South Africa and US play ‘chicken’ as trade deal deadline looms

The humble chicken is at the heart of a critical trade deal between South Africa and its major trading partner, the United States, as a September deadline looms for the renewal of the African Growth and Opportunities Act (AGOA).

South Africa’s troubles have grabbed far more recent headlines than its trade assets. The country has gotten attention for its freefalling currency, its often-violent political clashes and its notoriously unstable energy grid.

But South Africa’s trade minister said Africa – and his country in particular – is undergoing transformation.

South Africa’s trade minister Rob Davies spoke to journalists in Johannesburg, saying, “If you look at the statements that are coming from any number of African leaders now, they will tell you that this continent – having improved its economic performance in the last decade or so, having now appeared on the world state as an important economic player, not a continent that is a basket case or anything like that any longer – that the challenging issue for this continent is that the next phase of African development needs to be characterised by industrialisation.”

But industrialisation scale is not inexpensive, a fact overshadowed as South Africa literally plays chicken with the United States.

This common bird is at the heart of a major disagreement between the two countries. Two US senators from chicken-producing states are threatening to drop South Africa from a multibillion-dollar trade agreement, AGOA, unless it agrees to import American chicken.

Davies said this disagreement over poultry is anything but paltry.

“There are plenty of win-loses. Another one of the win-loses is that we just say, ‘Okay, we are going to stop being a country that produces chicken and we will keep AGOA.’ That would be a win-lose,” said Davies.

“But I also said that the other side is a win-lose. Take us out of AGOA because of the chickens and the US chicken producers do not get access to the markets, it is a simple as that. And the other win-lose would be that there are all kinds of other implications for AGOA.

“I do not think that the senators or myself who are trying to work with the chicken producers on each side, we are not looking at that. We are looking at a win-win outcome, and I think we can get that, we can get a deal.”

South Africa has benefited from AGOA, which was enacted in 2000 to allow African nations duty-free and quota-free access to the US market. Last year, AGOA accounted for about US$52.1bn worth of trade, according to the US Department of Commerce. South Africa accounts for more than a quarter of that total.

Davies said the sky is not falling because of AGOA, quite the opposite.

“I think our overall message as South Africa has been that we do not believe that AGOA is broken, and therefore we do not think we need to fix it,” he said.

“We think that the arrangement as it stands, the broad architecture of it can be improved, it can be improved in a number of ways. But the overall design of it, we think, is supportive of African growth and development.”

AGOA could appear before US Congress in coming months, before a September deadline. – VOA