Trade experts have expressed concern over South Africa’s eligibility to retain duty-free access to markets in the United States under the auspices of the African Growth and Opportunity Act (AGOA).
Until March 2016, South African agricultural products risked losing out on the benefits accorded by the preferential trade programme unless the country agreed to a meat trade deal, which allowed for the sale of bone-in US chicken pieces without anti-dumping duties. This, after an out-of-cycle review relating to the country’s eligibility was launched 30 days after the 10-year AGOA Extension and Enhancement Act.
Among the factors reviewed and deemed appropriate by US trade authorities were whether the country has a market-based economy, the rule of law, quality of workers’ rights, efforts to combat corruption, reduce poverty and child labour as well as efforts to eliminate barriers to US trade and investment. Now, with South Africa’s eligibility up for review on an annual basis, as per the new act, trade experts have expressed some concern over the country’s ability to meet all the eligibility requirements.
“AGOA is not a negotiated agreement, we are at the mercy of the US congress,” said Virusha Subban, a partner at Bowman Gilfillan.
South Africa could face difficulties in qualifying as a market-based economy that protects private property due to the Expropriation Bill, when considered in terms of our own constitution and customary international law, and Copyright Amendment Bill, said Malebakeng Forere, a senior lecturer at the Wits School of Law.
Speaking on a panel at the Mandela Institute, Subban warned that regulation of the private security industry, in which American companies hold significant interests, would also have a negative impact on South Africa’s status as a market-based economy.
That the South African government allowed Sudanese president Omar al-Bashir to leave the country after attending an African Union summit in 2015 despite having an arrest warrant from the International Criminal Court raises questions about the rule of law, Subban said. She did, however, praise the South African courts for respecting the rule of law in the way in which they handled the matter.
At the same time Forere said numerous scandals and discourse about state capture could have a negative impact on how the country’s efforts to combat corruption are perceived.
She did, however, take issue with requirements pertaining to the elimination of barriers to US trade and investment as well as efforts to reduce poverty. As per agreements governed by the World Trade Organisation, should South Africa eliminate certain barriers against trade and investment by the US, it would have to do so for other countries as well, Forere said. She also called US concerns over Broad-Based Black Economic Empowerment ironic in that it is a policy formulated to alleviate poverty.
Forere said the “wonderful” rights afforded to workers in South Africa would see the country pass that eligibility requirement with ease.
According to Cyril Prinsloo, a researcher at the South African Institute of International Affairs, addressing issues flagged by the US Trade Representative in its annual report to congress would mitigate “another poultry debacle” in the short term. With AGOA unlikely to be extended beyond 2025, he said they should look to engage with the US on a more equitable level and suggested South Africa, as a member of the Southern African Customs Union (SACU), negotiate a Free Trade Agreement with the US. Forere echoed his sentiments saying a bilateral agreement negotiated under the auspices of SACU would be better than the non-reciprocal AGOA.
Despite concerns over South Africa’s eligibility to benefit from the programme, Forere stressed that the US is reliant on South African products. “I don’t think we are sitting on the fence, the US needs us just as much as we need them. We may look desperate but the US is just as desperate too,” she said.