AGOA: South Africa and US crack deal

A row between South Africa and the United States over agricultural exports has been resolved.

South Africa will now be free to export farm produce to the world’s largest economy without any penalties.

The agreement was reached despite South Africa missing an important deadline set by US President Barack Obama to conclude negotiations by December 31, 2015.

There were fears that he would suspend South Africa from the crucial trade agreement on January 4.

South Africa’s Minister of Trade and Industry, Rob Davies, commended the people involved in the negotiations and called on the US to do the right thing and retain South Africa’s membership in Agoa without any interruptions.

“We look forward to a strengthening of relations, not just to going back to where they were,” Davies told reporters in the capital Pretoria. “We have succeeded in achieving a balance in maintaining the trade opening with the US and the animal health in South Africa.”

The announcement by Davies will come as a relief to the agriculture and automative industries, particularly BMW and Mercedes, which stand to benefit from continued absence of tariff barriers through Agoa.

The current drought in South Africa has adversely affected farming extending a recession in the sector. South Africa is the world’s second-biggest exporter of oranges and the top producer of macadamia nuts.

The trade program has helped South Africa more than double its exports to the U.S. since 2000.

South African agricultural exports to the U.S. under AGOA amounted to $154 million in the first nine months of last year, or about 14 percent of shipments, according to data from the Trade Law Centre, which is based in Stellenbosch, near Cape Town.

South African products affected would include oranges, macadamia nuts, wine and citrus.

South Africa says it reaches agreement with US to rescue #AGOA trade deal https://t.co/fZSJ629UIn

— Bloomberg Africa (@BBGAfrica) January 7, 2016

Agoa, 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.

In order to remain beneficiaries, countries are required to cut barriers to US trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.