Ellis Mnyandu
IN A BID to avert more fallout from what has become a high-stakes game of chicken between South Africa and the US, Trade and Industry Minister Rob Davies plans to travel to Washington this month to finalise a deal to keep Pretoria in the key preferential trade scheme, known as the African Growth and Opportunity Act (Agoa).
Davies told Business Report in an interview yesterday that his trip to Washington would be preceded by meetings between the South African Poultry Association (Sapa) and its US counterpart, the USA Poultry and Egg Export Council (Usapeec).
For months now, Davies has been at the forefront of the oft on-and-off deliberations between the South African government and US administration officials over Washington’s demand for South Africa to grant to US poultry products unrestricted access.
His visit to Washington is planned for April 16. “Of course I will be discussing these matters further with the US government, and I hope we will be able to secure some meetings with people in Congress as well,” said Davies.
High stakes
The meetings in Washington will cap almost a month of high stakes posturing involving US lawmakers and Sapa over the dispute. For 15 years now US poultry exports to South Africa have been subjected to what US officials have said are punitive anti-dumping tariffs – more than 30 percent – raising the ire of US lawmakers in recent months.
Two of those lawmakers are Senator Chris Coons of Delaware, a Democrat, and his Republican counterpart Johnny Isakson.
Both have pushed for South Africa to be kicked out of Agoa if it does not scrap the tariffs.
They have argued that the tariffs are outmoded, while Sapa has said they were necessary to prevent dumping by the US and to protect jobs.
However, in a letter addressed to Davies this week, Coons, Isakson and 11 other senators urged him to “continue to work with Sapa and encourage its leaders to not shut the door on negotiations”.
Through Agoa, South Africa has been able to derive duty-free access to the US market for various products, including cars, wine, citrus and textiles.
Barring South Africa from Agoa would cost Pretoria as much as $2.5 billion (R30bn) in benefits and put thousands of jobs in jeopardy. Agoa must be renewed ahead of its September expiration date.
While President Barack Obama’s administration supports Agoa’s renewal, the decision will be made by Congress.
Key stakeholders
Davies said efforts were under way to ensure South Africa continued to benefit from Agoa. To that effect, he said he was due to meet with a Sapa delegation yesterday afternoon, while on Tuesday met other key poultry industry stakeholders over the matter.
“We need to find what the US senators have called the sweet spot. The sweet spot is a level of imports from the US which is sustainable, which takes account of the realities of the need to grow the local poultry industry, the employment dynamic, which (involves) 150 000 direct and indirect jobs.”
He said starting from April 12, both Sapa and Usapeec would be participating in meetings in Lisbon and Rome where the International Egg Commission and the International Poultry Council would be holding deliberations.
“The two will meet there, and the Sapa side will transmit an improved offer to the US,” said Davies, adding that it was important, however, that “flexibility be shown on the US side”.
He said South Africa had agreed, through the US embassy which is in contact with Coons and Isakson, to set up a time frame on the process of negotiations.
“From the time the new offer is exchanged, we expect the process to be concluded within a month,” Davies said.
“We are working in good faith to try to reach a mutually acceptable, mutually beneficial outcome.”
Although Davies could not be drawn into the specifics of what the South African proposal to the Americans would entail, he said “it involves a quota”.
“We have to agree to disagree about the anti-dumping duties that are in place. Anti-dumping duties have been in force since 2001 and... I don’t want to enter into any kind of dialogue on these anti-dumping duties.”
“What we are saying we can create market access at a level which is reasonable, tolerable and is in the interest of both of us through the process that is ongoing, and that’s what we are committed to doing,” he added.
Asked how much South Africa needed Agoa, Davies said: “Agoa is of value to us.”
He said the South African government was looking for the poultry association “to develop an offer which will accommodate legitimate, real interest of US poultry exporters but at the same time also ensure that we do have some kind of a space to grow the local industry”.
He said the discussions had also involved “talking about some kind of a developmental component that we would like to see, that will include support for developmental programmes”.
Davies also said that there had been talks with Coons about developing training programmes for local poultry producers in the US.
“We would also be looking to support BEE (black economic empowerment) through the imports, create BEE opportunities. So those are the sort of parameters of the process.”
Ellis Mnyandu is the editor of Business Report. Follow him on Twitter: @Ellis_Mnyandu