The screws are being turned tighter by the US on South Africa to ease poultry import regulations.
This follows the move by the US Senate Committee on Finance yesterday, which “approved unanimously by voice vote language that would put pressure on South Africa to remove unfair limits on American chicken imports”.
The re-authorisation legislation, the latest twist in the two countries’ strained engagement over the Africa Growth and Opportunities Act (Agoa), gives the US the option to selectively limit or temporarily suspend benefits without having to terminate them completely.
Barring South Africa from Agoa would cost it as much as $2.5 billion (R30.33bn) in benefits and put thousands of jobs in jeopardy.
The bill that was passed by the committee renewed Agoa for 10 years and included Senator Johnny Isakson’s amendment. It has moved to the full Senate for consideration.
Since December, Isakson and fellow US Senator Chris Coons have been putting the South African government under pressure to end “unfair duties” on US poultry.
Isakson in a press release suggested that the bipartisan amendment, co-sponsored by Senators Tom Carper and Mark Warner, would require the US president to conduct an out-of-cycle review of South Africa within 30 days of enactment of the Agoa trade agreement. An unfavourable review could potentially damage South African trade with the US, hurting many sectors, including the motor industry, which has been a major beneficiary from Agoa.
Norman Lamprecht, the executive manager at the National Association of Automobile Manufacturers of South Africa (Naamsa), said excluding South Africa from Agoa would disrupt trade flows between the two regions.
Total automotive trade between South Africa and the US totalled R28.96bn last year, with exports from South Africa totalling R17.14bn and imports into South Africa from the US valued at R11.8bn.
Lamprecht said trade with the US had since 2001 been significantly increased by Agoa, which allowed duty free access of additional products into the US.
The latest development puts into question progress made recently between the two countries and industries, particularly statements by the SA Poultry Association (Sapa) that it believed it was on the cusp of moulding its expectations to suit the Americans.
Earlier this week, Sapa chief executive Kevin Lovell confirmed he was drafting a letter with “realistic, rational and reasonable proposals”, which if accepted by their US counterparts would form the basis of a new agreement.
According to the Department of Trade and Industry, the proposed deal would see US chicken bone-in cut exports being restored to their value prior to 2000 with a growth factor that takes into account current dynamics in the South African market.
This was on the back of Minister of Trade and Industry Rob Davies hammering out an agreement with his counterpart US trade representative Michael Froman to strengthen and deepen their bilateral trade and investment relations during the Trade and Investment Framework Agreement Council meeting held in Washington this month. – Additional reporting by Roy Cokayne