SA should seek more reliable market access into US

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While Africa benefits tremendously, it is also relevant that exports from Africa support more than 120,000 jobs in the United States. Therefore, uncertainty about its renewal brings about uncertainty by US companies on whether to continue to invest in Africa and this is clearly detrimental to both development on the African continent and the goodwill that AGOA has created for the US here.

While AGOA, which sub-Saharan countries have been signed up to since 2000, has seen many small successes, it has also brought in criticism, for one around the amount of oil exported out of Africa. However, it appears that for Africa, AGOA offers the opportunity for trade on a global scale and its potential demise is concerning.

Area of concern

One particular area of concern is the apparel sector. Apparel and footwear companies have seen extremely positive changes for the job market having created several hundred thousand direct jobs, let alone indirect employment through AGOA in the US alone. However, with US companies having to plan far in advance to ensure their products will make it to their stores in time, the uncertainty about its potential expiration in September could potentially lead to extensive loss as fear around placing orders is evident.

Another issue to recently hit the media has been the AGOA row between the US and South Africa around the chicken trade. The US has complained that SA has been shutting them out by placing tariffs on American chickens while still enjoying the benefits of AGOA which allows SA to export wine, luxury cars and other goods to America.

SA feels that these duties are lawful and that it should be taken to the World Trade Organisation for resolution. SA's poultry industry is currently negotiating with the US on allowing a quota of their dumped chickens, which would exclude anti-dumping duties, into the SA market. The US is trying to challenge SA's dumping duties through lobbying on AGOA.

Dumping occurs when a country exports a product at a price that is lower than it normally charges in its home market, or if it exports for a sustained period at prices below the average cost of production. Anti-dumping measures are implemented to level the playing field between domestic and foreign producers in the same market, with the aim of promoting fair trade.

Duty-free entry

All of this has meant that US officials are now threatening SA's inclusion in AGOA. With AGOA facilitating duty-free entry into the US on certain products, without AGOA, Africa would clearly be affected both in terms of job opportunities and economic growth. In fact, the US is one of several countries concerned about SA's anti-dumping duties in the poultry sector - Germany, Brazil, the UK and the Netherlands are all concerned about a current investigation which could result in anti-dumping measures being imposed against them.

Unlike its European counterparts, the US as a unilateral preference scheme benefactor to SA, wields immense negotiating power in the form of AGOA and is likely to eventually have its way unless South Africa reconsiders its stance in the chicken anti-dumping duty impasse.

The current uncertainties surrounding AGOA renewal should prompt South Africa to seek a more reliable market access regime into the US such as a free trade agreement. While it is likely that AGOA will be extended this time around, continued extensions are not guaranteed, hence the need to have a reciprocal trade agreement in place which should, among other things, seek to secure or lock-in some aspects of the favourable market access into the US market through AGOA.