Agoa: US lawmakers up the ante
The United States has ratcheted up its bid for South Africa to grant access to US poultry products, with 13 US Senators writing to Trade and Industry Minister Rob Davies this week to urge him to push for talks to resolve a dispute threatening Pretoria’s participation in a key trade scheme known as the African Growth and Opportunity Act (Agoa).
Agoa must be renewed ahead of its September expiration date. In a letter, also addressed to ambassador Faizel Ismail, South Africa’s special envoy for Agoa, the 13 US legislators said they were concerned that the SA Poultry Association (Sapa), which represents the local industry, was “drawing a hard line on its most recent offer to the US industry and may not be willing to continue negotiations in good faith”.
“We urge you to continue to work with Sapa and encourage its leaders to not shut the door on negotiations,” the Senators said to Davies.
While the letter from the Senators stopped short of saying that South Africa risked being left out of Agoa, it reiterated the course of action sought from South Africa.
“We share your optimism that a fair agreement can be reached,” they wrote to Davies.
Chickens or cars?
The signatories to the letter include US Senator Chris Coons of Delaware, a Democrat, and his Republican counterpart Johnny Isakson from Georgia. The letter echoes what Coons told Business Report in an interview about a week ago.
Coons and Isakson have been vocal in their push for wanting South Africa to scrap the duties on US poultry products or risk being kicked out of Agoa, a preferential trade scheme that allows duty-free access into the US of various South African exports, including cars, wine, citrus and textiles.
In the interview with Business Report Coons had warned that the opportunity to salvage South Africa’s participation in the trade scheme was fading fast, and called on Sapa and its US counterpart, the USA Poultry and Egg Export Council to urgently begin formal negotiations. The letter to Davies, dated March 30, also contains the same plea.
The 13 Senators said the work to resolve the dispute “needs to be done urgently”.
Through Agoa, South Africa has been able to derive preferential access to the US market for its products.
Barring the country from Agoa could cost Pretoria as much as $2.5 billion (R30bn) in Agoa benefits and put thousands of jobs in jeopardy.
While President Barack Obama’s administration supports Agoa’s renewal, the decision will be made by Congress. Some US business interests and legislators have demanded that South Africa be “graduated” because it is an upper middle-income country and because they say it is discriminating against US poultry imports.
Nearly three weeks ago, a delegation from South Africa, including representatives from the government and the South African poultry industry went to Washington as part of the efforts to try to resolve the impasse.
In the letter, the Senators said while preliminary offers were made between the two industries, there had been little progress to reach a solution and formal negotiations had yet to take place.
Efforts to get comment from Davies’s office were unsuccessful yesterday.
But Sapa, whose critics have accused it of holding South Africa hostage to the whims of the poultry barons by standing firm, said that the inclusion of a 15-year-old dispute in Agoa renewal was an attempt by the Americans to bypass the mechanism for resolving trade disputes, “in this case a dispute relating to the dumping of chicken, specifically bone-in portions, into the South African market”.
In a response to Business Report, Sapa chief executive Kevin Lovell said: “That the application of these duties has never been challenged by the US in the courts or at the World Trade Organisation – the correct forum for this kind of remedy – speaks for itself.”
Lovell said Sapa was mindful that Agoa offered opportunities for South Africa to develop new trade ties and deepen existing ones, and had supported the renewal process since early last year, “even though it is to our own detriment”.
“The Americans have a natural advantage over us as they source maize and soya at lower prices than we can. Now they want an unfair advantage as well,” said Lovell yesterday, referring to the two critical inputs for raising poultry.
Last week, Lovell had told Business Report that the US demands were tantamount to asking South Africa to shrink its economy. “For as long as the Americans dump we will defend our right to be protected from unfair trade.”
He said the US approach thus far was akin to asking South Africa to make a choice “as to how we would like to shrink our economy – chicken or cars”.
According to Lovell it was not true that US poultry products were shut off from the South African market.
“The anti-dumping duties apply to only one tariff line, so the rest of the poultry import market (about 250 000 tons per annum) is freely available to them and the part for which the anti-dumping duties apply (about 150 000 tons) is also available as the principle of an anti-dumping duty is that it is corrective, not punitive – for example, it levels the playing field so that the two parties can compete equally and fairly.”
Even so, David Wolpert, the chief executive of Association of Meat Importers and Exporters of SA, said it was high time for Davies to call an urgent summit of all interested affected parties to resolve “this completely avoidable crisis”.
“We simply cannot have SA poultry magnates holding the tens of thousands of South African jobs that Agoa creates to ransom,” said Wolpert.
“The South African Poultry Association continues to use nonsensical arguments in defending anti-dumping duties on US chicken.
“Sapa contends that dropping anti-dumping measures would have devastating effects on the South African economy. This is simply not true. When dumping duties are dropped on US bone-in chicken, all that will change is the source of our imported chicken and not the quantity of chicken imported.
“The big loser in the maintenance of dumping duties is the consumer.”
South African poultry, Wolpert said, was acting in their own self-interest, with no regard for the consequences.
“Surely it is time for the Minister to do what is right for South Africa as a whole?”