By Carien Kruger
South Africa’s continued use of trade benefits under America’s African Growth and Opportunity Act (AGOA) lies in President Donald Trump’s hands, and he doesn’t have much regard for the South African government. This open hostility raises questions about SA’s continued inclusion in this discretionary programme.
Since Trump issued an executive order on 7 February to halt financial aid to South Africa, local concerns regarding South Africa’s eligibility for AGOA trade benefits have intensified. AGOA is a unilateral programme from the United States and allows eligible countries south of the Sahara to export thousands of product lines to America duty-free. South African agriculture is one of the sectors that benefits significantly, particularly the citrus, wine and macadamia industries, which have a lot at stake. The law outlines criteria for beneficiation under AGOA, and each country’s eligibility is reviewed annually in the year’s second half. South Africa was one of 32 countries whose participation was confirmed in January this year.
Duty-free chicken from the USA
Dr Adelia Jansen van Rensburg, a senior lecturer who holds the chair for international trade and the World Trade Organisation at North-West University, says according to the law, the American president determines an AGOA country’s eligibility based on statutory criteria and a process that includes an annual period for public comment as well as hearings.
With the renewal of AGOA in 2015, the programme was adjusted to provide for “out-of-cycle” reviews in response to public petitions.
“The (American) government can completely remove a country’s beneficiary status or just for specific products, provided it gives the American Congress 60 days’ advance notice.”
Jansen van Rensburg notes that, in theory, the process can be completed within a few weeks or months but usually involves consultation and/or negotiation with the country concerned.
“In 2015, South Africa’s eligibility was reviewed, but the review process was suspended when South Africa complied with America’s broiler chicken export requirements. Dr Rob Davies, the then minister of trade and industry, was responsible for the negotiations.”
South Africa granted an annual duty-free quota for American chicken pieces on the bone that excluded South Africa’s anti-dumping tariffs.
SA’s AGOA violations
Regarding whether South Africa’s broad-based black economic empowerment (BEE) legislation could conflict with AGOA criteria, Jansen van Rensburg states it is possible since it conflicts with internationally recognised workers’ rights. However, he points out that there are already a considerable number of AGOA requirements that South Africa does not comply with, and these are far more significant than just broad BEE. The three most important ones currently are:
- The expropriation of land is against AGOA’s provision on the protection of private property.
- The discrimination against minority groups is a violation of human rights, which is another requirement of AGOA.
- South Africa’s support for Palestine could be viewed as undermining America’s national security and foreign policy interests.
‘We don’t know what Trump knows.’
Donald MacKay, director of XA Global Trade Advisors, who was directly involved in 2015 when South Africa’s participation was reviewed, emphasises the importance of remembering that AGOA is not a trade agreement. “The ultimate problem is that it is entirely a discretionary programme. Even if we believe it has structure, President Trump can remove us without regard for any process. I would be surprised if South Africa is still an AGOA beneficiary by the end of the year, though perhaps those wishing to send President Cyril Ramaphosa to America can change that. I’m not optimistic, though.
“Underpinning these events is a sort of animus towards South Africa that I find difficult to comprehend. As long as we remain unaware of the reasons behind this, I will be astonished if South Africa is not expelled”.
His instinct tells him that BEE is not an explicit requirement for AGOA benefits. “There are far worse violations by other countries that still enjoy AGOA benefits.”
MacKay America can also lose benefits: The moment America expels South Africa from AGOA, the American broiler chicken industry forfeits its duty-free quota for exports to South Africa.
