30 May ANALYSIS | Why AGOA is vital for SA food exporters
New trade deals with Asian and Middle Eastern markets are still many years away – so South Africa needs to protect its AGOA access, writes Wolfe Braude.
South Africa currently enjoys valuable preferential access to mainly traditional markets – the EU, UK, US, Africa and some South American countries (under Mercosur).
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, SA agricultural products are exported globally as follows: Africa 37%, Asia 27%, EU 19%, Americas 7%, and the rest of world (including the UK which comprises over half of this) makes up 10%.
The main export crops comprise maize, wine, grapes, citrus, berries, nuts, apples and pears, sugar, avocados, and wool. SA 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 (including non-agricultural products) grew by 16% between 2017 and 2012 and comprised 11% of total SA exports in 2021.
SA exports and agricultural exports to the US
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.
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.
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