Africa risks being left out of the lucrative African Growth and Opportunity Act – a preferential trade programme, writes Peter Fabricius. US ambassador to South Africa Patrick Gaspard has warned that the country’s economic...
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EPA talks collapse, need ‘political solutions’

The East African Community and the European Union have yet again failed to agree on the long awaited Economic Partnership Agreements, putting the principal market for Kenya fresh produce exports including cut flowers in jeopardy.

The collapse of the talks held in Kigali, could see the exports – currently accorded duty free access to the EU – being taxed at between eight and 12 per cent when the current interim arrangement lapses, making them uncompetitive in the face of intense competition from Tanzania, Ethiopia and Colombia.

The two trade blocs disagreed on provisions for agricultural subsidies that farmers in the EU benefit from, duties and taxes on EAC exports and non-trade issues such as good governance and transparency.

The two parties blamed each other for the deadlock, with some officials of the EU delegation accusing the EAC members of coming up with new demands in the negotiation meetings.

Negotiators from the two trade blocs had also failed to reach a deal on the EPA negotiations during the January talks in Belgium.

EAC duties

On taxes on exports, the EAC maintained that it should have the authority to determine when to impose the duties without seeking authorisation from the Economic Partnership Agreement Council as demanded by the EU.

The EAC members maintained that taxes on exports of raw materials were critical in developing the region’s agriculture-based industries and also maintaining currency stability especially when global commodity prices surge.

“Export taxes are used by countries when they want to stabilise their currencies, when faced with situations of food shortage so that you do not sell food simply because you are expecting higher prices abroad, leaving your home country without food,” said Dr Karanja Kibicho, Principal Secretary in Kenya’s Ministry of Foreign Affairs and international Trade, who was the head of the EAC negotiating team in Kigali.

The EU, however, insists that such taxes should be imposed with the authorisation of the Economic Partnership Agreement Council and that when duties are effected under special circumstances with regard to revenue, food security and environmental protection, EAC should only do so after notifying the EU.

“The EAC wants to have the express authority to impose the export taxes, while EU insists on its position, which is viewed as a way of helping it predict the availability of raw materials once the agreement comes into force,” said Kenya Flower Council chief executive officer Jane Ngige, who also attended the Kigali meeting.

On subsidies, the EAC team expressed fears that allowing in subsidised agriculture produce from the EU would destabilise the local market and choke the growth of agriculture-based industries, which are the source of livelihood for thousands of citizens.

EAC members insisted there must be a provision in the EPA that restricts such products’ access to the EAC market or excludes the EAC as a destination for agricultural exports benefiting from subsidies.

“Allowing in those products will end up killing our agriculture because we are not at the same level of development, and we do not have the same level of support to offer to our farmers,” said Dr Kibicho.

The head of the EU delegation to Rwanda, Michael Ryan, disagreed with Dr Kibicho, saying the EU made an offer to the EAC to guarantee that no export refunds would be applied to EU exports to the EAC.

“Unfortunately, this offer was neither acknowledged nor reciprocated. We tried to explain to the EAC negotiators that the EU does not provide domestic agricultural support for exports. The EU of today is not the EU of 20 years ago.

“There is no trade-distorting effect of the EU’s current agricultural policy. Agricultural support is an issue for discussion at the WTO level in Geneva, and not in bilateral arrangements,” said Mr Ryan.

He also dismissed remarks that the EU was opposed to the EAC imposing taxes on EU exports to protect its young agriculture-based industries terming it a complete fallacy.

“The EU has agreed with the EAC several types of safeguards for domestic business, one of which was specific to infant industries. Products from infant industries in the EAC are protected from liberalisation in the EPA text we have on the table. On top of that, we have agreed to include export taxes imposed by EAC to give further protection to infant industries. The EU has shown a great deal of flexibility on this point,” said Mr Ryan.

The two blocs also failed to agree on whether to include or exclude non-trade issues, mainly transparency and good governance, in the agreement. While the EAC wants any reference to the Cotonou Agreement removed from the document, the EU is insisting on its retention.

The EAC team accuses the EU of pushing for the retention of sections of the Cotonu Agreement in the final document, terming the latter’s insistence on non-trade issues suspicious.

The EAC is particularly uncomfortable with sections of the Cotonou Agreement that touch on countering proliferation of weapons of mass destruction, protecting and promoting human rights and fighting corruption.

“We do not know what their intentions are,” said Dr Kibicho.

The deadlock, according to the EAC negotiators, can only be resolved at an EU-EAC ministerial level. Ms Ngige said a ministerial meeting could be organised in September to iron out the issues before the October 1 deadline for concluding the EPA.

“The meeting was for senior government officials and since we did not agree, it will have to be referred to the ministerial level. The disagreements need a political solution,” Ms Ngige said.

However, both sides expressed hope that the pending issues will be resolved.

“There is no question at all of collapse of EAC exports to the EU. Four of the five EAC states enjoy ‘everything but arms’ trade arrangements with the EU; this means, they will continue with duty free and quota free access to EU markets, just as they do now,” said Mr Ryan.

