Obama announces 15 March Agoa suspension

South Africa has until 15 March 2016 to fully comply with the US over its meat imports, after US President Barack Obama on Monday ordered the suspension of duty-free treatment to all Agoa-eligible goods in the agricultural sector from South Africa, effective on that date.

Sources in the industry indicated to Fin24 that the suspension would only be implemented should South Africa not fully comply with the requirements.

The announcement comes after South Africa failed to meet the December 31 deadline set by Obama to finalise negotiations around US meat imports, failing which he said he would suspend certain duty free tariffs on goods that benefit from the African Growth Opportunity Act (Agoa).

The act, renewed by US lawmakers in June, eliminates import levies on more than 7 000 products ranging from textiles to manufactured items and benefits 39 sub-Saharan African nations.

“I have determined that South Africa is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by South Africa with such requirements than terminating the designation of South Africa as a beneficiary sub-Saharan African country,” Obama said in a proclamation released on Monday.

“Accordingly, I have decided to suspend the application of duty-free treatment for all Agoa-eligible goods in the agricultural sector from South Africa for purposes of section 506A of the 1974 Act, effective on March 15, 2016.”

While Minister of Trade and Industry Rob Davies announced on January 7 that the countries had completed negotiations on the various meat imports, US Ambassador Michael Froman warned there were more hurdles for SA.

“While we celebrate the progress we have made in resolving the outstanding technical issues, the true test of our success will be based on the ability of South African consumers to buy American product in local stores,” he said on January 8.

“We will be working to ensure that this final benchmark of entry of poultry is achieved so that South Africa continues to have the advantage of full Agoa benefits, including by working with the US and South African industries to expedite the shipment of eligible product as soon as possible.

“Our goal is to complete this effort so that South Africa can maintain the full and continued enjoyment of Agoa’s benefits.”

Matthew le Cordeur, Fin24

The African Growth and Opportunity Act (AGOA) provides duty-free market access to the United States for qualifying Sub-Saharan African countries by extending preferences on more than 4,600 products eligible under the US Generalised System of Preferences (GSP), in addition to a further 1,800 tariff lines added by the AGOA legislation. The legislation also provides duty-free access to all clothing (as well as certain textile) exports from countries that qualify under the Act’s ‘wearing apparel provisions’, subject to the Rules of Origin (RoO) being met.

In 2014 South Africa was the 3rd largest AGOA exporter to the US after Angola and Nigeria.

In 2015 South Africa was the largest AGOA exporter to the US followed by Chad and Nigeria.