Agoa dispute shows need for new export markets

South Africa should seek urgently to diversify its export markets, whether or not the country retains its benefits under the United States trade legislation the Africa Growth and Opportunity Act (Agoa).

This is the view of Dr Mmatlou Kalaba, commodity market analyst at the independent Bureau for Food and Agricultural Policy (BFAP).

Senior government ministers have visited Washington to argue for the retention of South Africa’s benefits, following the view of influential US politicians that the benefits should be terminated.

Writing in Farmer’s Weekly, Kalaba said that, while losing Agoa benefits would be serious, local issues such as power cuts and issues at domestic ports had “more far-reaching consequences”.

“Power loss due to load-shedding in just one shipment of fruit can spoil the whole load, costing billions of rands. It can wipe out a producer overnight. We’ve seen in the past that delays in getting shipments out, due to strikes or failing equipment, have similar effects,” he said.

Loss of South Africa’s Agoa benefits would not shut its exports to the United States. However South African products would “face far bigger trade barriers and potentially higher tariffs, making our products less attractive”.

Kalaba said potential trade issues with the US and the European Union highlighted the need to explore alternative markets. The Middle East and African markets were a saving grace for South Africa.

“Together with Asia, these three markets have the potential to absorb any trade lost with the EU and the US, but trade protocols are different and in many cases still need to be negotiated.

“The fact that there are such high-level discussions [regarding the EU and AGOA agreements] should be a wake-up call that South Africa needs to invest in securing other markets,” he wrote.