South Africa and AGOA: Recent developments 2015-2016 and possible suspension
The African Growth and Opportunity Act (AGOA) has received much publicity and attention over the past year in particular, for two main reasons: (a) the legislation was set to expire at the end of September 2015 amid uncertainty and many questions about whether it should be renewed, and in which format, and (b) the legislation’s eligibility requirements were brought to the fore amid serious questions around South Africa’s continued compliance with these underlying provisions. South Africa had in the meanwhile become the largest and most diversified AGOA beneficiary.
Fast-forward to end 2015. AGOA has since been renewed by ten years, and South Africa remains in the fold, albeit on somewhat precarious ground, and very much in the spotlight. Special provisions targeting South Africa – in the sense of compelling a mandatory formal review of South Africa’s compliance with AGOA’s eligibility provisions – were included in the new legislation. Overhauled eligibility requirements and associated processes and reviews, as well as possible sanctions for non-compliance, feature in the new AGOA.
The process relating to South Africa was partly concluded in November 2015 when President Obama wrote to Congress, in line with the provisions of the new AGOA legislation, to give advance-warning of an intention to suspend some of South Africa’s market preferences under AGOA. In January 2016, Obama followed-through with this threat and formally suspended South Africa’s AGOA preferences for agricultural exports amid a new 60-day notice period, as required by the legislation, effective 15 March 2016. Until then, South Africa has a final opportunity to rectify, implement or finalise the few remaining issues to which this suspension relates.
This Working Paper aims to provide a relatively non-technical and accessible overview of recent events (and those that preceded the current situation), look at the potential trade impact of the proposed sanction and associated vulnerable sectors, as well as inform on South Africa’s rebate system relating to the agreed chicken quota that has become available to South African importers regarding chicken imports from the United States.
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