Is USA using AGOA to manipulate Africa?
“CHICKEN imports end AGOA impasse”, screamed a headline from one of South Africa’s newspapers last week in a widely publicised national news story. Cheap United States chicken imports hit South African supermarket shelves on Tuesday last week for the first time in 15 years. The announcement concluded a protracted trade dispute that came to a head in November last year when US President Barack Obama gave South Africa 90 days to open its market to US chicken, beef and pork or lose duty-free access to the US market for its own agricultural products.
The poultry dispute dates back to 2000 when South Africa imposed prohibitive anti-dumping duties on US chicken parts, a decision not well received by the “dominant” world power.
US trade representative in South Africa, Michael Froman, quoted in a celebratory remark in one of the dailies acknowledged Pretoria has finally “satisfied conditions” for retaining US trade privileges under the African Growth and Opportunity Act (AGOA).
He says the lifting of the barriers to US poultry, beef and pork exports to South Africa would probably increase the sales of those products by about $160 million a year with close to $100 million of that being chicken exports.
US ambassador to South Africa Patrick Gaspard also welcomed the announcement noting that the entry of US poultry into South Africa was required as a condition for avoiding South Africa’s suspension under AGOA. He also claimed the move paved a way for a broader, stronger economic partnership with South Africa.
However, Obama has still to issue a formal proclamation announcing that SA has satisfied AGOA conditions, but Froman indicated that was now a formality. His office would, however, continue to monitor SA’s compliance with the requirements of the act, which is not a trade agreement but a unilateral grant of US market access to qualifying countries. While this is a purely domestic matter, events around this chicken scenario raise a lot of questions concerning the skewed nature of United States’ economic relations with Africa as a whole.
AGOA is a US non-reciprocal trade policy for sub-Saharan African countries, enacted on May 18, 2000 as Public Law 106 of the 200th Congress. While this seemingly benevolent policy seeks to enhance market access to the US for qualifying Sub-Saharan African countries, critics have pointed to the manipulative political undertones engrained in this policy.
The Act originally covered the eight-year period from October 2000 to September 2008, but legislative amendments signed into law by US President George Bush in July 2004 served to extend AGOA to 2015. At the same time, a special dispensation relating to apparel was extended by three years to 2007; but in December 2006 these were extended to 2012. The Act has since been extended to 2025.
There seems to be an anomaly in the qualification criteria for AGOA preferences, which is based on a set of biased conditions contained in the AGOA legislation. These include upholding of the rule of law, human rights, political pluralism, no engagement in activities that undermine United States national security or foreign policy interests and elimination of barriers to US trade and investment. It appears the US deliberately crafted these conditions to somehow arm-twist desperate governments to open up their economies for American exploitation.
No case study exemplifies the typical manipulative US tendencies than the chicken import experience in neighbouring South Africa. A lot of meaning can be drawn from the attitude of Obama himself, who each year wields the power to disqualify any country and how through his threat, he cornered South Africa to give in to US demands.
Given the challenges facing the South African economy and fears of a potential volatile political climate over economic woes, the response by the South African government did not come as a surprise. After careful consideration it looks like South Africa could not fathom the prospect of losing access to the lucrative US market and attendant consequences of such a stance. This smacks of a defeated country but at what cost to South African farmers and the country’s sovereignty?
Africa as a whole has all reasons to worry about such economic arrangements, which not only reduce them to play second fiddle but perpetuate the dependency syndrome and economic dominance of the rich north countries.
Considering that South Africa is a sub-regional powerhouse, countries in the Sadc region will most likely feel the heat. The reasons to support this view are many. One of them is that most South African headquartered retail conglomerates such as Pick n Pay, OK, Shoprite and Food Lovers, have footprints across the region, hence the possibility of them being extensions of cheap US poultry products is high. This might pose a threat to domestic production and viability.
The effect is likely to deepen in the context of drought in the region, which has a huge bearing on the production capacity factor for many firms. Swaziland has already voiced this concern over unfair trade, an issue that the World Trade organisation was established to deal with.
Farmers in the US and its Western allies are heavily subsidised to produce on an intensive scale using modern technology. It is obvious that when made to compete with poorly supported farmers in Africa the US products would win competitively.
This has been one of the sticking issues in the Doha Round of discussions under the WTO on the agriculture issues especially, which the US seems to be trying hard to smuggle through AGOA.
History has shown how the US, using AGOA has invoked a similar manipulative strategy to influence governance systems in Nigeria (2013) over poultry exports. Madagascar, Ivory Coast, Mali, Eritrea, Burundi and Central Africa Republic have also not been spared.
To date several countries like Zimbabwe, Swaziland, Gambia and Sudan are not eligible for the arrangement because of policy differences with the US. Zimbabwe’s indigenisation policy, for instance, is an anathema to US investment interests. The country is also not eligible under the preferential trade to African exports to the United States because of its alleged interventionism and perceived lack of “fundamental” freedoms.
This shows how the ‘powerful’ US abuses its financial power and uses policies such as AGOA to whip southern countries to dance to her tune. From this perspective AGOA appears to be a hegemonic apparatus, created to foster economic and political domination of the US in Africa.
Moreover, there is no agreement regarding the scale of benefits that African countries have been able to gain from AGOA to date. While the proponents of AGOA believe the policy has helped create approximately 300,000 direct jobs in eligible countries many Africans are less convinced.
Critics argue that this preferential treatment had not yet delivered expected outputs as trade between the US and Sub-Saharan Africa is still low and highly concentrated. According to data published by AGOA.infor website, only approximately one percent of US imports come from the 39 African countries supported by AGOA, with the hydrocarbon sector alone accounting for most of the African exports under AGOA.
“All African countries have not benefited from AGOA,” insisted Ngoulakia Barthelemy, president of the Scientific Committee of the AGOA Forum, in August of last year. He further noted that, until now, only a few Sub-Saharan African economies have managed to take advantage of the opportunities offered under AGOA. Among these is; Angola, Chad, Congo and Congo-Brazzaville who, unsurprisingly are some of the largest oil producers in the region.