Why AGOA is vital for SA food exporters

South Africa currently enjoys valuable preferential access to mainly traditional markets – the EU, UK, US, Africa and some South American countries.

In the equally lucrative and fast-growing South and East Asian region, only one agreement potentially exists - a preferential trade agreement with India that remains under negotiation. No trade agreements exist with Middle Eastern states.

However, government maintains close relationships with most markets in these regions and efforts continue to deepen trade. Preferential access is the first prize of trade, it bilaterally removes tariffs, and usually incorporates a set of binding protocols and agreements that enhance trade and cooperation, remove obstacles to current trade and include mechanisms for dealing with disagreements.

Overall, South Africa’s agricultural products are exported globally as follows: Africa 37%, Asia 27%, EU 19%, Americas 7%, and the rest of world makes up 10%.

The main export crops comprise maize, wine, grapes, citrus, berries, nuts, apples and pears, sugar, avocados, and wool. South Africa now exports roughly half of its agricultural produce in value terms. The industry therefore needs exports to maintain revenue, economies of scale, and thereby jobs and domestic product affordability. If exports at put at risk, agricultural jobs and indirectly domestic food security will be put at risk. Total South African exports to the US grew by 16% between 2017 and 2012.

The African Growth and Opportunity Act (AGOA) essentially expanded a unilateral preferential tariff regime called the Generalised System of Preferences (GSP), which was launched by key developed markets under the UN Conference on Trade and Development (UNCTAD) in the early 1970s.

The concept was that extending such unilateral duty-free access would create an enabling trading environment for developing countries.

GSP

The following countries grant GSP preferences: Australia, Belarus, Canada, the European Union, Iceland, Japan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey, and the US. South Africa is a beneficiary under GSP programmes run by Japan, Russia, Turkey and traditionally the US.

Like AGOA, the GSP is not a trade agreement, but rather a unilateral benefit offered to less economically developed countries, allowing these countries to increase and diversify their trade with the US. It is not restricted to African countries, however.

Both GSP and AGOA operate according to a set of eligibility criteria, and can therefore be withdrawn if a recipient country breaches such criteria. The US GSP criteria broadly comprise of the following: enforcing arbitral awards; not have nationalised, expropriated or otherwise seized property of US citizens or corporations without providing, or taking steps to provide effective compensation; taking steps to afford internationally recognised worker rights; implementing commitments to eliminate the worst forms of child labour; and the extent to which a country provides adequate and effective protection of intellectual property rights.

More than 5 000 products are eligible for duty-free access under the US GSP programme. It must be noted though that the US GSP is currently not active. It expired in December 2020. The programme is usually extended for two to three years at a time. The GSP programme has lapsed prior to its reauthorisation in 10 of the 14 times it was extended though.

A sizeable group within the US Congress is actively lobbying for its renewal, noting that the absence of GSP makes useful imports more expensive for US firms, and decreases US competitiveness and attractiveness versus China.

Several bills to reauthorise GSP have been introduced to Congress. The president holds the primary authority for GSP but a Trade Policy Staff Committee administers GSP and provides annual country review recommendations to the president.-Fin24