According to him, only Kenya will suffer on its cut flower sales to the EU.

“From October 1 exports of cut flowers from Kenya will fall under the GPS (Generalised System of Preferences) regime, and even then it will still benefit from certain duty discounts into the EU through having MFN (most favoured nation) status. But, it will pay duties on its cut flower exports to the EU, inevitably, as a result of the absence of an EPA with the EU,” Mr Ryan added.

Kenya exports flowers to the EU worth Ksh46.3 billion ($537 million) and vegetables worth more than Ksh26.5 billion ($307 million) annually. The EU takes about 40 per cent of Kenya’s fresh produce exports.

A recent report by the EAC Sectoral Council on Trade, Industry, Finance and Investment showed that senior officials had by the end of May reached an agreement on the rules of origin text as well as the most favoured nation (MFN) clause.

The MFN clause would bar EAC members from entering into bilateral preferential trade arrangements with countries that have no similar arrangements with the EU.

Additional reporting by Jeff Otieno.


EPA talks collapse, need ‘political solutions’

30 Jul 2014
The East African Community and the European Union have yet again failed to agree on the long awaited Economic Partnership Agreements, putting the principal market for Kenya fresh produce exports including cut flowers in...
1 ~ 502

SADC Gender Protocol 2014 Barometer

In August 2008, Heads of State of the Southern African Development Community adopted the ground-breaking SADC Protocol on Gender and Development. This followed a concerted campaign by NGOs under the umbrella of the Southern Africa Gender Protocol Alliance. By the 2013 Heads of State summit, 13 countries had signed and 12 countries had ratified the SADC Gender Protocol. The Protocol is now in force.

With one year to go, time is ticking to 2015, when governments need to have achieved 28 targets for the attainment of gender equality. In keeping with the Alliance slogan: Yes we must! this 2014 Barometer provides a wealth of updated data against which progress will be measured by all those who cherish democracy in the region. The SADC Gender and Development Index (SGDI), introduced in 2011, complements the Citizen Score Card (CSC) that has been running for five years to benchmark progress. The world, and SADC is also looking to the future with the post 2015 agenda.

Now is the time to strengthen resolve, reconsider, reposition, and re-strategise for 2030.

Alliance calls for a strong post 2015 agenda

The Southern African Gender Protocol Alliance has called on gender ministers to craft a strong rights based approach to gender equality for the region post 2015. Speaking at the annual meeting of gender ministers in Malawi ahead of the Heads of State (HOS) summit in Zimbabwe mid-August, Alliance Chair Emma Kaliya stressed that: “We are counting down to 2015. We must not let up the momentum. At the same time we must plan, re-strategise and reprioritise for 2030, in line with the global agenda.” (Download Alliance Chair Emma Kaliya's speech below)

Senior officials meeting here ahead of the gender ministers meeting noted that “the 28 targets of the SADC Protocol on Gender and Development lapse in 2015. It is likely that most member states will not achieve them by that date. Therefore the targets will have to be reviewed.” The senior officials note that amendments will need to be submitted to the Council of Ministers in 2015.

The Alliance is calling on strong leadership from Zimbabwe, the new chair of SADC, in taking forward this critical agenda that forms the centre piece of the 2014 Barometer, due to be launched in Harare on July 28 at the SADC Council of NGOs forum ahead of HOS. The Barometer uses two measures for progress – the SADC Gender and Development Index, based on empirical data for 23 indicators that can be measured across the region, and the Citizen Score Card, based on citizen perceptions of all 28 targets. The 2014 Barometer puts the SGDI at 67% and the CSC at 66%. Both indicate that the region has a long way to go in fulfilling the original targets of the 2008 Protocol.

In her submission to gender ministers, Kaliya noted that with less than a year left before the deadline of the targets for the gender protocol and the Millennium development Goals (MDGs), “we are called upon to revision our future direction in line with the draft Sustainable Development Goals…voice, choice and control are the key watchwords in the post 2015 gender agenda.”

The Barometer proposes 150 potential targets for 2030, accompanied by 300 indicators, 100 of these on gender violence, the major manifestation of gender inequality in the region. This would involve all member states undertaking GBV baseline studies, using an agreed set of indicators, and benchmarking progress. The Barometer also proposes the incorporation of a new section on sustainable development (weak in the current Protocol), and strengthening of sexual and reproductive rights provisions.

Citing the reviewing of 11 constitutions to strengthen gender provisions as a major success of the past six years, the Barometer highlights key areas for ensuring that these are not undermined by culture, custom, tradition and religion. With 26% women in parliament and 24% in local government, the region is unlikely to achieve the original 30% target for women in decision-making, let alone the gender parity target, by the end of 2015. The 2014 Barometer argues that the post 2015 agenda needs to make sure these numerical targets are met, but also move beyond that, to measuring gender responsive governance.

The individual chapters may be downloaded at this link.


SADC Gender Protocol 2014 Barometer

30 Jul 2014
In August 2008, Heads of State of the Southern African Development Community adopted the ground-breaking SADC Protocol on Gender and Development. This followed a concerted campaign by NGOs under the umbrella of the Southern...
1 ~ 502