Johannesburg - It is D-day for South Africa’s benefits under the African Growth and Opportunity Act (Agoa).
The US is expected to announce within days, if not hours, that South Africa would lose some of its benefits as a consequence for missing three critical deadlines on tariff issues.
US Ambassador to South Africa Patrick Gaspard said yesterday: “The recommendation of the US trade representative made its way to President (Barack) Obama this week.”
Gaspard suggested that the loss of any benefits could take effect in January.
In response to reports that an announcement from the US was imminent, the Minister of Trade and Industry Rob Davies said: “We believe that when our vets meet today they can iron out the outstanding issues and that the first consignments of US poultry, pork and beef can be imported by South Africa before the end of the year.”
Reduction
Davies was of the opinion that any announcement by the US on a reduction of South Africa’s benefits under Agoa would not affect South Africa’s motor vehicle manufacturing industry.
Cutting access to Agoa could see South Africa lose as much as $1.7 billion (R23.5bn) in export revenue a year.
Given that Gaspard said that the two sectors which could be affected were either the motor vehicle or citrus industries, there are suggestions that the citrus industry might end up being penalised for what is effectively a “three meats” dispute.
The vice-chairman of the Citrus Growers Association, Piet Smit, said the loss of Agoa benefits for citrus growers in the Western and Northern Cape would be severe.
“The US market is the most important market for us as between 30 percent and 40 percent of our exportable fruit is exported to the US. If our privileges under Agoa were to be revoked and we had to pay duties, we would be uncompetitive against Latin American nations such as Chile, Argentina and Peru, which enjoy privileges under free trade agreements.”
Smit emphasised that about 10 000 jobs in the Cape were dependent on the citrus sector, and if each employee had five dependents, it would mean 50 000 people downstream could be severely affected.
“Either we would be forced to find an alternative market for our produce or we would have to cut costs.”
For the people of small towns such as Citrusdal and Clanwilliam on the Cape West Coast, which are entirely dependent on the surrounding citrus growers, the economic impact will be severe.
The chief executive of the Citrus Growers Association, Justin Chadwick, said he had gone to Washington trying to explain to Senators Chris Coons and Johnny Isakson and the US trade representative just how much the citrus industry had been a success story of Agoa.
Which makes it all the more baffling why the citrus industry should be penalised.
Agoa has enabled the South African citrus exporters to establish an important base in the US market, which has allowed it to compete against Mexico and Europe, and has resulted in South Africa creating 85 000 jobs in the citrus industry.
Agoa has also enabled South African vehicle exports to grow from zero in 2000 to average around $2 billion a year, providing more than 30 000 direct jobs, and more than double indirect jobs.
From the US perspective, America has created a programme that has helped to develop South Africa’s manufacturing industry to the extent that Port Elizabeth exports $1.3bn in luxury cars to the US annually.
“It is hard to stomach being called a bully when we are busy trying to negotiate even further market access for South African products such as avocados, lamb and parsimons,” Gaspard said.
While a quota system was put in place for the three meats, poultry continues to be blocked by the fact that the South African Department of Agriculture and Fisheries has not yet issued a health certificate and concluded a protocol on how to treat avian influenza in the US.
Outbreak
The US is insisting that South Africa agree on “regionalisation” based on US state lines so that if there is another outbreak of avian flu in some US states, South Africa can still import meat from those US states not affected.
The US considers it a double standard that South Africa allowed these meats to come in from other areas such as the EU, which does not grant South Africa duty free market access like the US does.
According to Gaspard, 138 countries had accepted US poultry, 100 of them without any protocols, while 38 followed regionalisation protocols.
“It would be quite simple for South Africa to do the same,” Gaspard said.
Davies was confident that South Africa and the US could resolve these issues, and Gaspard contended that officials on both sides were working round the clock to ensure that the US adoption of such a recommendation could be averted.
While both sides insist that there is the requisite political will to do a final deal before it is too late, Gaspard has warned: “We are at the edge of the cliff.”
BUSINESS REPORT