Senate to Debate Early South African Removal From AGOA, Says Coons

The Senate will likely again take up an amendment withdrawn in committee to terminate South Africa from the African Growth and Opportunity Act after three years, said Sen. Chris Coons, D-Del., at a Foreign Relations subcommittee hearing on April 23. The amendment had been withdrawn in favor of another amendment approved requiring the U.S. Trade Representative conduct an AGOA out-of-cycle review of South Africa. However, the Senate will still consider the three-year removal of South Africa once the Finance Committee-approved preference package hits the Senate floor, said Coons.

Ending beneficiary status for South Africa after three years would give the U.S. Trade Representative time to negotiate a free trade agreement with South Africa, Coons said. “I am wondering whether a shorter reauthorization for South Africa would make sense,” said Coons. “And if we offered instead three years of AGOA benefits which would give us time to negotiate an FTA that would provide benefits for U.S. companies eager to continue accessing the South African market.” USTR has not recently suggested it intends to strike a FTA with South Africa. The agency didn't respond for comment.

The South African economy has arguably grown to the point of “graduation” from AGOA, and the U.S. may be wise to prevent another ten years of beneficiary status, Coons said. South Africa is the second largest AGOA economy behind Nigeria.

The Senate Finance Committee on April 22 approved an amendment, offered by Sen. Johnny Isakson, R-Ga., to require the Office of the U.S. Trade Representative to conduct an out-of-cycle review on South Africa 30 days after the enactment of preferences legislation, which includes AGOA (see 1504230001). That preference bill includes renewals for AGOA and the Generalized System of Preferences, as well as two tariff preferences levels for Haiti. The Office of the USTR occasionally conducts out-of-cycle reviews to evaluate country-specific trade behavior or other areas of trade, such as counterfeit markets.

Isakson, who sat in on the Foreign Relations subcommittee hearing, had earlier withdrawn an amendment during the April 22 Finance Committee markup to terminate South Africa after three years. Isakson and Coons have for months ramped up pressure on South Africa to remove antidumping duties on U.S. poultry exports (see 1503310069). During the April 23 hearing, Isakson said he preferred to avoid the early termination, which he called a “sledgehammer.”

Meanwhile, the Chamber of Commerce’s Africa trade expert, Scott Eisner, contested the three-year approach in testimony at the hearing, saying the removal of South Africa would jeopardize neighboring economies. “I think the cautious approach that was adopted by Finance yesterday is a much more palatable one, and one that needs to be looked at for other economies where there are impediments to U.S. investment,” said Eisner.

All the witnesses at the hearing, which includes varied private sector representatives, applauded the introduction of 10-year AGOA extension, as part of the preference package, in both houses of Congress. PVH supply chain expert William McRaith said the 10-year extension just barely exceeds the amount of time to vertically integrate the textile and apparel industry in Africa. “We are pleased to get 10 years, but 15 years would have absolutely been the preferred,” said McRaith. “The 10-year really just meets the absolute minimum required to get us that investment into place. The belief is by then FTAs would be in place and we will continue forward.”