The next few days may be crucial in determining whether South Africa will continue to enjoy billions of rands in benefits under the US African Growth and Opportunity Act (Agoa).
US President Barack Obama earlier gave the country until December 31 to comply with the conditions set for South Africa to qualify for duty free access to US markets under the agreement.
At a media briefing on Monday in Pretoria ,Trade and Industry minister Rob Davies acknowledged that this deadline has lapsed, but said “the whistle has not been blown yet” and negotiations were continuing.
Davies could not say when the new deadline was, since that was up to the US. Another meeting has however been scheduled for Wednesday January 6, he said.
Davies said a lot of progress had been made over the holidays on outstanding issues, which related largely to the importation of chicken, beef and pork from the US. The only matters to be finalised are the administration of the chicken import quota of 65 000 tons, feedback on a South African proposal that beef from neighbouring countries be dealt with as originating from the US after a 90 day quarantine period and the applicable salmonella standard.
Davies said it is difficult to quantify the benefits that may be lost if the negotiations fail and South Africa is excluded from Agoa. He said broadly R25 billion of the R70 billion exports to the US are done in terms of Agoa and research indicates that 62 000 jobs benefit from the act. The products that benefit most are citrus, Macadamia nuts, wine, canned fruit and avocados, he said.
Davies said that if the US decides to exclude South Africa, it will decide on the terms of the exclusion. Any exclusion can however quickly be lifted, once agreement has been reached, he said.
The impact of exclusion may differ from product to product with some having to stop exports and others continuing, but being less competitive, Davies said.
Minister of Agriculture, Forestry and Fisheries Senzeni Zokwana and Health Minister Aaron Motsoaledi accompanied Davies.
Zokwana said he was positive that agreement could be reached on the Salmonella standard. Motsoaledi said the standards South Africa is insisting on, are international standards and a balance has to be found between issues of trade and health.
His statement follows a tweet by the US embassy on January 2, stating that the US is exporting chicken to 138 countries throughout the world based on standards that South Africa has been unwilling to accept.
Davies said South Africa has had a “relatively balanced” trade relationship with the US and Agoa has underpinned this. Export to the US includes value added products like wine and companies from both countries invest in the other. He referred to it as a “robust relationship” and said: “We want to preserve that”.
Davies emphasised that South Africa is not using sanitary standards as a pretext for protectionism. He said the two countries have different systems in place and are actively seeking solutions.
The US embassy would not comment on the issue.
Agri SA CEO Omri van Zyl said the US is an important trade partner and in the current difficult economic environment South Africa needs all the investment and export markets it can get.
He said while AgriSA was frustrated by the lack of urgency up to November last year, a lot of progress has been made since. A balance has to be found between consumer access to cheaper US products, protection of producers against dumping, and consumer safety, he said.
In 2014 South African producers enjoyed benefits of about R2 billion in terms of Agoa. This has to be weighed up against the issues relating to chicken imports, he said. While the US is an important trade partner, South Africa cannot just drop its standards, Van Zyl added.
Van Zyl said that hopefully the outstanding issues could be finalised in the next few days, but emphasised that it has already taken too long. The Obama administration is under severe pressure from Congress to put the matter to bed, he said.
Andrè Morgenthal, communication manager for Wines of South Africa (Wosa), said while Davies explained the current position well, it is still not clear whether “wine is safe”.
He said South Africa exported 10.7 million litres of wine to the US last year, more of 9 million litres of this being bottled wine. This represents 2.5% of the country’s total wine export.
The US market is however of huge strategic value to the industry, as it grew by 27% in value and 9% in volume in the first 9 months of 2014.
Morgenthal said Agoa gives the local wine industry a competitive edge over exporters from Australia and South America and many of the country’s prominent quality wine brands have a presence in the US market. South African wines have enjoyed a lot of media coverage in the US over the last few years, which has boosted the industry image in that market, he said.
Morgenthal said Wosa has been in contact with both South African and US Agoa representatives and believes the US “will give us a few more days”.
He said South Africa is currently waiting for feedback from the US on the proposals it made and said he is positive that the two countries will find common ground.