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U.S., South African trade dispute heightens

11 Nov 2015
Financial Nigeria

Summary

South Africa has restricted imports of U.S. poultry imports for 15 years, beef imports for 12 years and pork for the past three years

U.S. Presdident Barack Obama and South African President Jacob Zuma

Following last week’s ultimatum by United States President Barack Obama to the South African government to open its markets to American poultry, beef and pork exporters within 60 days –  until January 4 – or risk losing the benefits of the African Growth and Opportunity Act (AGOA), the South African government has said it is working to resolve the dispute.

In a White House statement on November 5, Obama warned that the United States will suspend South Africa’s duty-free access to the lucrative US market for its agricultural exports. Obama said, “In accordance with sections 506A(d)(4)(C) and 506A(c) of the African Growth and Opportunity Act (AGOA), I am providing 60-day advance notification of my intent to suspend the application of duty-free treatment to all AGOA-eligible goods in the agricultural sector for the Republic of South Africa 60 days after the date of this notification.”

South Africa has restricted imports of U.S. poultry imports for 15 years, beef imports for 12 years and pork for the past three years. The two governments have been negotiating to end the row over the past few years. Despite the long-running dispute, South Africa was included in the new version of the AGOA which was re-authorised by the U.S. congress in June, extending it for another 10 years. The legislation was first enacted in 2000 to improve the economic relations between the United States and eligible Sub-Saharan countries.  

Obama further said, “I am taking this step because South Africa continues to impose several longstanding barriers to U.S. trade, including barriers affecting certain U.S. agricultural exports, and thus I have determined that South Africa is not making continual progress toward the elimination of barriers to United States trade and investment as required by section 104 of AGOA.”

Rob Davies, South African Trade and Industry Minister, said on Tuesday that both governments were negotiating the issues and were close to a deal. Davies said he believed U.S. poultry, meat and pork could start entering South Africa by the end of the year.

Meanwhile, a bill has been passed by the South African Parliament that would require US and other foreign owners of private security companies to sell off majority stakes to South Africans. Laird Treiber, Economic Counselor at the U.S. Embassy in Pretoria, said if such a bill is signed by President Jacob Zuma, it would be deemed as expropriation.

South African lawmakers recently said that the $5.2 billion fine imposed by Nigerian Communications Commission (NCC) on a South African company, MTN, could hurt relations between Nigeria and South Africa, two of Africa’s largest economies. The Nigerian regulator fined the Nigerian operations of MTN, Africa's largest telecoms company, the record fine last month after the company flouted a regulatory directive to disconnect five million users with unregistered Subscriber Identification Module (SIM) cards.

South Africa exports $250m of farm products to the U.S. each year. The biggest exports from South Africa to the U.S. under AGOA are vehicles. Last year, about $1.3 billion worth of vehicles were exported to the U.S., accounting for 74% of all South African exports to the U.S. under the Act.

President Obama said the he will continue to assess whether South Africa is making continual progress toward the elimination of barriers to United States trade and investment in accordance with AGOA eligibility requirements.


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